Great Ideas: The 5 keys to effective employee evaluations

In most firms, managers and staffers alike dread annual employee evaluations. That’s because the goals of these meetings are often unclear. Many feel as though such exercises have no real bearing on individual compensation, job performance and/or overall company outputs.

In Simple Numbers, Straight Talk, Big Profits! 4 Keys to Unlock Your Business Potential, accountant and consultant Greg Crabtree argues that they key to good evaluations is to cover those areas of performance that ring true to your firm’s culture and help drive profitability. He recommends doing so by rating each staffer on the following five criteria:

1. Teamwork

Lone wolves have their place, but they don’t facilitate cohesive teams—no matter how talented they may be. Measuring employees on how well they work with others helps ensure that they fit well within the organizational culture.

2. Customer relations

In today’s business environment, it’s rare to find any position that doesn’t interact with customers at some point. By evaluating workers, regardless of position, on how they represent your business when dealing with clients, you reinforce the message that customer service really does matter.

3. Productivity

Productivity can be tough to gauge. Some employees work slowly and steadily. Others rip through projects in a matter of hours, but require plenty of downtime to recover. By considering each employee’s work style when evaluating their output, you’ll get a better sense of their true productivity than you would by measuring, say, only hours worked.

4. Contribution to the bottom line

Crabtree believes that a company must generate a profit from every employee. If a worker is making $50,000, but you could hire someone for $35,000 a year to do the same job, he feels you should bring it up in the employee evaluation. How can you do this without making the staffer feel defensive or demotivated? The answer: by treating it as an opportunity to encourage that staffer to improve his skills set and/or take on new responsibilities.

5. Core competencies

The evaluation is a great time to monitor whether an employee’s core responsibilities and skills have increased. If they have, reward them with an appropriate increase in salary and/or benefits. While you’re at it, be sure to include clear instructions about what they will have to do to receive future raises; this, Crabtree says, can be an excellent way to motivate staffers to do their best work.