Why and How to Evaluate Employee Performance

HiringHiring & recruiting
April 11, 2023

Employees are the most valuable assets of a company because they are the ones who can make your business successful. Therefore, identifying employees with excellent performance and improving those who need to perform better is crucial. 

Companies should evaluate team members to understand which one is thriving and which needs more training or support.

Evaluating employee performance is vital for all companies because this evaluation can inform you about the employees who are exceeding their levels or need to improve to reach their desired levels. 

Most companies evaluate their employees regularly, for example, once or twice a year. The evaluation process usually includes reviewing employees’ tasks and responsibilities. The evaluation results are one of the critical factors in dedicating a promotion or reward to an employee.

Evaluating employees regularly will help them better understand employers’ expectations, acknowledge their responsibilities, and connect better with their employers. 

Businesses can also record their employee’s performance over time by evaluating their performance regularly and have better judgment regarding employees’ overall performance and their expectations towards them. 

When companies know the benefits of the employee evaluation process, they will understand that it is a helpful and positive process that can help their company’s development. 

In this article, our team at WeTest will discuss the employee evaluation process, its benefits for both employers and employees, and the best tools to help businesses in this process. 

What is performance evaluation?

The employee performance evaluation process involves analyzing and reviewing an employee's overall job performance; usually, employers do the evaluation once a year. 

The employee performance evaluation process involves analyzing and reviewing an employee’s overall job performance; usually, employers do the evaluation once a year. 

Performance evaluation helps employers to evaluate employees’ accomplishments based on their expectations. In addition, the data gathered through the process will allow employers to make fair decisions about employee promotions, raises, or dismissal. 

Besides evaluating the employee’s performance by managers, the evaluation process also includes a self-evaluation by employees about their success level. This process should be done based on specific criteria without bias and prejudiced judgments.  

Employers should consider employees’ skills, achievements, and overall work during a particular period and decide if they meet their responsibilities or fail at their tasks. 

Some businesses also perform this evaluation while employees finish their trial period. Based on the evaluation result, they will decide if the employee can be moved from a trial to a permanent position. In addition, the evaluation process results will be registered in employees’ files because they might be needed by future employers or companies a person wants to work with.

Performance evaluation has different processes and frameworks between other businesses and industries. For example, some may involve rating scores, self-evaluation plans, or performance observations. Usually, a part of an employee’s performance evaluation consists in assessing the accomplishment of an employee compared to the determined goals. 

The importance of performance evaluation for employees

As a manager, you must understand your employee's performance levels and strengths and weaknesses. As a manager

As a manager, you must understand your employee’s performance levels and strengths and weaknesses. As a manager, you should know about employees’ difficulties with their tasks or how well they are improving so you can reward them fairly or support them with necessary resources and help them grow. 

Take the time to evaluate your employee’s performance. Then, you can identify the ones having difficulties with their duties and understand why some of your workers are leaving the company. And the main reason is that they were not rewarded fairly due to their efforts.

Employee performance evaluation is among the essential communication tools in many successful companies and businesses. 

This evaluation can fill the gap between the company’s expectations and the performance results and help employees harmonize themselves with the company’s goals and objectives. 

Performance evaluation has many advantages for both employers and employees, and it is a helpful process for taking care of some inevitable issues at the workplace.

Here are some critical importance factors of the employee performance evaluation process:

Getting a clear picture of an employee’s performance

Performance evaluation is crucial for getting a clear picture of employees’ level of achievement to determine if they are ready for more significant tasks and duties. Many employees may deserve a promotion, but you quickly pick one by analyzing their achievements and progress through the evaluation process.

Acknowledgment and Motivation

All employees like to receive approval from their managers because of their hard work, encouraging them to perform their job better. The evaluation process will allow employees to get identified because of their efforts. This process can be evaluated based on different criteria so that qualified employees will be recognized and receive the promotion or reward they deserve because of making business goals happen.

