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Updated Oct 23, 2023

How to Evaluate and Track Employee Performance

Employee performance evaluations provide essential information about how your employees are doing and help you support them.

Natalie Hamingson
Natalie Hamingson, Business Strategy Insider and Senior Writer
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This guide was reviewed by a Business News Daily editor to ensure it provides comprehensive and accurate information to aid your buying decision.

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Performance evaluations can be a source of dread for managers and employees. After all, they offer much to consider, especially when the assessments are tied to compensation or promotions. However, there are ways to track and manage performance assessments that make the process easier and give employees and managers a better idea of what to expect from evaluations. 

To get the most out of the employee performance evaluation process, it’s crucial to clearly understand what factors to assess and how best to evaluate your employees.

What is a performance evaluation?

A performance evaluation is a comprehensive review of an employee’s job performance based on specific criteria, such as their job description. A manager will look at an employee’s skills, accomplishments and work over a specific period and determine whether the employee is meeting, exceeding or failing to meet expectations.

“[A performance evaluation] provides insight into the employee’s overall performance at the company, which helps managers understand what each staff member brings to the table,” explained Vinay Amin, founder of Eu Natural.

Did You Know?Did you know
According to Betterworks, companies with robust performance management processes are 39 percent more likely to attract and retain top talent.

How to track and manage employee performance

You can track and manage your employees’ performance in many ways, including software, checklists and forms. While you may only sit down with your employees for a formal review once or twice a year, your evaluations must be an ongoing process to gain a comprehensive view of your employees’ activities and monthly progress.

Before you begin your employee performance evaluations, it can be helpful to take the following steps:

  • Ensure job descriptions are updated. An up-to-date job description helps you provide an accurate evaluation based on the employee’s current responsibilities.
  • Update performance expectations. As a result of updating their job description, your expectations for an employee’s performance should also change because various key job functions have different outcomes. Setting clear expectations for employees is critical.
  • Check previous goals. Determine if the employee met their previous evaluation’s established goals, performance standards and objectives. If they did not, discuss why in your evaluation meeting.

Performance management software

Performance management software is a popular way to track and manage employee performance. Performance management software provides a central base where you and your management team can input and track information on employee performance and easily access it during reviews. 

Consider the following highly rated performance management software solutions:

  • Paycor. Paycor provides essential tools to implement a continuous performance management system. This platform includes people management software that allows you to set performance goals, gather employee feedback, launch employee surveys, make use of staff analytics reports, and run performance reviews. Read our Paycor HR review for more information. 
  • BambooHR. BambooHR offers multirater feedback, a goal management tool, automated reminders and a visual matrix tool showing how your employees stack up. Its open API allows it to integrate with other HR software. Read our in-depth BambooHR review to learn more.
  • Cornerstone. Cornerstone is a user-friendly, automated performance management system that allows your team to engage in a customizable review process. It also allows you to connect with each other to gather multiple points of feedback.
  • UKG. UKG is a performance management tool with comprehensive data reports to help your team boost productivity and stay on top of workforce trends. Actionable data insights in UKG’s reports can also help employees set clear career paths they can get excited about. 
Unfair performance reviews are a top reason employees quit. When they perceive their performance reviews as inaccurate, their engagement and motivation levels drop.

10 factors to use in evaluating employee performance

Determining how to evaluate your employees can be a challenge, especially if they perform various duties and functions. Here are 10 crucial factors to consider when evaluating your employees.

1. Work quality

Examine the employee’s work over the evaluation period. Was it well done? Was it thorough? Was every detail thought through? Were there any mistakes? Consider feedback from clients or team members about the employee’s work quality and determine if the employee’s work fits your business’s standards.

2. Execution

Evaluate how well your employee organizes, schedules and completes tasks; how they manage their time; how creative they are; and how they communicate with their team members. Are they largely self-sufficient and able to complete their work on time, or do they require significant assistance or handholding? Is their work considered high level?

3. Progress

Look at the employee’s performance in the evaluation period. Have they met their goals from their previous evaluation? Have they grown in their role? Have they acquired new skills? It is reasonable to expect positive growth and professional development between evaluations.

4. Adaptability

Does the employee handle change positively? Are they receptive to new ideas or adjustments? Do they demonstrate an ability to modify their working style or processes? Consider how the employee responded to previous goals you set with them — did they make the necessary adjustments to meet their goals?

5. Initiative

Evaluate how the employee pursues their goals and responsibilities. Do they take it upon themselves to meet their objectives, or do they require some prodding? Do they demonstrate an eagerness to tackle goals or new responsibilities? Do they show a desire to excel at their job?

