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4 min read

5 Key Benefits of Performance Evaluations

How often do you give performance evaluations to your employees? Once a year? Once a quarter? Or is it an ongoing process? There are many ways of going about it, but the important thing is that you do it. Here are five advantages to both you and your employees, from regular performance appraisals.

1. Pinpointing Problem Areas. This is a twofold benefit. First is the obvious: What are the areas where individual employees need work? What can they improve on? What’s keeping them from fulfilling their potential, and how can you help them get better? But there’s another aspect to this: Are there any areas where all of your employees are lacking, or in which everyone needs work? This can indicate a problem not with them, but with your training process. By evaluating employee performance, you can see if there are areas you need to address, both individually and en masse, and improve your training methods going forward.

2. Building Better Teams. Not only can you use performance evaluations to find each individual’s strengths and weaknesses, you can also determine how best they fit in with your company’s overall dynamic. Will the talents of one employee complement the talents of another if they work together? Will one person’s strengths balance out someone else’s weaknesses, and vice versa? By evaluating your employees, both individually and as a whole, you can build teams that will increase efficiency and productivity.

3. Improving Employee Motivation. Often, performance appraisals are a bit daunting for employees. They’re afraid they won’t measure up, and may even face disciplinary action as a result of their shortcomings. But it doesn’t have to be this way. Instead of tearing employees down for not meeting your standards, you can use it to motivate them and encourage them to reach their full potential. Provide some special recognition for those who do well in evaluations, and/or for those who have improved the most since the last one. This way, instead of being afraid of the consequences of a performance appraisal, they’ll be motivated to improve and do better on the next one.

4. Creating Communication. A performance evaluation gives you a chance to sit down with your employees individually and get to know them better, at regular intervals. You can give them feedback on how they’re doing in your company, but also talk to them about their goals for the future and how they can best achieve them. That way, you can go beyond just their numbers and scores and find ways to help them improve individually. They can also voice to you any concerns or suggestions they may have for how their job could be made more efficient, or how they can train others better going forward.

5. Identifying Candidates for Promotion. A performance evaluation can show you who needs to improve and what areas need work, but it can also go the opposite way. It can shed light on which employees have a solid grasp on what they do and might be best suited for promotion, when the time comes. Maybe someone wasn’t on your list for advancement last quarter, but in the last few months they’ve improved considerably, developed new skills, or otherwise proven themselves in new ways. Performance evaluations can help you see who stands out above the rest, and who might best benefit your company if you move them forward. At minimum, it can give you an idea of which employees to look at more closely in that regard, or perhaps begin grooming for a better position.

Performance Appraisal Styles

There are several common methods companies use to conduct performance appraisals, each one with its strengths depending on the type of company, company size, and whether it’s public or private.

Standard appraisals

These are the types of evaluations that you’re probably already familiar with. You evaluate your employee’s performance against custom criteria the company has set. Sometimes this takes the form of SMART goals (specific, measurable, attainable, relevant, and timely), and sometimes it can take the form of more qualitative feedback. This method is best for companies with distinct quantifiable goals, although its usual blindspot is in evaluating soft skills, such as personal commitment and interpersonal skills

Self-assessment appraisals

A self assessment can make an employee feel empowered, giving them a say in where they feel they’ve done well, and where they can improve. While common opinion is that an employee might overrate themselves when given this opportunity, the truth is many are actually hard on themselves in an effort not to appear arrogant. In addition, by giving an employee the autonomy to identify what they want to work on, you open them up to being more receptive to feedback, and you can align your feedback with the items they mentioned. Self assessments are effective when used as a portion of any performance review, although they can be biased when used as the only appraisal style.

360-degree feedback

360-degree feedback is becoming more commonplace now, especially in organizations where employees work in a team environment. The employee evaluates themselves, a peer, their supervisor, and subordinates if there are any. The benefit of this review style is it allows a holistic view of each employee, taking into account their ability to hit company goals as well as how well they work with others. However it can also be susceptible to bias, cultural differences, and sometimes dishonest reviews when conducted in a competitive environment.


These are just a few of the benefits and styles of performance evaluations in your company. How and how often you implement these appraisals is up to you, based on what will be most beneficial and fit in best with your office dynamic. However you decide to do it, though, remember that improvement is a continual thing. There are always ways in which your individual employees, and your company as a whole, can become more productive and more efficient. The better equipped you are to find those ways, the better your company will be.

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