Sample Job Appraisals
Performance Appraisals & Career Advancement
Every person has his own qualities and capabilities. It is his unique traits that differentiate him from the others. The recruiters must be able to determine the skills and abilities possessed by the individual candidates in their office. Performance appraisals rate employees on the basis of their individual and team performances.
The CEO of Hound.com, a Popular Job Site, A. Harrison Barnes states that performance appraisals are widely used these days by the associations and organizations to assess the performance level of its employees. This helps the candidates to advance towards their goals and objectives. The employees can thereby give direction to their individual performances and review their performance. The performance appraisal helps the candidates to bring about self introspection in their performance and find out ways to improve their performances in the future. The performance appraisal is a two way process that not only helps the candidate to excel in his career but also helps the company to achieve its organizational roles.
At Hound.com, we provide you with better insights into the process of Performance Appraisal, different kinds of approaches and methods relating to performance appraisal, sample forms for performance appraisal, software appraisals etc. we have also tried to study the current market scenario for analyzing the standards of global performance appraisal says A. Harrison Barnes. A well structured and formal performance appraisal helps a candidate to analyze his or her standards of performance in a better way. There are several popular methods involved in the process of performance appraisal that are carried out keeping organization goals in mind. They are as follows:
The 360 degree appraisal process enables an employee to receive feedback from his subordinates, managers, peers and customers about their performance. Peer appraisal helps an employee to determine one's own strengths and weaknesses, says A. Harrison Barnes the CEO of hound.com. You can create an appraisal form of your own and ask the peers to rate your current performance. Thereafter, you can analyze the summary of your reviews and get an idea about the present rate of performance. This helps to strengthen relationship among your colleagues. Performance appraisal can be measured with the help of parameters like Behavioral Observation Scale or Behaviorally Anchored Rating Scale.
Trait based systems are commonly used in business firms for rating performance appraisals. These are based on personality traits. Human personalities are static and cannot be changed at will. Though it is within the reach of an employer to alter an employee's behavior, any attempts of changing one's personality might not bear fruitful results says A. Harrison Barnes. The trait based system is said to be vague and unreliable as they are susceptible to office politics. The office politics provides a cover over the true performance of the candidates. This vagueness prevents the right candidate from getting recognized by the managers. Due to lack of precise behavioral information there may be rise in the favoritism claims.
Performance Appraisal Software is also used in some organizations. This is a tool that helps to organize the high performance value of the employees in almost no time says A. Harrison Barnes the CEO of hound.com. The performance appraisal software is very user friendly. The striking feature of this software is as follows:
The software helps you to reduce your time and other resources by up to 85 thereby enabling the managers and the HR to devote time towards other important issues too. It helps you to bring about qualitative developments in the field of employee appraisals. The performance appraisal software helps one to bring in the same targets and developmental activities with priorities in business.
It tracks and manages the entire appraisal system from the HR Control Centre. It helps to create large number of appraisal forms in a very short period of time. The performance appraisal software creates appraisals the way you want them to be says A. Harrison Barnes.
Basic objectives behind performance appraisals:
1) The employees of the company can get feedback about their individual performances; this helps them to move ahead in their career.
2) The management by making use of appraisals can identify the training needs of the employees.
3) Certificates and awards are given out to the employees who achieve organizational goals and targets.
4) The employees are motivated to achieve organizational goals in lure of incentives, increments, disciplinary actions and promotions.
5) The communication between the management and employees is enhanced.
6) The performance appraisal provides opportunity for analyzing organizational goals and development.
7) It helps to standardize selection procedures and policies concerning human resource for meeting the requirements of Equal Employment Opportunity.
About the Author
Elizabeth Martinez - Ph.D. - Organizational Psychology. Provides you with a deep level of insight into your career direction and career development.
Sample Job Appraisals
Employee Evaluation Tools
What A Nice Restaurant, How Much Is It Worth?
What a nice restaurant, how much is it worth?
We are all able to judge if a restaurant is “cool” or not, based on its location, its atmosphere, the people, the courtesy of the waiters, the wine list and of course, what we eat and what we pay for it. This article deals with a different type of judgement: what is the value of the restaurant itself? If You believe that Real Estate values depend on bricks and revenues, just pass on. For those interested in valuing intangible properties instead, just have a look. (The location is Rome in Italy but Names and Values have been changed.)
Introduction and approach
EqS Equity Studio was recently challenged to place a value on one of Rome's most famous restaurant, Marcello's. It is located in the centre of Rome, exactly where you would expect it to be. Believe me, its one of the best places You may want to spend an evening dining out or, if you can't afford it, just to have a cappuccino in its Coffee Lounge.
The first aspect when starting the job is defining what the value is. We came to the conclusion that Marcello's value is the sum of the three different values:
a) There is a value because in order to run its business, Marcello's holds an administrative license. That is, naked and with no goodwill, a first bit of value.
b) Then Marcello's has a value because it developed a Goodwill both as a Coffee Bar and as a Restaurant.
c) Finally Marcello's has a value because of its well known Trademark which captures people from all over the world.
We will not give Real Estate or Fixed assets appraisals: you do not need to read here to understand how to calculate these.