6. Communication

Does the employee share their thoughts and ideas effectively? Do they listen to others well? How well do they take direction and feedback? Can they clearly convey their thoughts in speaking and writing?

7. Job knowledge

Does the employee display an acceptable level of knowledge regarding their specific role? Do they have the technical, administrative or specialized knowledge necessary to perform well? Are they willing and able to expand their job skills?

8. Problem-solving and decision-making

Can the employee effectively identify a problem and devise an appropriate solution? Can they quickly make and execute decisions? Do they get overwhelmed in the face of problems? Can they delegate and bring in outside assistance if necessary?

9. Planning and organization

Is the employee organized and consistently prepared? Can they identify and prioritize their daily, weekly and long-term responsibilities? Do they regularly meet their deadlines? Do they effectively manage their time?

10. Teamwork

Is the employee pleasant and polite to other employees? Do they work well in team settings? Do they display a professional and positive attitude? Can they communicate and collaborate well with others? Do they maintain healthy business relationships?

Employee performance reviews aren't a one-way conversation. Encourage employees to ask questions, share feedback, and complete a performance evaluation self-assessment as part of the performance review process.

Why is tracking employee performance important?

When managing a workplace, you need to know how your employees are performing, what they are struggling with, what they’re doing well, and how they’re growing in their roles. That way, you can properly reward good work and provide help and resources to those who might be struggling.

If you don’t take the time to track employee performance, you might not realize that some of your workers are struggling with key tasks or leaving the company because they are not being fairly compensated for their work.

“Employees are the most important asset in a company,” said Nancy Michieli, performance coach and former manager of projects at Paton Engineers and Constructors. “Employee performance plans are less about tracking an employee’s performance and are more of an opportunity to develop the employee and provide quality feedback for their growth.”

Benefits of tracking employee performance

From gleaning key information about your team members to increasing employee satisfaction, there are significant benefits to tracking your employees’ performance.

“When employees know that management is following their performance and behavior, and that authority keeps track of what they do with their time, employees manage to be more focused and less disturbed in their work, which increases the overall productivity of the business,” explained Brack Nelson, a search engine optimization manager.

The benefits of tracking employee performance include the following:

  • Tracking employee performance increases efficiency. Evaluating your employees’ performance and progress gives you and your team the insight necessary to set goals and fix problem areas. This can both improve an employee’s work and give them something to work toward. A performance evaluation shows employees that their work is seen and valued, which can motivate them to work harder to meet the company’s goals as well as their individual goals.
  • Tracking employee performance helps identify strengths and weaknesses. You want to see where your employees and business are performing well and where you’re falling short. Regular employee performance reviews are a great tool for providing this information, especially since you may see patterns in the performance of multiple employees and fix widespread problems.
  • Tracking employee performance brings higher employee satisfaction. Employees require support when they’re excelling and when they’re struggling. Employee performance reviews reveal top performers and those who need help. When management ignores high or low performers, employees become frustrated and disengaged. That can lead to poor production levels and high employee turnover.
  • Tracking employee performance creates better communication. Regularly scheduled employee evaluations can open up an avenue of communication you may not have had with your employees otherwise. An annual review is an excellent opportunity to sit down and touch base with an employee about their role and any changes they have experienced or expect, such as a promotion or adjustment in responsibility. For example, you may have an employee expecting a pay raise, but their performance has not been up to par — the evaluation process allows you to explain the areas where they are lacking and what they can do to improve.
Key TakeawayKey takeaway
When conducting performance reviews for remote employees, use a top video conferencing service to experience face-to-face communication and connect more deeply.

Strong performance management practices benefit everyone

Performance evaluations help employees and managers ensure they’re on the same page. Regular performance tracking and reviews can help managers identify where their team members need some extra support. This data can help employees ensure their career is on the right path. Performance evaluation software can simplify the process for everyone so the team can focus on what’s most important — growing the business. 

Kiely Kuligowski contributed to this article. Source interviews were conducted for a previous version of this article.

Natalie Hamingson
Natalie Hamingson, Business Strategy Insider and Senior Writer
Natalie Hamingson has spent more than 15 years researching and studying print and digital communications with a recent focus on business operations. She has hands-on experience with a range of software tools, from Salesforce to Buffer, and has also worked with data entry systems and accounting administration. Hamingson is adept at managing contact and financial data, conveying high-level concepts to a variety of clients and targeting different audiences through various mediums (email campaigns, longform writing, etc.). With a bachelor's degree from UCLA in communications studies, she excels at helping small business owners by providing counsel on website and social media content, marketing strategies, product descriptions and tools for accounting, payroll and sales.
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