Since 1914, performance appraisal has proven to be an invaluable tool for the evaluating of the entire management system. F W Taylor introduced this mechanism to detect the much talked about productivity concerns among members and the overall organization. Initially, this practice had the purpose of acting as a filter process for team members. In the long run, it became mandatory that every firm adopt this practice in order to achieve this goal.
Performance appraisal is often referred to as the ‘negative process’ as it often results in the suspension of unproductive personnel. However, the process goes much deeper than that. An entrepreneur today is exclusively dependent on its personnel’s work. The input and performance of internal stakeholders are perhaps more significant than any other at this point. Therefore, an entrepreneur often ends up spending the majority of costs on recruiting the suitable. And from the perspective of a business owner, it is imperative to determine whether the members are in line with the company’s vision.
The purpose of this blog post is to discuss how performance appraisals benefit entrepreneurs, how they can provide a 360-degree analysis, and how they can generate value for SMEs.
Relative and Synchronized System
It is high time we burst our bubbles and realize appraisals are more than just a means to rank members. An entrepreneur can design and set up an entire system with this tool. For example, an entrepreneur who wants to eliminate lethargy might include “punctuality and spontaneity” as a criterion for reviewing efficiency. Another example, if one wants the sales members to remain on the field during quarter-end, then a parameter of attendance can be taken into consideration. Thus, the system is tailored according to the preferences of an entrepreneur.
During C-19, the majority of the members continued to work from home. Since it’s impossible to monitor their work on a day-to-day basis, managers became concerned. It was especially for the sales team, which was responsible for sourcing and closing leads to drive revenue. Even they encountered difficulties since no one could leave home due to protocols. It became difficult for managers to evaluate members as most of them ended up with similar but poor sales figures. Soon, virtual sales started getting more preference, and the team was asked to assist their clients via video calls and virtual demonstration sessions. And during performance appraisals, this became a parameter and the members who turned out to be productive despite any external conditions were appreciated. Due to the flexible system, entrepreneurs can determine their desired workforce that can remain in sync with the firm’s goals.
When an entrepreneur wins at creating a flexible system, members and organizational goals get aligned. Getting a clear understanding of what an entrepreneur expects from its members is accomplished through these finite appraisals. In the above example, punctual members are more likely to sustain in the organization and work productively, whereas the remaining chunk resigns. Workforces, who clear these performance reviews are more likely to remain aligned with the company’s goals and vision. As a result, an entrepreneur gets benefited through flexible performance appraisals here. Traditional appraisals which were only output-driven are still in existence, but to design a system that matches one’s business nature is much better to apply.
Excellent Workforce, Retention, and Goal Setting
A business owner gets a chance to craft their team. Here a business owner can identify the performance of each team member. Appraisals help managers and systems identify the key personnel. In this phase, where expenses are often on the rise and revenue is low, appraisals can be extremely useful. It helps in identifying the most valuable member and sets a path for further development.
When a firm starts to develop opportunities for its members, they remain longer with the firm. Performance appraisal includes another part where workforce retention gets in the story. A well crafted performance appraisal will not only recognize the best members but will also suggest how management can help them achieve their goals. As a result, member retention increases. The members who are under the expected length of service will aid with training and enhancement tools.
Once an entrepreneur is thorough with the current working condition of the workforce, they can thrive for improvement. An organization can alter and control its flow using proper monitoring, controlling, and establishing measures. Once all these steps have been met, an owner can set the next goal to achieve.
It is an endless cycle. Once the previous loopholes are closed, one can set the goal for another quarter or year. In addition, an appraisal can be conducted at the end of the tenure to find out if the organization achieved its goals. As HR often struggle with effective goal setting, reviewing past performance appraisals can serve as a start base for the next one.
Transparency and Improved Communication
The issue of transparency arises when entrepreneurs remain in a bubble where everything has worked well for their firm, irrespective of the gaps between the team’s working methods and the desired outcomes.
A similar process can help us to know what our members’ thoughts are when the organization asks them for their feedback. The application process simplifies the conversation as a solution to the question above. Here, members can voice their concerns. By having a friendly and healthy discussion, the company can ensure trust among its members with a fair evaluation.
Appraisals are a detox for every organization. Besides improving performance, it also improves the culture of a firm. The need for self-improvement increases when each employee is provided with 360-degree feedback and evaluation. As a result of improving performance and other personal/professional issues, a team’s culture also improves.
Lastly,
Appraisals are not one-day events. It takes time and effort to correct a system and align people with the corporate mission. As a business owner, you can only improve one thing without incurring any costs, your workforce. An improved and streamlined workforce is 20 times better than a giant commercial with an unproductive workplace. One important thing that entrepreneurs need to realize is the need for introducing flexible evaluation systems. Traditional appraisal methods are nothing but a downward spiral, as opposed to the 21st century system that is inclined towards improving work-life balance, eliminating fatigue, preventing employee rights, and promoting diversity.
Cloverbites By Rupesh Sanghavi 
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