Employee Performance Evaluation: Definition, Benefits and How To Prepare

By Cassandra Williams

Updated March 30, 2021 | Published February 25, 2020

Updated March 30, 2021

Published February 25, 2020

Cassandra Williams is the founder of Career Talk With Cassandra, a career coaching brand dedicated to helping women find happiness and success in their careers.

An employee's job performance has a significant impact on their longevity and upward mobility within an organization as well as prospective job opportunities with other organizations. Companies use employee performance evaluations as a tool to document an employee's performance over time.

Being informed about the evaluation’s potential benefits helps to ensure that the process is a positive one. In this article, we describe what an employee performance evaluation is, its benefits and how to prepare for one.

What is an employee performance evaluation?

An employee performance evaluation, also known as a “performance review,” is a process used by organizations to give employees feedback on their job performance and formally document that performance. Although companies determine their own evaluation cycles, most conduct employee performance evaluations once per year.

Some companies also conduct evaluations when employees reach the end of their initial probationary period. Those who perform well on that evaluation are typically removed from probationary employment status. Evaluation information is stored in the employee's file and may be requested by future employers or institutions of higher education.

Performance evaluations vary significantly in structure and format across industries and companies. They might include rating scales, self-assessment checklists, formal observations or performance tasks. Typically, at least a portion of an employee's performance evaluation includes a review of outcome metrics or progress against previously identified goals.

In the corporate sector, for example, part of an employee's performance evaluation might include a review of sales generated or company growth targets. In a school setting, the academic performance of students in a specific class is included as a component of the evaluation.

Benefits of employee performance evaluations

Employee performance evaluations have many potential benefits for employees and employers alike.

For employers

A few of the benefits of evaluations for employers include:

Protection against litigation

In situations where current or former employees are pursuing legal action against a company, having clear documentation of that employee's performance is very important. This is especially relevant in situations where an employee is terminated or turned down for a promotion. In these cases, the performance evaluation can serve as objective evidence that confirms the company's decision-making.

Encouragement of good work

With the busy pace of many organizations, an employee performance evaluation may be one of only a few times that employers give structured positive feedback and reinforcement to their employees. Doing so boosts employee morale, shows them what to continue doing and helps build a positive relationship between the employer and employee. This can help minimize employee turnover as employees identify clear ways that their work is valued and valuable.

Informing hiring practices

Employee performance evaluations, when considered in totality, can offer valuable insight into past recruitment and/or hiring practices and inform future practices. For example, if a company notices a trend in employees having underdeveloped skills in a certain area, they can add additional screening items for that skill set to their hiring process. Assessing the number of people who are likely to be retained and the number likely to be let go as a result of their evaluation informs the extent and nature of recruitment necessary to rehire.

For employees

A few of the benefits of employee performance evaluations for employees include:

Growth and development

Employee performance evaluations provide a dedicated time for managers to focus on individual performance and growth and development opportunities. This is an ideal time for employees to discuss their salary, career goals and learn what they need to do to achieve those goals. By identifying areas of strength and areas for improvement, employers and employees can develop a growth plan that expands the employee's skills and benefits the company. This can open doors to the advancement and attainment of long-term career goals.

Senior leadership visibility

There may be members of senior-level management that are not easily accessible and do not have frequent interaction with employees. The performance evaluation process can provide insight into these leaders about the workforce including who the top performers are and where to support promotional opportunities.

Potential for a pay increase and/or bonus

In certain companies, merit-based pay increases and/or bonuses are issued to employees who perform well on evaluations. A strong performance evaluation may also lead to opportunities for advancement within the company. This can include formal advancement through a promotion or assignment of leadership responsibilities.

Improved communication

The structured nature of an employee performance evaluation lends itself to productive communication. For both positive reinforcement and constructive criticism, it has mechanisms to guide the conversation and provide very specific feedback. This can ease tensions when discussing something challenging. In some instances, this process opens the door to more meaningful communication outside of the evaluation process as well.

Related: How To Develop Your Skill Set To Advance Your Career

How to prepare for an employee performance evaluation

Given the potential benefits and long-term implications of a performance evaluation, it is important to prepare for this process thoughtfully. Follow these steps before your next performance evaluation:

1. Organize performance information

Just as your employer is likely to bring documentation or notes to support evaluation ratings, you should gather similar information as well. This can include work samples, prior evaluations, customer reviews or a list of objective accomplishments.

Reviewing this in advance helps you to reflect on the previous year and give you talking points for performance questions that your employer may ask. Also, there may be projects or accomplishments that your manager may inadvertently miss or forgets to include so it’s good to have this information to ensure all your hard work is accounted for.

2. Draft goals and areas for support

Thinking about what you hope to get out of the meeting and what goals you are striving for in the upcoming year can help you prepare for your performance evaluation. Also, consider how your employer might help you accomplish these goals. For example, there may be a mentor they can connect you with or a new project you could join to grow your skills.

Considering this in advance helps you be proactive in advocating for your own growth and development. Your employer will likely appreciate your specific requests and general preparedness.

3. Make a list of questions

Since you should have your employer's undivided attention, a performance evaluation meeting can present an opportunity to get any lingering questions answered about the company, your department or your role. If your organization recently underwent leadership changes, for example, you may want to ask about any implications for your position. Writing down your questions in advance can help you maximize your time in the evaluation meeting.

4. Prepare for a two-way conversation

Most people approach performance evaluations with a lot of anxiety and anticipation about what type of feedback they will receive. While performance evaluations include at least some feedback about areas for growth, you should keep in mind that a performance evaluation is a two-way conversation.

As much as this conversation is about providing you with feedback, it is also about you expressing what you need to be successful and what you’re looking for in your career. You should come prepared with any questions you have about career growth opportunities, salary, and steps you need to take to achieve your career goals.

This is an opportunity for you to strengthen your relationship and communication between you and your manager. Be sure to take advantage of this time and clarify goals and expectations, share any challenges you think you may have with achieving those goals and any training that’s needed.

Practicing how to respond to critical feedback is also a helpful preparation strategy. Consider role-playing with a friend or practicing in the mirror. This will help ensure that your body language and tone communicate openness to feedback, which is important to employers when considering an employee's long-term growth potential within the organization.

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