What is employees’ performance evaluation?

Performance evaluation is an activity to assess and evaluate the job performance of employees. This activity is very important because it can improve the performance of both employees and the company. The following is a brief explanation of performance evaluation.  

Performance evaluation is an activity to assess and evaluate the achievements, abilities, and growth of employees. Every company’s activity needs to be done to evaluate the performance and increase employees’ productivity. 

Performance evaluations should be carried out on a regular basis so that the company can determine what kind of development the performance of each employee is. If this is not done, it can cause a decrease in employee productivity, which, of course, can be damaging to the company. The following will explain in full performance evaluations starting from the definition to the implementation process. 

This article covers:

NOTE: This page’s information is provided for informational purposes only and should not be interpreted as legal, tax, or financial advice

How to evaluate employees’ performance correctly?

Here’s how to properly evaluate your employees’ performance to take advantage of them.

Evaluation method

There are various evaluation methods, but let’s look at the one that has received particular attention.

・ 360 degrees evaluation

It is also called multi-faceted evaluation and evaluates strengths and points for improvement from multiple perspectives such as superiors, colleagues, and subordinates. You will be able to grasp evaluations and problems that you cannot see by taking advantage of others’ perspectives.

・ Real-time evaluation

A mechanism that can be evaluated at any time of the year. You can evaluate small points daily, and your senior management and employees can communicate frequently.

・ Balanced scorecard

This is a typical method for companies. It is an autonomous evaluation system in which employees set their own performance goals, take action, and give feedback. It is one of the easy methods to introduce because there are many successful cases.

・ Evaluation by KPI

It is an abbreviation of “Key Performance Indicator” and is called a key performance indicator. It is used to achieve better performance by observing the set goals’ achievement status at fixed points and looking back on the detailed process.

・ Value evaluation

It is not an evaluation of business performance or achievements. Evaluate in conjunction with employee action guidelines and corporate mission vision policies. From these evaluation methods, let’s think about what is suitable for your company.

Things to watch out for in the evaluation

No matter how you evaluate, there are some points to be aware of. It is important to be fair and objective above all, not to include prejudice or personal perspective. The better the workplace relationships, the more careful it is necessary to evaluate whether the evaluation is subjective. By making evaluations based on facts, grounds, and clear standards and rules, all employees’ credibility can be built. Furthermore, what the boss should have is the perspective of human resource development. It is important not only to evaluate employees and make assessments in the personnel system but also to guide them to develop their abilities.

By making the best use of individual abilities, corporate activities such as profit expansion and cost reduction of teams and organizations proceed smoothly.

When is employee performance evaluation conducted?

Each company has an employee performance evaluation policy. Furthermore, after knowing how to conduct performance evaluations, companies need to know when is the right time to do this. You need to know that every company is different in determining the right time to do this performance evaluation. It is based on the needs of every company. Generally, performance evaluation is carried out in:

Annual Review

Performance evaluation once a year is an evaluation commonly carried out by companies, especially companies that still apply the traditional system. Many companies have carried out this evaluation; one reason is that the company has many employees, so it is difficult to provide regular reviews to each employee about their performance.   


Semiannual reports are usually conducted twice a year. Ideally, this performance evaluation will be conducted in early January and early July. One of the discussions about this evaluation will later lead to the percentage increase in compensation. With a fair performance evaluation, employees can enjoy an objective compensation increase every six months. Later this evaluation can also focus on employee development because this review is beneficial for employees in the long run. Show them how they can boost their performance level through the feedback they receive.

Quarterly Basis

The last type of performance evaluation is usually done quarterly. So in a year, the company conducts performance evaluations four times. This review is generally useful for startups.

Usually, the performance evaluation that is carried out includes short-term goals, where this evaluation will focus on regularly scheduled feedback rather than just a comprehensive performance evaluation. 

