This presentation is designed to provide an overview of the various types of employee evaluation processes. The most successful evaluation process is implementing a Performance Management System. This presentation was delivered to MBA students at the University of Budapest in May 2015.
For questions or help in implementing a Performance Management System, contact Gary Wheeler at The Virtual HR Director.
2. Seminar Topics
• Why Employee Evaluations
• Problems With Employee Evaluations
• Evaluation Systems
• Essay’s
• Critical Incidents
• Behavioral Anchored Rating Systems (BARS)
• Management by Objectives
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3. Seminar Topics cont.
• Key Performance Indicators (KPI’s)
• Balanced Score Card
• Best Evaluation Systems
• What is a Performance Management System
• Defining Organizational Goals
• Linking Individual Goals
• Management and Employee Training
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4. Why Employee Evaluations
• The purpose of an employee evaluation is to measure
job performance
• Evaluations may contain quantitative information
and/or
• Evaluations may contain qualitative information
• Evaluations should help us determine if the employee is
performing the job they were hired to do at the desired
level of performance
• Evaluations are used to help determine merit pay
increase
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5. Why Employee Evaluations cont.
• Evaluations are used to help determine merit pay
increase
• Evaluations help are used to help determine who should
be considered for promotion
• Evaluations are used to help determine organization and
individual training needs
• Evaluations are used for discipline
• Most important – Evaluations should be used to help
drive organization success!
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6. Problems With Employee Evaluations
• The evaluation system is too complex
• Managers are not trained to properly conduct
evaluations
• Employees do not understand the evaluation process
• The goals and objectives are not realistic
• The evaluation is held once at the end of the year
• The performance evaluation does not evaluate what the
employee actually does
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7. Problems cont.
• The evaluation is very subjective
• The evaluation system does not drive organization
results
• The evaluation process is not taken serious
• The evaluation process does not impact compensation
• The evaluation process does not impact promotions,
demotions or terminations
• The evaluator is bias toward the employee
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9. Evaluation Systems
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• Essays & Summaries
• Critical Incidents
• Behaviorally Anchored Rating Systems (BARS)
• Management By Objectives
• Key Performance Indicators (KPI’s)
• Balanced Score Card
10. Essays & Summaries
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• An evaluation used to provide compelling evidence
supporting your opinion by using logical reasoning to
show that your evaluation is correct
• Challenges
• Requires a lot of time
• Can be very subjective
11. Critical Incidents
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• The critical incident evaluation process involves using a
set of procedures to evaluate human behavior through a
series of observations
• A series of observations are used to evaluate better than
expected or less than expected performance
• Challenges
• Requires a lot time
• Can be very subjective
• Leave out good & bad
14. Management By Objectives (MBO)
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• MBO is the process of defining objectives/goals
within the organization where management and
employees agree with the objectives/goals and
understand what they need to do in the
organization
• Challenge
• Individual goals are not aligned to organization
goals
15. Key Performance Indicators (KPI’s)
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• KPI’s are used to evaluate organizational and/or
individual success using key metrics
• KPI’s should be relative to organization success
• Challenge
• Understanding what is important to the
organization and choosing the right KPI’s
16. Balanced Score Card
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• Balances KPI’s into four organization
perspectives
1.Financial
2.Customer
3.Internal Business Processes
4.Innovation and Learning
• Two to three elements in each area
• Challenge
• Getting employees to understand indirect
objectives
17. Best Evaluation Systems
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• The Best Evaluation System is a Performance
Management System using
• Key Performance Indicators (KPI)
• Balanced Score Card (BSC)
• Handouts
18. What is Performance Management?
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• Performance management includes activities
which ensure individual goals are consistently
met in an effective and efficient manner and are
aligned with the organization, division,
department, manager and individuals
• Individual goals role up to the organization’s
goals and they support the organization’s
mission and strategic plan
19. Key Performance Indicators (KPI’s)
• A Performance Management System consists of
objective data also referred to as key performance
indicators or KPI’s
• KPI’s are a measure of organization performance
• KPI’s should be results based v. activity based
• KPI goals should be SMART
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20. Key Performance Indicators (KPI’s)
• Activity Goal
• Sixty (60) client cold calls per month
• Performance Based
• 2 – million Forint in sales per month
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21. SMART GOALS
• KPI’s are created by setting SMART Goals
• S specific
• M measurable
• A achievable
• R realistic
• T timely
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22. Defining Organizational Goals
• Organization goals are set at the highest level of the
organization
• Board of Directors
• Executive Staff / Leadership
• Owner of the business
• Before setting organization goals, you must have first
defined the organization’s vision, mission and values
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23. Vision
• The vision should be a short statement that outlines
what you would like your organization to be
• Example(s):
• UPS – Create Value, Transform and Invest to Grow
• Coca Cola – People, Portfolio, Partners, Planet, Profit and
Productivity
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24. Mission
• Your mission can be one statement or a series of
statements that indicate how you are going to
accomplish your mission
• Example(s):
• Wal-Mart – People, Saving Money, Living a Better Live
• Facebook – To give people the power to share and make
the world more open and connected.”
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25. Examples of Organizational Goals (KPI’s)
• Revenue / Sales
• Net Profit before tax
• Average dollar sale
• Quality Index
• Customer Satisfaction Index
• Employee Satisfaction Index
• Employee Turnover
• Productivity
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28. Pay for Performance
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• Performance management systems allow organizations to
pay individuals based on their contributions to the
organization
• The better your production the more you make
• Individuals are rewarded for achieving results
29. Benefits of Performance Management
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• Organization
• Outcomes are tied to the mission
• Outcomes are tied to strategy
• Outlines responsibility
• Manager
• Identifies expectations
• Creates an objective evaluation system
• Staff
• Let’s people know where they stand
• Greater chance of receiving recognition
30. Who Conducts Appraisals?
11–30
Supervisors rating
their employees
Employees rating
their superiors
Multisource, or
360°, feedback
Outside sources
rating employees
Team members
rating each other
Employees rating
themselves
Sources of
Performance
Appraisals
32. Manager and Employee Training
11–32
Appraisal process
and timing
Performance criteria
and job standards
Common rating
errors
Compensation
reviews
Positive and
negative feedback
Training and
development goals
Performance
Appraisals
Training Topics
34. Summary & Best Practices
• Establish a clear vison, mission and values
• Identify your organization goals using KPI’s
• Make sure your KPI’s are SMART
• Create a strategic plan to achieve your goals
• Link the organization goals to divisions and
departments
• Link division and departments to individuals
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35. Summary & Best Practices cont.
• Train managers and employees on conducting
performance evaluations
• Conduct quarterly evaluations
• Use a dashboard to track results monthly or weekly
• Recognize and reward individuals for reaching their
performance goals
• Pay for performance
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