Identifying the top employees

Performance evaluation will help a company identify the best workplace employees. Some employees might be doing their best and performing beyond the company’s expectations. The evaluation process will help managers recognize these workers and enjoy watching their accomplishments. Employers should acknowledge their effort and give them the reward they deserve to encourage them to keep what they are doing.  

Letting go of underperforming employees

On the other side of a business, some employees can’t meet the company’s expectations. These employees can harm a business’s performance. The evaluation process will help employers identify these workers and allow them to align themselves with the company’s goals. If they can’t meet the expectations again, it depends on the manager to give them another chance or let them go. 

Determining new goals

The performance evaluation process will help a business determine new company goals. For instance, if most employees are not meeting the company’s expectations, managers should provide better strategies for encouraging them to work better. For example, a recognition strategy or a reward system can motivate employees greatly. 

Identifying training needs

Performance evaluation will help employers to understand why some employees have difficulties in their job and stay behind in their deadlines. Of course, there might be different reasons, such as insufficient or inadequate training. However, ignoring this issue can harm a company’s reputation and cause a business to step back from reaching its goals. As a result, the evaluation process will help employers to recognize the training needs in positions that are required or choose workers who are more qualified for training employees. 

Keeping The Rewards Fair

Rewarding employees for their performance is one of the best strategies to encourage them and boost their confidence. Employee performance evaluation will help managers quickly identify the qualified workers who deserve a reward or promotion. A fair rewarding system can be conducted with the help of evaluation performance results. 

Performance evaluation steps

Companies need a standard evaluation process to assess their employees effectively and fairly and evaluate employees based on specific metrics and criteria. Through the evaluation process, employers usually consider employees’ improvements, weaknesses, capacity, etc. The employee evaluation process should be done by taking some steps, and these steps might be different for each company or business based on the employee’s position or company’s field of work. Some of the common efforts of the performance evaluation process are as below:

Determine performance standards

Every business must determine standards for employee performance which can describe the company’s expectations from employees and how they should meet them. The same standard should be chosen for other employees in the same position. These standards should be practical and relevant to the employee’s job description.

Determine particular goals

After determining performance standards, it is time to set particular goals for every employee. These goals might be the same for some employees based on their position. Managers should identify the strengths and weaknesses of each employee to determine definable and achievable goals for them. After a while, employers can analyze employees’ performance based on these goals. 

Take notes over the year

Employers should follow up with their employee’s performance during a year by making a performance file or checklist for each employee. Then, managers can take notes about employees’ achievements, whether positive or negative. Employers can also provide feedback about employees’ performance right after, and they don’t need to wait until the end of the year to give them a promotion or criticize their performance. 

Be Prepared

Employers should be prepared for employee evaluation; for example, if they are supposed to meet with one of the employees about their performance evaluation, it is better to prepare ahead. Managers should take notes from their assessments and mark the parts they want to discuss with employees. The evaluation should primarily be about positive feedback regarding the employee’s performance with constructive advice on improving in some fields. 

Don’t compare employees with each other

Don't compare employees with each other

The main goal of an employee performance evaluation is to assess each employee based on a set of criteria. It’s not constructive to compare employees’ performance with each other while evaluating them, as this can lead to destructive competition and even hostility between workers. Therefore, always stay on the evaluation structure without evaluating other employees’ performance for another worker. 

Perform mutual conversation

Performance evaluation shouldn’t be a one-sided conversation. Managers and employees should be involved in this process and engage in the conversation. Employers should not limit the whole discussion only to employees’ level of performance. You can talk about career development, challenging tasks, leadership, promotion, and many other things, as these subjects can bring a sense o loyalty to employees. Instead of insisting on their previous mistakes, this conversation should concentrate more on how they will perform in the future.

Evaluate the performance, not the personality.

Employers’ evaluations should be toward employees’ level of performance and not their personality. If you judge an employee because of their personality traits, they might feel that they are under attack, and this can lead to an unpleasant connection between a worker and a manager. Therefore, instead of giving feedback about an employee’s behavior or telling them that they should behave more maturely or less emotionally, provide constructive feedback about their task’s performance. Don’t provide personal feedback; always keep them professional and work-related. 

