The ins and outs of employee performance reviews

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When you run a small business, you’re involved in your company’s sales, accounting, marketing, and human resources, among other things. Being responsible for human resources isn’t just about hiring and firing people, although those are large parts of the role. It’s also about managing the people who work for you while they work for you.

Conducting regular employee performance reviews is part of managing your workers. While performance reviews may seem daunting, if you have a plan for doing them and focus on rewarding great employees while helping less successful employees achieve more, you’ll find the performance reviews not only motivate your employees, they enhance your business and decrease employee turnover.

Here are some tips on conducting productive performance reviews.


Do them frequently and regularly

Once a year isn’t regular enough because employees will go for too long without having a sense of how well they’re doing, or what areas they can improve in. By the time you get around to discussing an issue, it’s likely gone on a long time.

Instead, have more frequent discussions with your employees and set up shorter-term goals. Conducting reviews every two to three months keeps your employees informed about their performance and gives them time to address any feedback you give them. That helps them feel secure in their role. It also gives you a chance to see how employees view your business and make sure you’re all on the same page about expectations.


Involve the team – 360° feedback

As a business owner, it’s very unlikely that you have the same quality of day to day interactions with all your employees as their direct peers and coworkers.

Involving other staff who work alongside an employee can give that much-needed insight into behaviours, leveraging strengths and uncovering blind spots for development and progress. This can be done either anonymously or openly but will provide valuable dialogue fodder around performance opportunities and successes.


Automate the cycle

Making performance reviews happen is easier said than done, if there’s not a rigid process in place it’s more than likely one of those things getting lost in the whirlwind of business. By automating this process you can improve the overall effectiveness and quality of performance reviews.

Employee review software programs such as Lattice can take out all the manual preparation of recording and collecting performance feedback data and thus speed up the review process.

Systemising your employee review process not only allows you to gain powerful performance insights more quickly but will provide a centralised and transparent record which can be used to protect your company from potential legal risks in the future.


Be present

The majority of workers want to do a good job and want to learn where they can improve. Your performance evaluations are important to them and also to the future of your business. Show your employees you care about them and their growth by being dedicated to those conversations.

Don’t check your email, texts, or voice mail while conducting an evaluation. Make sure other employees know not to disturb you during this time. Also, make sure the focus stays on the employee in front of you, not on other employees and their performance, or on office drama. This performance evaluation should be as important to you as it is to your employees.


Be consistent and flexible

Owning a small business means you likely have personal knowledge about some or all of your employees.

That’s why it’s vital you be consistent in how you evaluate employees. If one employee would receive a special bonus for meeting her sales quota, all employees should receive that bonus. No one should receive special treatment just because you know more about their personal circumstances.

That said, it’s also important to be flexible. A person whose focus is sales can’t be measured on the same scale as someone in marketing. They each contribute differently to your bottom line but still have a vital part in the success of your business. Your reviews need to take into account each employee’s role within the company, what their goals are, and how effective they are at getting their job done in their department.


Final thoughts

Performance evaluations are vital for your small business. They help you keep communication with your employees and monitor how well your employees are meeting their goals.

Even the best employees have issues that arise once in a while, and conducting a regular performance evaluation helps identify those issues early and develop a plan for addressing them, preventing minor troubles from becoming insurmountable.

Finally, by rewarding your great employees during performance evaluations, you can motivate them to achieve their goals and you can decrease turnover rates.


Quantum Advisory is a business accounting and advisory firm that empowers family businesses to step up, scale up and sell up. Visit or call 1300 700 711 and start the journey.