How To Do Employee Evaluations and Reviews

Disclaimer: Employee evaluations are extremely sensitive in nature and are subject to numerous federal laws and guidelines. This article is intended for educational purposes only and is not to be taken as legal advice.

Employee evaluations and reviews are terrific tools for providing formal feedback regarding on-the-job performance. When implemented properly, evaluations and reviews can help turn average employees into excellent employees by pinpointing performance areas that need improvement. Furthermore, evaluations can help identify the weakest organizational members as candidates for possible termination. Here are the basic steps involved in conducting employee evaluations and reviews.

1. Decide what to evaluate. The first step in measuring employee performance is to determine which criteria you will evaluate. Objective criteria--those that deal with quantifiable results such as the number of sales made in a month--are the easiest to measure, but often do not tell the whole story. A salesperson that closes the most deals month after month but also generates the most complaints from customers may not be as valuable to the company as you think. Therefore, a thorough employee evaluation should also measure behavioral criteria, such as attention to customer service and adherence to corporate polices, whenever applicable.

2. Decide when to evaluate. In order for evaluations to be more meaningful and effective, you should conduct them at regular intervals. Many human resources departments follow an annual system whereby reviews are performed yearly on the date of an employee's anniversary with the company. Depending on the nature of your organization, however, you might find it advantageous to evaluate employees more frequently than that. For example, a firm that relies heavily on high sales volume would probably benefit from conducting quarterly evaluations to ensure that employees are meeting or exceeding minimum quotas.
3. Decide how to evaluate. There are many different ways that you can record your appraisals of employee performance. If you are working for an organization that already has a specific format in place, you will likely be expected to continue using that same method. If you have a little more control over the employee review process, then you might be allowed to choose your own format. Some of the most common employee evaluation formats include those that are based on norms (straight ranking, forced distribution), based on results (management by objectives, direct index approach), or based on absolute standards (behaviorally anchored rating scales, graphic rating scales).
4. Be aware of potential rating errors. Evaluating employee performance is a difficult task that by its very nature is susceptible to bias and subjectivity. While it would be impossible to eliminate all errors from the rating process, you can help prevent some of the most common ones by being aware of them as you record your appraisals. These include being too strict or too lenient; placing too much emphasis on actions and behaviors that have occurred recently; and having a tendency to rate all employees as average despite obvious variations in performance.
5. Ensure legal compliance. Since employee evaluations and reviews often go a long way toward determining promotions, pay raises, and terminations, it's important that you stay within legal boundaries throughout the entire process. In general, a legally defensible performance evaluation adheres to three basic guidelines:
   • The criteria used in the evaluation must be job-related.
   • The criteria must be nondiscriminatory.
   • The evaluation must be conducted in a fair manner.

   If you wish to consult legal documents for further reference, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, and the Civil Rights Acts of 1964 and 1991 are all excellent resources.