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Performance evaluation by objectives: why do it?

If you are involved in or interested in people management, you have certainly heard of OKR methodology, SMART objectives... However, these terms directly related to performance evaluation by objectives are not so easy to understand if you are not an expert in the field.

This methodology, born in the 80s, is still implemented in many organisations as it is one of the most effective. Before we get into the technicalities, let us take you back to the beginning... I'm sure you're wondering: what is performance appraisal in the first place?

What is performance evaluation?

Performance appraisal is the process by which managers quantitatively and qualitatively assess the effectiveness of employees' activities and responsibilities. The objective of a performance appraisal is to continuously improve the performance of employees and the organisation. It involves ensuring that employees' performance contributes to the results of their teams and the company as a whole. In addition, it allows to detect the organisation's talent, identify organisational gaps and define action plans such as training and career plans. One of the most widely used tools for this purpose is the 9-grid box where the entire team can be visually identified in a 3×3 matrix with two axes: performance and potential.

How to evaluate performance?

Many classify performance appraisal according to the different types of appraisals to be conducted. However, the easiest and most straightforward way to understand the phases of a good employee performance appraisal is to sort them according to the area of performance management activity. That is, objective setting, competency assessment, and enrichment through feedback; this feedback can be given in many ways, but the three best known are:

  • Managerperformance evaluation, annual, periodic, formal and informal.
  • 180° evaluation: where the professional is evaluated by his or her manager, peers and, if applicable, by the people reporting to him or her.
  • 360º evaluation: manager, peers, direct reports, other relevant managers, and if applicable, customers and suppliers. In other words, all the people who come into contact with a professional on a day-to-day basis, whether they belong to the company or not.

To begin with, in this first article we will focus on objective-based performance appraisal.

Evaluation by objectives

This type of appraisal focuses on the alignment between the organisation's objectives and the activity of its workforce. A good objective-based performance appraisal makes everyone aware of what the organisational objectives are, and their role in helping the company achieve them. At a minimum it should be conducted once a year, usually in January or February; at a second meeting the objectives for the year in question are set.

Why do you set these objectives?

Effective target setting can increase the achievement of targets by 30% by employees because:

  • Gives direction and focus on what is really important.
  • Emphasises the role of employees in achieving the organisation's major objectives.
  • Increases persistence by defining the endpoint of the job

SMART Objectives

Why is everyone talking about SMART objectives? In order to orientate and focus actions towards the results in question, objectives must be clearly and specifically created to be effective. For this, many set their objectives by referring to 5 attributes that make up the word SMART:

  • Specific: what does the employee need to achieve?
  • Measurable: how do the manager and the employee know that a target has been met?
  • Achievable (achievable/realistic ): is the objective something that the employee can achieve, but at the same time challenging?
  • Relevant: Are the objectives aligned with those of the organisation?
  • Time-bound: when should these targets be met?

Check in

The check-in or continuous performance feedback allows companies to achieve their business objectives through a more frequent review of responsibilities. It is very important to give indications of how employees are evolving, and to create links so that there is more trust and well-being in the company. The check-in is a monthly, bi-monthly or quarterly conversation in which the following points are covered:

  1. What went well during this period of time?
  2. Where do I need to improve?
  3. Where will I focus in the coming weeks?
  4. How could your superior help you achieve your goals?
  5. Overall assessment, from 1 (being the lowest) to 5 (being the highest)

Tools for objective-based performance appraisal

A performance evaluation software makes data collection and updating easy for any company. With the generation of visual graphs from the results, the submission of surveys and forms in one place, and the recording of data and comments, niikiis can be all you need to perform a performance evaluation by objectives in your company. Based on the identified needs of each of our clients, niikiis allows you to evaluate by objectives in the following ways:

  1. Set SMART objectives for each period
  2. Categorise them as personal, team, or company-wide
  3. Chooses and determines indicators for monitoring
  4. Modify the indicators as you evaluate on a regular basis.
  5. Include relevant comments for a good follow-up and action plan.

With this system, the performance evaluation of employees can be visually updated and allows all employees to review their performance. In addition, through the provision of data, they and their managers can see the data from previous periods and compare the results. In this way, our objective-based performance appraisal system:

  • Improves target setting and achievement
  • Powering progress
  • Optimises the creation of action plans

 

Do you want to know more about our objective-based performance appraisal software? Request a demo We'll explain everything you need to know - with a 15-day trial!

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