Performance reviews may not be the most glamorous part of owning a small business, but they are a necessity you cannot afford to ignore.
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One of the most important reasons to conduct performance reviews with your employees is a legal one. Performance reviews can provide a legal basis should you need to terminate an employee at a future date. Unless you can document a history of negative performance, the employee is free to speculate about the reason behind his termination – often with the help of his attorney.
There is also a much more benign reason to conduct performance reviews of your company's employees. Though it may seem like a waste of valuable time, a well-designed employee assessment program can actually improve your company's effectiveness and result in a healthy bump in your bottom line.
It's relatively simple to implement performance reviews. Here are some tips to help you get started:
1. Establish a process
The first step toward implementing performance reviews is to establish the process by which they will be conducted. Who will conduct the reviews? What will be the review criteria? How often will they be conducted? These questions (and others) will need to be answered during the process development stage.
One of the keys to developing an effective process is to maintain a uniform standard across the board. This means that every employee should be subject to the same basic evaluation standards. Non-uniformity opens the door for charges of favoritism and may even nullify the benefits you had hoped to achieve.
Also, a process cannot be effective unless everyone in the organization knows about it. So it's your job to make sure your employees understand the process before it begins.
2. Involve your employees in the process
At some point, your employees should be asked to give an honest assessment of their own performance. By having a voice in their performance review, employees feel valued. If they feel valued, they will eventually start to look at their performance review as a joint effort to help them live up to their potential in your company.
Some employers have doubted the benefit of self-assessment techniques, believing that employees will be unwilling to identify negative aspects of their own performance. However, most of us are more critical of ourselves than we are of other people. It shouldn't surprise us, then, that most employees will provide an honest assessment of their performance.
3. Be positive
Employee performance reviews are an ideal occasion for employer-employee communication. Sometimes we tend to think of the communication that occurs during performance reviews as primarily negative, i.e. a discussion about those things the employee is doing wrong or needs to do differently. However, that doesn't have to be the case.
A good performance review is one that provides as much (or more) positive employee feedback as it does negative. It's your opportunity to let your employees know that their hard work and dedication has not gone unnoticed. Knowing that they make a difference is often all the reward an employee needs to be willing to go the extra mile for your company.