Employees' Performance Appraisal, even in a small company, should be goals/KRAs-based. I consider that competency-based appraisal systems cannot measure performance. These are more useful to evaluate the development needs of employees.
Setting goals/KRAs for all employees well before the start of the next financial year is important. This can happen only if your Annual Business Plan (ABP) for the next year is ready by then. In addition to the ABP, you need the Job Descriptions (JDs) of all your employees. JDs define the job deliverables, and the ABP gives an indication of the KRAs for that year for each Job Position. The combination of these two creates SMART goals which are to be set through interaction between the employee and his/her Manager (Appraiser). Some goals may have quarterly targets to be achieved. For Sales staff, the targets could even be monthly/weekly.
The fact, however, remains that unless an employee clearly knows the goals (and the targets to be achieved for each goal), how can you expect him/her to deliver performance? Thus, the assignment of goals becomes a vital responsibility of all Appraisers in a company. If each appraiser takes this responsibility with pride, the entire organization becomes performance-driven.
Having set the goals, there is a need to periodically track employees' achievements as per the targets assigned. If each employee has, on average, 8 goals in a year that are to be tracked on a quarterly basis, you need a system. It is difficult to track performance manually. After all, our basic purpose is that the targets assigned are achieved every quarter by each employee. Even with a staff of 25 employees in the company, you have to track 200 goals every quarter. The employee has to enter his/her achievement for each goal and submit it to the Appraiser. If the achievement is inadequate, the Appraiser has to examine the handicaps (in consultation with the employee) and provide his/her counseling for future improvements. A record of such counseling every quarter on the Goal Sheet gives, at the end of the year, a comprehensive summary of achievements and shortfalls. This is an objective picture of the year-round performance of an employee which enables the Manager (Appraiser) to do a proper performance evaluation of each subordinate.
Automated tools are available these days to help organizations create a performance culture right from the beginning. HR has to understand these tools and educate the company management about their utility. 'EmpXtrack' is one such tool that is being widely used by small and medium-sized organizations to manage the performance of employees. It provides a free demo of both the Appraisal and Goal Setting mechanisms. Those interested may do a Google search of 'EmpXtrack' and register for the Demos.
Those keen to learn more are welcome to contact me at [IMG]https://www.citehr.com/misc.php?do=email_dev&email=YmtiaGF0aWFAc2FpZ3 VuLmNvbQ==[/IMG]
Best of luck B K Bhatia