6 reasons why performance evaluation is a necessity in startups

“Performance leads to recognition. Recognition brings respect. Respect enhances power. Humility and grace in one’s moments of power enhances dignity of an organisation.” – Narayan Murthy

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Performance evaluation is an important trend in startups and medium-scale companies. While it is a common belief that evaluation plays an important role in the appraisal and promotion of the employees, it actually brings a lot to the manager’s table than what is actually expected. Often, startups stop taking performance analyses of the older employees because these individuals have proved their worth and importance over time. While a belief system is good for productivity, it often hampers the growth of the new employees. Here are some of the key reasons why performance evaluation is important for every company.

It lets the real performers stand out

Sharing frequent feedback is vital. Often, after the employees spend their time in an organisation for a while and get promoted higher up the ladder, they tend to stop contributing to the overall productivity. Regular performance evaluation brings out this fact and keeps them motivated to continue contributing towards the growth of their company. This can be used as an alarm for the old employees if, after a point, they have stopped performing but still occupy higher positions, blocking the way for the newcomers.

It sets learning examples

At times, startups need to notify the pain points of the employee, where they are lacking. Regular evaluation helps startups formulate their own performance matrix that will help them in the long run. A fool-proof performance analysis helps identify employees who are performing and those who are lagging.

It keeps your employees happy

Often, it is seen that the best performers speak less about their achievements unless someone points them out. At the same time, older employees with minimal contributions try to overshadow others, thus creating contempt among co-workers. Performance evaluation is an impartial way that brings out the best performers out of the shadows. It keeps the employees happy and satisfied with the work they are doing. They get a chance to speak about their contributions to the company in front of an impartial panel and hence stay assured that their growth in the organisation will be worth the contribution.

It maintains equality between all the employees

Performance evaluation brings a manager and an executive on the same table. At times, it happens that managers take all the credit from the juniors who have done all the work. This happens because a certain employee has set their credibility in the organisation after spending some time while others still need that time to prove their worth. Performance evaluation is also a time of leadership assessment and understanding the leaders’ capability of dealing with tough situations. This practiced impartially and brings a lot more to the table than which employee is worth the appraisal and who is not.

It brings out the start performers of the organisation in open

Star performers share a few certain traits. According to Kets de Vries, professor of leadership development, “Star performers of the organisations are super heroes as well as paradoxes. They can think long-term and execute well short-term, they take calculated risks and take responsibility for their actions, combine optimism with realism, have great tenacity and high energy. The list seems endless.” At times, in the daily rush of the office, these performers are often lost in the shadows doing their work. Performance evaluation brings out this bunch from the shadows and gives them exposure in front of the senior management, who later work towards grooming such employees.

It motivates the underperforming employees

It is often noticed that certain employees start underperforming after working for a while. The reason may not necessarily be that having spent a lot of time in the organisation they don’t need to prove their worth. Performance evaluation helps segregate these employees and find out the pain points that stop them from performing. It might be a capacity mismatch where an employee good at something else is working on something they don’t know about. By performance evaluation you can place the right talent required for the right job. This way, you can keep your employees happy and improve the productivity of the company.

When someone works with you, they believe in a fair practice and equal opportunity for growth. For a startup, you need to set criteria for performance evaluation that you can only learn from your experiences. A fair process of evaluation can set examples in the long run for you and the entire organisation. As they say, ‘An organisation can only grow when the employees with grow.’