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How Performance Appraisals Affect Your Bottom Line

How Performance Appraisals Affect Your Bottom Line

by December 3, 2015

What is your biggest business concern? Whether you’re concerned with anything from company alignment to sales to revenue, performance reviews can remedy a majority of the problem. You spend how many thousands of dollars on employee salaries, benefits, office equipment and everything in between, shouldn’t you take the time to analyze your investment just like you would the ROI of your other tools? Now, employees are more than just the latest piece of human capital management software; but just like any other facet of your organization, you need to evaluate their performance because it affects nearly every aspect of your organization.

Align Business Perspectives

You’ve heard it more times than you can count, but please don’t stop reading after I say… It’s all in the employee engagement. At this point, the discussion about employee engagement has become almost nauseating, but with good reason. You’ll have a hard time engaging your team to their work if they can’t connect to the organization. Aligning their work to the bigger picture – the overarching business goals – will help them become attached to their projects.

Unfortunately, only 41% of employees know what their company values arethat’s not even half. So how can an employee be engaged at a company they don’t really know? That’s where performance reviews come in. They are the perfect avenue to align your team to the organization. By identifying their place in the company, they find their worth and become engaged in their work.

Find Missing Links in Employee Performance

Your employees may not always know what they’re missing. Whether that’s specific checkpoints in projects or even realizing the tools they need, this is your responsibility as a manager to make sure they have all of the tools and information they need in order to get their job done. However, 26% of employees don’t feel they have the tools they need to succeed, either in resources or information. You can identify these problems and help find solutions during performance reviews.

Improve with Change

When you adjust your practices according to the metrics you’ve gathered and the information you’ve heard during performance reviews, the results are impressive. Ben Eubanks (@beneubanks), Analyst at Brandon Hall Group, discussed some interesting perspectives on HR’s impact on business problems. Sarah Duke (@SarahMaeDuke), Lead Content Creator at Red Branch Media, recapped his presentation:

“The Turkey based telecommunications company, Turkcell, changed the compensation strategy to better alignment in the organization. They restructured their systems from a 25 KPI list to 5, so employees could focus more completely on the KPIs. With a steeper payout curve, Turkcell was able to see a 6% revenue growth.”

When their employees are able to concentrate on a smaller, more concise list of responsibilities, they were able to hit these goals better and faster. The result: increased revenue for the organization. A simple performance appraisal can illuminate areas of misalignment, as it did with Turkcell, so you can restructure specific aspects of your company to help improve employee performance. Performance reviews can help your team see the missing links (or too many links in this case) in their work, so they are able to concentrate on areas that need improvement.

Whether your business goals are affected by alignment, performance, or anything in between, the performance appraisal can help fix it in some capacity. Find the missing links in the team’s performance so you can fill in the gaps with information or tools they need to improve their situation. They may not be everyone’s favorite office mandate, but they are necessary. Your employees are your biggest investment, why wouldn’t you make sure they’re performing well and have everything they need to do so?

About The Author
Chris Arringdale
Chris Arringdale is the Co-Founder and President of Reviewsnap, an online performance appraisal software that allows you to customize performance management, competencies, rating scales and review periods. Reviewsnap serves more than 1,200 customers worldwide including, Penske Racing, CubeSmart, PrimeSource and Nonprofit HR Solutions.

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