As a consultant to small businesses, I have talked to a lot of business owners recently that stopped giving performance reviews over the last couple of years. Some stopped when they could no longer afford to give raises, others have just been inconsistent. Small business owners need to understand the importance of reviews and make sure they have a process in place that is easily repeatable.
How can I find time to do this and run my firm? One of the biggest values you get out of a review is having that one-on-one candid time with a team member that can help you both get on the same page. In a small business every team member means a lot to the bottom line.
Establishing a Foundation
The performance review process has a tremendous value. This is an opportunity to provide recognition, work on a development plan, and set goals with your team members.
Pick a plan and stick with it. You can do reviews annually, every six months, every month, whatever you need to do to be consistent. At my company, ERG, we do reviews every 90 days. This gives us the ability to get out of the hectic daily routine and talk about the big picture.
Don’t find an excuse to not give a review. The biggest mistake I see companies make is to tie raises to a performance review. This means that if you cannot give raises, you probably won’t do the review. Make the two separate and PLEASE make sure that you are providing feedback in an ongoing basis so the review is just that; a review.
Learning the Skill
Learn how to do a proper review. This is why I suggest reviews on set dates instead of anniversaries. It is easier to do a refresher on the proper review process one time before a series of reviews than before every review over the course of the year.
Make sure that the questions on the review align with the mission and values of the organization. This helps you keep the mission front of mind and allows your employees to do the same.
If you have managers that will be conducting reviews, make sure you train them on how to do reviews and hold them accountable to get the job done. You might be missing out on the development of a key employee if you aren’t consistent with this process.
Staying Out of Trouble
Review how the job is being performed, not the employee personally. The factors you are judging this employee on must be relevant to the job. Inform employees of the standards you are holding them accountable to and how you came to the determining factors in their performance rating.
As an employer, you need to have a standardized, well documented procedure that is consistent across the board. If you put an employee on a performance plan and they believe they are not the only one that underperforms in the areas you cite, it would behoove you to have performance reviews with other employees documented that prove otherwise.
Keep great records of your reviews. We recommend retaining for seven years as a best practice but the minimum is one year after creation of the document (Title VII, ADEA, ADA, and GINA). California requires retention of 3 years after termination of employment (CA Labor Code 1198.5. FEHA).
You should let your employees comment on the evaluation and get their feedback on the review. Have the employees sign off on the documentation (they don’t have to agree) to acknowledge that they have seen it. You should have the review process outlined in your handbook to communicate when it will happen and how.
Don’t miss out on an opportunity to identify issues with an employee before a major problem develops. You can increase retention, improve employee development, and get more out of your team by taking the time to analyze what they are doing and how they can improve.
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Written by ERG Payroll and HR