Evaluating Performance: A Review of the Basics

By Alex Fischer

Evaluations are excellent times to open the door for structured discussions of individuals, their place in the business and how they can improve.

As a small business, one of your distinct advantages over your larger counterparts is your ability to maintain successful internal communication. You can keep track of how your employees are doing on a more personal level, and you can receive personalized feedback from them in return. But day-to-day familiarity shouldn’t take the place of regularly scheduled performance reviews to document skills, goals and company expectations. Evaluations are excellent times to open the door for structured discussions of individuals, their place in the business and how they can improve.

Keep these main areas in mind: accuracy, timeliness, productivity, leadership, technical abilities, communication and adaptability.

Before you start scheduling your first reviews, it's a good idea to review original job descriptions for each employee. Once you’re refreshed on the particular functions of the job, you can concentrate on the specific individuals in each position. As you mentally prepare, keep these main areas in mind: accuracy, timeliness, productivity, leadership, technical abilities, communication and adaptability.

General Tips for Successful Reviews

• Strive for consistency and fairness.
  Use the same, standard form and process for everyone in the company, including management.
  
  
• Seek input from other others when appropriate.
  Ask other employees about an individual, or customers and clients. Done tactfully, this will also show clients/customers that you care about improving performance.
  
  
• Allow plenty of time to prepare evaluations.
  Don’t leave reviews until the last minute, and don’t do them at the end of a frustrating day. Give every employee the benefit of the doubt by offering them a complete and balanced review.
  
  
• Conduct formal reviews at least once a year.
  If you find that your annual review meetings run over an hour and a half, consider it the signal to do them more often.
  
  
• Informal reviews should be done throughout the year.
  Communicate to employees when they are performing well or poorly. Keep notes of project successes or angry letters.
  
  

It’s a good idea to conduct salary and performance reviews separately.

It’s a good idea to conduct salary and performance reviews separately. Even if only spaced apart by three months, pulling them apart will help your employees remain focused on their performance evaluation rather than allow them to get distracted by the money issue. Also, tying performance and salary reviews together gives the impression that performance and salary are directly connected, whereas other factors—such as profits and budgets—are inevitably part of the equation.

If one of your employees comes up short of expectations, the most important thing you can do is be honest and direct.

If one of your employees comes up short of expectations, the most important thing you can do is be honest and direct. Don’t beat around the bush and don’t be vague or general. Likewise, don’t be rude or demeaning. Instead, be clear and specific. Give examples of the areas you’re concerned about, in a way that paints a picture that the employee can relate to and understand. Keep notes throughout the review process, and don’t write anything you wouldn’t say. This is a time for honesty and open dialogue.

Encourage employees to evaluate their own performance over the course of the year.

If you’re the only one filling out the review fields, you’re missing out on a valuable source of feedback—from the employees themselves. First, encourage employees to evaluate their own performance over the course of the year. Invite them to list their strengths as well as what they think they can improve on. Self-evaluations are a great opportunity to make sure that you and the employee are on the same page in terms of expectations and goals. Second, consider having your employees give an anonymous review of management. Of course, this won’t be feasible for all small businesses, but at the very least, make it clear during review time that you want feedback on how you’re doing as well.

Employees may not initially see the importance of annual reviews. Prepare for their reactions by explaining how valuable evaluations can be to both the individual and the company in advance. With honesty and structure, these discussions can be the best springboard for a closer-knit team and higher employee satisfaction.