How to measure the effectiveness of the employee evaluation process? Many organizations conduct periodic employee evaluations. Traditionally, the evaluation process is performed by managers or supervisors, but some organizations expand the process to include other participants, i.e., professional managers, colleagues, and employees themselves. The employee evaluation conversation consists of various subjects, which usually include an assessment of performance, both in mission and interpersonal aspects, a comparison between performance and expectations or goals, identification of training and professional development needs, promotion, and compensation. In addition, the organization provides the participants with tools and resources: structured assessment forms, computerized feedback platforms, relevant training, schedules, and appropriate conditions for the feedback conversation.
Considering the massive investment in the employee evaluation process and the organizational capacity that the process takes, a new managerial need emerges: to examine the effectiveness of the employee evaluation process. The stakeholders and players who participate in the evaluation process, the available tools and resources, and the issues discussed in the feedback conversations, all affect the effectiveness of the process. Therefore, at the end of the process, managers tend to raise questions regarding these sources of influence. A study of the employee evaluation process will help the organization to answer four main questions:
1. How did managers face the assessment tools, i.e., how valid were the assessments given to employees?
Managers may be aware of the possible biases in employee evaluation. Biases may occur, for example, due to a tendency to evaluate different performance dimensions based on one outstanding characteristic, attribute characteristics to an employee, review work behaviors according to background characteristics, avoid realistic low assessments, and more. Organizations try to reduce these biases before the evaluation process starts through training, in which managers are provided with tools and guidelines for valid employee assessment.
Preventing biases in the evaluation process is extremely important since the outcomes directly influence the employees and managers who participated and indirectly affect the entire organization. Therefore, an assessment of biases in the performed evaluation process is essential. Furthermore, statistical analysis of the evaluation data enables examination of the managers’ assessment skills, i.e., their ability to distinguish between employees and different assessment dimensions. Therefore, rating the managers by these skills is helpful for ongoing improvement in evaluation processes and as a part of the managers’ training and feedback.
2. Is the organization’s employee evaluation form valid and reliable?
The wording of the evaluation form has considerable influence. The way it is organized, its items’ phrasing, and the measurement scales, all affect the answers obtained during the evaluation process. The evaluation forms are no exception from other kinds of questionnaires. Therefore, it is essential to evaluate the form as an assessment tool. When the employee evaluation process is based on “quantitative” feedback, in which the measurement scales are appropriate for statistical analysis, the validity and reliability of the evaluation form can be easily tested using “factor analysis” and other statistical models.
Statistical feedback is particularly crucial when the form is new to the organization and is used for the first time. The statistical analysis lets us point out recommended modifications that the organization should consider for future evaluation processes. Also, examining the evaluation form and identifying biases is very important when the decision-making about employee compensations and incentives is based on the evaluation process results.
3. What can we learn from the attitudes of employees and managers towards the evaluation process?
Employees and managers, who participated in the evaluation process, usually have valuable opinions, which are helpful to study in a survey of all process participants or a random and representative sample of participants. Employees and managers can offer vital feedback on the evaluation process and the tools provided. Such feedback can be obtained in group discussions or anonymous surveys. Participants can relate to the perceived objectivity and fairness of the assessments, the content of the evaluation form, the contribution of the training they had before the evaluation process, and other issues. A survey can also cover how appropriate the process was for the different needs of employees, managers, and the organization in general.
4. How to use aggregated data generated from the employee evaluation process as a long-run management tool?
Many organizations usually complete the employee evaluation process by producing specific reports. The purpose of such production is to provide managerial tools to directors at various levels in the organizational hierarchy. These reports typically include a summary of measures and items from the quantitative part of the evaluation forms and multiple comparisons according to the organization’s needs. Naturally, the reports are designed based on the organizational structure and the data the organization collected and provided.
When analyzing the employee evaluation process results, it is interesting to explore and compare the outcomes in two levels of the organizational hierarchy: one above the manager who receives the report and one below it. For example, a head of the department’s report will include a comparison of the findings of the entire company (the level reported above) and results in all teams under him (the level reported below). The manager may identify strengths and weaknesses and compare them to the organizational norms according to the position in the hierarchy.
If possible and depending on the scope of the data generated in the evaluation process, reports also include multivariate inferential statistics of items and measures in the evaluation form. Sometimes findings are compared over time to map change that occurs in the organization, both in the organization unit performance and the quality of the evaluation process. Reports also help to control and monitor the activities derived from the process of evaluating employees.