Critical Facts to Conduct Employee Performance Reviews

Employee performance reviews get a bad rap. They can be time-consuming, nerve-wracking and simply ineffective at truly measuring an employee’s performance and contribution to a company. But that might have more to do with how they’re usually conducted — once a year, crammed in before the holidays and using one-size-fits-all forms to evaluate everyone from warehouse workers to marketing managers.

The truth is that employee performance reviews can play an important role in helping you lead and cultivate a happier, more motivated staff. Here are five reasons why your small business should have a performance review process.

1. To set new goals:

It’s no secret that many small business employees stay busier than their large company counterparts — wearing many hats is often one of the draws of working for a small business. But often those added responsibilities don’t leave time for big-picture planning. Having a formal performance review process in place will allow you to take the time with each employee to focus on growth. How do they want to grow as an employee in the next year? And how can they contribute to the growth of the company?

2. To assess achievement of those goals:

A common complaint about employee performance reviews is the lack of follow-through. It’s one thing to set goals; it’s another thing to achieve them. Regular performance reviews throughout the year can help you and your employees stay on track with achieving whatever performance goals are set. And if your review process finds that you and your employees aren’t working toward those goals, you’re also one step closer to finding out why.

3. To address problems:

It’s a natural tendency to want to avoid confrontation, but if an employee isn’t performing well, it’s in your company’s best interest to address the problems. Having a regular review process in place can provide a structured and confidential way of addressing problems with performance.

4. To acknowledge a job well done:

As a small business owner, it can be easy to forget to praise individual employees for doing a good job. You’re focused on other aspects of running your business and you expect employees to do a good job. But, that praise is important to them, and receiving strong marks on a performance review can motivate them to continue doing great work.

5. To gather employee feedback:

An effective performance review isn’t one-sided. It should be an honest, two-way conversation that provides plenty of opportunities for the employee to reflect on his own performance, as well as that of his boss and the company as a whole.