Perform a skills gap analysis

For many employers, understanding and evaluating employees’ skills is challenging. A company’s team members usually have multiple tasks, which include different processes and tools. As a result, a skill gap analysis can help employers evaluate employees’ skillsets in various fields of their daily tasks. In addition, a skill gap analysis gives employers and managers a clear picture of each employee’s knowledge level in different field positions and task fields. 

Give feedback continuously

Employee performance evaluation should be ongoing for a year, and employers shouldn’t consider it a one-time job. Giving regular feedback throughout the year and having a connection or conversation with an employee to assess their progress in achieving goals can encourage employees and keep them on track for their tasks and responsibilities. 

Benefits of evaluating employee performance

Evaluating employee performance levels can have many benefits both for managers and workers.

When employees know that the company or the manager is keeping track of their performance, hard work, and how well they are doing their tasks, employees will be more concentrated and less distracted by their tasks. 

This understanding can increase the level of productivity among employees, which ultimately leads to the success of a business.

Employee performance evaluations have many benefits for employees and employers, as below:

For employees

Increased employee efficiency: The evaluation process of an employee’s performance will motivate workers and give them a purpose to move forward and do their best job. This evaluation process will show employees that their work and effort are acknowledged and appreciated, which can encourage them to work hard and meet the company’s goals and expectations. 

Identifying strengths and weaknesses: Evaluating employee performance regularly will help employers identify each employee’s strengths and weaknesses and plan to improve or reward those points. On the other hand, when employees find out about their strengths or weaknesses, they will feel more confident regarding their strengths, and they will work harder to improve their weak points. 

Higher employee satisfaction: Employees need support while they are thriving in their job and while they are struggling as well. The performance evaluation will help managers to identify employees who are performing well and reward them. They will also recognize employees having difficulties with their tasks and try to allow them to master the challenges. But, when managers neglect employees’ high or low performance, they might feel disappointed, frustrated, and even separated from the company.

Better communication: Consistent evaluation process can open a new communication opportunity between employers and employees which never existed before. Performing this evaluation once a year will allow managers to discuss with employees their roles and responsibilities and how they have changed, become more experienced, and met the company’s expectations, which is why they deserve a promotion or reward. If you have an employee asking for a raise but is not performing as expected, you can talk to them about the areas they need to improve themselves so they can get the raise they deserve. 

For employers

Protect the company in case of litigation: Some situations might happen when a former or current employee is following legal action against a company or business; for these scenarios, employers should have a conducted file document of the employee’s performance. This process is crucial, especially when an employee’s promotion request is turned down or gets fired for any reason. In this situation, the performance evaluation can be solid evidence that the company made a correct decision about this employee.  

Encouragement of good work: An employee performance evaluation might be one of the few chances employers can get to provide productive and positive feedback to their employees about their performance. This process can increase employees’ self-confidence and prove that the manager is trying to create a positive relationship with their employees. In addition, this strategy can decrease employee turnover because they will understand their work is valued and appreciated.

Updating hiring process: Employee performance evaluation can provide valuable data to the company regarding the previous hires and also give them some information about what they need for the future recruitment process. For instance, if a company realizes that a group of employees in a particular field or position don’t have the proper set of skills, they can add some other criteria to their future hiring process to avoid hiring candidates lacking the required skills.  

Best tools for tracking employee performance

Many tools can help employers in the performance evaluation process, making this process easier and more efficient, mainly because many businesses work remotely. 

Performance evaluation tools are helpful software as they can help companies gather data about their employee’s performance, such as the time they spent on a project or a client, instead of checking all employees in person individually in the office. 

With this information, employers can evaluate employees’ performance faster and easier and then provide the necessary feedback. 

Some of the most popular performance evaluation tools are as below:


This tool is one of the best performance evaluation software for employers who want to keep track of their remote employee’s tasks. Basecamp gathers all data for you in one place, and you can immediately see your employee’s improvement on different tasks. Moreover, it provides a schedule to managers so they can find out what job each employee will work on for the day and if employees can finish all the tasks by the end of the day. 


