Measuring performance is a pivotal move for any organization, especially for those companies who have collaborative and self-managed teams. However, assessing individual performance in a dynamic organization like these isn’t the same as the stereotypical 9-5 supervisor-managed style of company. Performance reviews can be strenuous enough as it is for many employees and those who conduct the performance appraisal, but it gets a bit more complicated when there’s no true supervisor in a self-guided team. How, then, do you evaluate the performance of your employees in a dynamic organization?
Measuring Capability vs. Ability
Not frequently discussed when professionals talk about performance reviews, the differences between capability and ability are crucial to accurately assessing an individual’s performance… They are very different. According to John Clifford, Senior Fellow/ Agile Practices Lead at Construx Software and instructor for University of Washington’s PCE Program, ability is defined as the innate talent, aptitude and intelligence an employee has. Simply put, this is your team’s capacity for growth and professional development in their position. Capability, on the other hand as Clifford explains, is the culmination of knowledge, gathered skill and experience accrued over their career.
“We should hire employees with great ability and then endeavor to continually increase their capability so they they can grow in their careers while increasingly contributing to the organization’s success over time. A good performance appraisal process should identify whether performance issues are related to ability or capability, to guide us in terms of effective corrective actions.” 
When evaluating your individual’s performance, determine whether it’s an abilitydeficiency or capability shortfall. If it’s a lack of ability, then a change of role is ideal; a capability deficit would best be addressed with additional training.
Team Performance Relies on the Individual
Measuring individual performance is difficult, yes, but it’s vital to understanding team dynamics and collaboration. It’s organizational psychology’s and organizational behavior’s most crucial dependent variable. So measuring individual performance is the fundamental building block – a necessary piece of the performance puzzle – to determining if you need to rearrange teams, reassign tasks, or assess training programs.
For a dynamic organization that has self-governed teams, consider using a 360-degree review. Because it takes input from peers, supervisors and the employee themselves, it gives a well-rounded perspective of the employee’s performance. In a previous post, we noted:
“The goal of a 360 degree feedback isn’t to punish. It is an opportunity to thoroughly examine and improve the performance of your team on an individual level to help the group succeed. These appraisals give employees ownership of their work and review. By working with employees on development plans, organizations hold their workers accountable for their performance.”
Do I Need to Give a Performance Appraisal?
Honestly, yes. Even in unique work environments, giving employees a performance appraisal is still a necessary means of assessment. How you choose to impartially evaluate your team’s performance is your decision. Currently, however, only 45% of organizations use objective measures of potential to help develop succession and training plans, and only half of companies use talent metrics to prove ROI. These metrics should be the building block of the performance reviews so you can improve performance:
- Quality of Work
- Employee Efficiency
- Training Program Effectiveness
- Individual Employee Goals
Even a work environment in which the employees aren’t necessarily guided by an immediate supervisor needs performance appraisals – arguably more so. Because Team performance relies so heavily on individual performance, it’s crucial to understand separate developmental abilities and the need to expand capabilities. By using a 360-degree review, you can accurately assess employees in your dynamic organization from all vantage points. They don’t need to be a stressful event, but they are necessary. Choose your evaluation methods wisely.
Bio: Chris Arringdale
Chris Arringdale is the Co-Founder and President of Reviewsnap, an onlineperformance 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.
 – Contrux – Performance Appraisals in an Agile Organization
 – Reviewsnap – How Starting a 360 Degree Feedback Process Improves Pe...
 – CEB – 2014 Global Assessment Trends Report