That is the performance valuation that employees and companies need to know. Through this review, the company will find out employees’ contributions, build a fair work environment, and encourage employee morale to work harder. In addition, a good evaluation will also strengthen the relationship between managers and employees. Through good partner relationships, managers and employees can work together to fulfill the company’s vision.

What is the real purpose of employee performance evaluation?

Every action taken within the company has a purpose. If there is no purpose, then the non-action is useless. For the evaluation of employee performance itself, of course, there are goals that the company management wants to achieve, namely:

See which side needs fixing

One of the main goals of holding an employee job evaluation is to see which side each employee should improve. With this assessment, the employees can find out about deficiencies that they were not aware of before. From the company side, you can see the upgrades made by the employee as well. So both parties can get a way out of the existing problem.

Provide awards to outstanding employees

Not only to see the side that has to be improved, but also to reward employees who excel and provide good performance. Thus, these employees can feel appreciated by the company. For others, they will also feel motivated to feel the appreciation given to their other colleagues. 

Can protect the company legally.

The last one can protect the company legally. The main aspect of this point is that the company can terminate employees who make fatal mistakes, poor performance, unable to fulfill their job obligations, and other problems that can cause issues to the company. With this evaluation, it can be said that the management does not need to have trouble finding ways to terminate the contract or employment of the employee in question. The results of this evaluation must also be stored in physical form to be used as strong evidence if the employee decides to sue the company.

With an explanation of how to evaluate employee work and its purpose, it can be seen that evaluation within the company is essential because it provides so many benefits. These benefits are for the company and employees to improve themselves and provide better performance. 

To determine proper employee training.

After the company knows the weaknesses and strengths of employees through this evaluation process, the company can determine what type of training is right to encourage employee progress. This training program will increase employee knowledge, improve skills, and be suitable for career development. It is hoped that after this training, employees will be able to contribute maximally to the company.  

Performance evaluation effectiveness criteria

Performance evaluation also has several criteria or requirements in the implementation process. Here are a few requirements you should be aware of.


The first criterion is sensitivity. In this criterion, the evaluation system implemented should make a difference between effective and ineffective employees.


Furthermore, there is the nature of reliability; namely, the assessment results must show high consistency. In addition, the system used for the process must be reliable and believed to have used accurate, objective, stable and consistent benchmarks. 


Further performance evaluation effectiveness criteria are relevant. When in the performance evaluation process, there must be a very clear link between standard performance measures and the company’s main goals. 


Furthermore, there is practicality, which is easy to understand and use. The process must be understood, both by managers and employees, and the language used is clear and uncomplicated.


Acceptable nature is any work behavior that has been deemed acceptable by the company and employees.

Benefits of Evaluating Employee Performance

Not only that, even every businessman needs to evaluate levels of performance at least once every three months. Why is that? Here are a few advantages you can get by regularly evaluating employee performance.

 Improvement and Development of Employee Capabilities

Not only knowing what the potential of each employee is, by evaluating employee performance, you can also identify how the development of your employees’ abilities, whether they have increased or vice versa.

Two-Way Communication

Evaluating employee performance regularly can also make your communication with employees pleasant. When you identify a decrease in employee performance, you can confirm and listen to what obstacles the employee feels.

Minimize Miss Communication

By conducting regular performance evaluations, you can identify what deviations the employee thinks are correct. And from there you can explain and straighten out the employee’s understanding as early as possible.

Increased Productivity

By regularly evaluating employee performance, of course, you will continue to remember what business targets are and how they are achieved. Not only that, the thoughts and ways of working of employees will also follow the procedures that you have compiled. When all these things happen, it opens up opportunities to increase productivity in the business you are running.

Target Achievement Information

By regularly evaluating employee performance, it makes it easier for you to find out what your business has achieved and what targets thereafter.

Performance Management Software

Complete your digital transformation with Billed, stay ahead of the competition and increase your profitability. Take advantage of this easy-to-use performance management software, access all evaluation results with one click, and report everything in detail. Download reports in the format you need.

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