The Value of the administrative licenses
Marcello's operates in the centre of Rome, in Italy. To run its activity as Coffee Bar and Restaurant it needs an administrative license issued by the Rome Council. Marcello owns two licenses for the sale of food and beverages, both acquired from the previous tenant and then authorised by the local authorities. The first license permits the sale of food and beverages while the second license permits the sale of alcoholics liqueurs.
The value of licenses varies every year based on the market conditions. We have asked a local firm in Rome specialised in the sale of Coffee bar licenses to sell us a full license for the same district in Rome and we have been asked the price of € 120.000, which is one of the highest price in town. With this amount we can therefore acquire today a full license similar to those of Marcello' and use it in similar premises: we then value Marcello's naked licenses with no label or goodwill a total of € 120.000.
The Value of the Goodwill
When transferring a commercial license the seller and the buyer transfer the goodwill of the restaurant. There are various aspects that determine the value of goodwill: some are related to the location, other are related to the activity, other to the people.
The location. The centre of Rome was celebrated in the movie “La dolce vita” by Federico Fellini in year 1960. The movie introduced the usage of the word “paparazzo” and, although the film talks about the loss of values in a helpless moral atmosphere, it gave a tremendous appeal to all the places of the set. Rome' centre lost some of its appeal as a commercial district in the years 1990 – 2000 but has returned to be a place full of coffee bars and fashion shops in the last few years. Difficult finding a better location in Rome.
The activity. Marcello's is a glamour place, sophisticated, all new, high target, nice place to go. The Coffee Bar is full all day long, especially for breakfast, but never too crowded. No doubt that it is one of Rome's more successful coffee bars. The restaurant is not as well positioned. During our visit at lunch time we counted the people in the outside and inside: a terrible low occupancy rate at lunch time, better in the evening. The restaurant seems clearly not successful as it might be in such a famous district.
The people. Mr Franco Rossi, the current owner and manager, acquired Marcello's only five years ago and did a great job both in terms of place and revenues. There are 40 people working at Marcello's and the impression attending the site is that they are quite a lot. The service level according to Rome's standard is good but the location of this restaurant might require a higher class: it's a bit noisy and waiters sometimes talk to clients as they were friends and that might not be what we would expect from a 5-stars (and expensive) place.
Valuation methodology, benchmarks and result
We value Marcello's goodwill with the market method. We have therefore investigated current market prices for coffee Bars and Restaurants in Rome in order to derive a benchmark to apply to Marcello's taking into account all the peculiarities of the target.
We analysed a wide number of sale offers relating to “Bar” and “Restaurants” in Rome, both issued on newspapers and offered by local agents with whom we discussed, we consulted the official price list issued by trade agents and we also derived some price multiples from transactions recently completed.
The price range varies depending on the location. Taking into account only top tier locations, we derived current market parameters based on: price per available seat, price per square meter, price to annual turnover vat excluded, price to annual turnover vat excluded in top location, price to Sales, Price to Ebitda.
We then applied our sample multiples to Marcello's data, thus obtaining a valuation of Marcello's goodwill of € 6,5 million.
In our valuation the ratio Price to available seats and the Price/Ebitda multiple result to be very high, but we consider this as the additional value of being in a place known all over the world.
Our valuation is on a stand alone basis and considers the input data as they were given to us by the client. In a sale auction, including the higher potential value that a buyer might place on this location, the final price could clearly be different.
Nominal Price and PV
When discussing about the Value of a Coffee Bar or Restaurant we must keep in mind that the nominal Price of a transaction differs from the Actual Price because of the long terms of payments. It is common practise in this industry to pay cash a percentage of some 20% of the agreed Price and pay the 80% difference in monthly instalments up to 5 years. At a 7,50% WACC the current value is therefore 86,54% of the nominal price. Applying this rate to Marcello's we obtain: € 6.500.000 x 86,54% = € 5.625.100
Mr. Rossi and the value of the People
We do not know if Mr. Franco Rossi and his staff would continue running Marcello's should the place chance owner. Although he is an entrepreneur and a manager and he is not a celebrated chef, we still consider that part of Marcello's success relies upon the people that is running it today. We would therefore apply a rebate of 20% to our valuation should the people walk away.
The Value of the Marcello's Trademark
Object of the Appraisal
We now come to the most challenging part of the job: what's the value, if any, of a celebrated label such as Marcello's? The object of the valuation is the economic content that a buyer may derive from the usage of the Marcello's Trademark in the economic environment in which it operates and under the jurisdiction on the Italian patent law.
Testing the Value OUTSIDE the context in which the Marcello's Trademark is currently used
There are three basic questions for an initial assessment of the value of the Marcello's trademark:
1) The first question is: does the Marcello's trademark or brand name differentiate the product or service with which it is associated? Is it unique enough to differentiate the product/service? When applying this question to Marcello's we might want to discuss whether the Marcello's trademark has a premium appeal on Rome's clients compared to other coffee bar and restaurants. We would believe that Marcello's has indeed a upper class positioning among coffee bar and restaurants in Rome, but we cannot be sure that this is due to the Marcello's trademark itself and not to its unique location, to its sophisticated look and top class service.