This tool is a management software that will help companies and managers to determine their expectations of employee performance, collect feedback, conduct surveys, use analytics and 

Organize performance reviews, all with one straightforward tool. 


This software can report the time employees spend on their work and, based on this timeline, evaluates their efficiency and performance on the job. The main goal of this feature is to determine how long each employee spends on a task and when they have the most productivity during the day. When employees know how much they spend on a particular task, such as emails, projects, and meetings, it will help them to identify distractions and spend less time on tasks with less urgency and priority. 


This project management software tool will set up different projects on diverse sections and boards. Managers can follow up with the workflow and ensure that team members are updated with the project development. Managers can create to-do lists for employees and monitor different steps of the project until it ends. When other workers are added to one project, there is a clearer picture for both employees and employers about the tasks they are working on or how and when they should work on them. They can also communicate through the app instead of sending messages or emails, which can be frustrating. 


This software has many features for evaluating employee performance. BambooHR provides feedback with ratings and includes a goal management tool, visual matrix tool, and reminders to help managers find out how their workers are advancing in their job BambooHT supports an open API that will let it combine with other HR software.


This tool is one of the best options for remote team workers, and it offers many different features. ProofHub organizes task lists and collects data regarding workflow, calendars

This tool is one of the best options for remote team workers, and it offers many different features. ProofHub organizes task lists and collects data regarding workflow, calendars, discussions, documents, etc. ProofHub involves tools to help manage projects and cooperate with team members, customers, and vendors. It can also monitor the ongoing project’s progress and enable managers to gain insight into employee performance. You don’t need to install the software as it runs in the cloud space; therefore, you can easily use it no matter where you are. 


This evaluation tool will help employers to make tasks for different fields of work and rate their priority from high, medium, or low. Then, managers can give these tasks to employees and keep up with the status of each task as they go on. Employees can update the project status along the way as “working on it,” “complete,” or “stuck.” Each of these statuses will help managers understand if employees are doing well on the task or facing any challenges and need help. In addition, Monday.com can gain employee data about their performance, ideas, and feedback and provide them to managers for review. 


This tool is one of the best and most simple tools for time tracking that will help employers to find out how much time each employee works in a day or how much time they put into a particular task or project. Everhours also measured how much of this time was productive or profitable for the company. This tool also supports features of task management, reporting, resource planning, and tracking expenses. 


This tool is one of the most inclusive performance evaluation tools with many features and options. In addition, UltiPro provides career enhancement tools, educational opportunities, and goal-setting tools for businesses and enterprises.


This tool is one of the most helpful software for employees, employers, team workers, and even single workers. TMetric has many features such as time calculations, productivity measurements, level of team activity, taking screenshots of tasks and projects, and supports app/website usage monitoring, 


A business can be successful if its employees have a good level of performance. Employee performance evaluation can help companies to understand if their employees are performing based on standards and meeting expectations. 

If employers or managers can perform these evaluations regularly and effectively, they can see the positive influence of these evaluations on their business growth shortly. 

Besides the benefits of conducting an evaluation process for companies, employers can also watch their employees become more productive and encouraged in their work. As a result, the business’s success rate will increase, and it can reach its ultimate goal, which is the company’s massive growth.

Performance evaluation is essential for the success of every business. But unfortunately, this process can be boring or even a waste of time for some companies. Still, if they try to perform the evaluation once, they will be surprised by the fascinating changes the performance evaluation can bring to their business. 

Advanced performance evaluation systems and today’s extensive technology can bring steady growth and development for the company and increase employee self-confidence and motivation.

Businesses shouldn’t take the employee performance evaluation process for granted, especially if they want their company to develop comprehensively while accomplishing their goals at the same time. 

This article discusses the importance of employee performance evaluation, how it is done, and its benefits for both employees and employers. It also introduces some of the best performance evaluation tools which can help companies to do the evaluation faster and easier. This is a comprehensive guide for employers who want to use performance evaluation for the first time and for employees who want to know what is expected from them during the process.