2) The second question is: would others be interested in acquiring and using the Marcello's trademark in a different context? Would the Marcello's label allow the success to a second or third Marcello's coffee shop located elsewhere in Rome or elsewhere outside Rome? We doubt this: we do not envisage the opening of a Marcello's coffee shops chain simply based on the Marcello's label. Besides this, there may be coffee bars and restaurants with the same name elsewhere with no links to the Marcello's restaurant located in Rome.
3) The third question is: would a third party pay Marcello's in Rome to license or use the Marcello's name, either to duplicate its product or to extend its trademark into other products? We doubt this: Marcello's is not a concept, there are no particular values associated to the name and the trademark legal protection is weak: we do not see potential usage of this brand name in other products paying royalties to the Marcello's company in Rome.
In conclusion there is no evidence of value of the Marcello's Trademark outside the context in which the Marcello's Trademark is currently used in Rome. So let's focus on the business as it is.
Testing the Value INSIDE the context in which the Trademark is currently used
The valuation of a Trademark is most effected by the context in which it is valued and the value placed on a trademark derives from the additional benefit that it may bring to the buyer based on the potential synergies. Marcello's has filed the trademark “Marcello's” to Rome's Chamber of Commerce. This registration protects the company against the improper use of the Trademark relating to the coffee bar and restaurant activity in Rome. The filing allows a safer brand usage by the company but has no value outside Rome and in other product's usage.
Basic considerations when applying the usual trademark valuation methods to the Marcello's Trademark are:
1) The cost approach: the Marcello's Trademark was clearly not created by the company and no apparent costs were incurred in adopting this label. The competitive advantages of the Marcello's coffee bar are strongly related to its excellent location and we doubt that these would be maintained should Marcello's move to a less interesting location in Rome. We therefore consider the replacement value of the label not relevant.
2) The income approach: Marcello's price list is expensive but not more costly than other upper segment coffee bar and restaurant in Rome. Apparently the label is not premium price. We also doubt that the company may earn a significant stream of royalties when selling the usage of the Marcello's label to other coffee bar or restaurant in Rome.
3) The market approach: we believe that in restaurants the value of the label is strongly dependent on the chef and the people running the restaurant rather than on the Marcello's label. Should the chef and the people move elsewhere the additional value of the label may disappear leaving the only value of the location. We therefore see no relevant market value in the Marcello's label without taking into consideration its people and its location.
4) The relationship approach: the issue is if the Marcello's trademark allows a higher customer retention rate and a higher attraction rate compared to a new label. This aspect would need an in-depth customer analysis. During our visit we derived the impression that Marcello's customers are attracted by the location rather than by the label itself.
A final key issue related to the valuation of the Marcello's trademark is the fact that Marcello's is a pure label and not a brand asset concept. We may explain this aspect with two extreme comparisons: MacDonald and Harry's Bar.
Mac Donald's is not a naked trademark, it is a corporate concept represented by a label. The concept includes precise procedures, consistency of experience in quality and service worldwide, strong Trademark legal protection, location selection, marketing approach. Mac Donald is not a label, it is a concept. On the other end of the market we might mention Harry's Bar by Arrigo Cipriani. Founded in Venice, Harry's Bar is not only known because of Hemingway or the Bellini's cocktail (which may be similar to hundreds of similar coffee shops and restaurants) but because it developed a top class concept. The same customers attend Harry's Bar in Venice, in New York and elsewhere with an extremely strong customer's loyalty and retention. It is a club that everybody would love to be part of.
Marcello's is a great place as a coffee bar and a great location for a restaurant. However when applying best practise methodologies to assess the value of its label we end to the conclusion that the value of the coffee bar and restaurant mainly relies upon its location and its people and no relevant additional value is directly dependent on the naked Marcello's trademark.
Conclusions
Marcello's is a glamour place, sophisticated, all new, high target, very cool. We derived a stand-alone market value based on the value of its Naked administrative license and a Value of the Coffee Bar and Restaurant Goodwill while we doubt that Marcello's Trademark may have an additional Value in a different context.
As restaurant business is a people business it is crucial to the valuation that the current manager and his staff should continue the activity or not and we have considered that a portion of Marcello's goodwill will simply walk away together with the manager, but this aspect should be further investigated in a real transaction.
Cesare Carbonchi, President EqS Equity Studio in Milan, Italy
About the author: Mr. Cesare Carbonchi is an international investment banker with large European and US experience in top tier institutions and with CEO experience in leading corporations. Cesare Carbonchi runs EqS Equity Studio in Milano, Italy.
About EqS Equity Studio: EqS Equity Studio is an independent corporate finance boutique that provides financial advisory and transaction services to corporate clients relating to their business in Milano, Italy. See website at www.eqsstudio.com
About the Author
Mr. Cesare Carbonchi is an international investment banker with large European and US experience in top tier institutions and with CEO experience in leading corporations. Cesare Carbonchi runs EqS Equity Studio in Milano, Italy. EqS Equity Studio is an independent corporate finance boutique that provides financial advisory and transaction services to corporate clients relating to their business in Milano, Italy. See website at www.eqsstudio.com