I recently helped a major cabinet manufacturer conduct a survey
of its 600 dealers. The 30-question survey, conducted by the
company’s sales team, garnered an incredible amount of valuable
It also underlined several areas of general business management
that need lots of improvement things like the lack of an overall
business plan; no monthly or annual budgets; no monthly financial
reporting; no policy and procedures manual; no job descriptions and
no annual performance evaluations with employees.
Everyone wants and deserves
to know how they’re performing in their jobs. As kids, our report
cards told us where we were doing well and where we needed to
improve. The performance evaluation does exactly the same
Once our employees learned that the twice-a-year sit down we did
wasn’t going to be a kangaroo court where the boss beats up on the
employee, but rather an opportunity for both sides to discuss in a
constructive manner any and all issues, they learned to love them.
They looked forward to them.
From many years of experience and literally hundreds of
evaluations, I can promise you that employee productivity will
improve, morale will improve, mistakes will be reduced, customer
service will improve, teamwork will improve and everyone will enjoy
the work environment more.
Too many small business owners see the review as an opportunity
to criticize the employee’s performance rather than improve it.
Certainly, negative comments on past performance may be involved in
the review process. But, the intent of any criticism should be to
improve future performance. Everything you do in a performance
review is a means to improving performance.
Now, a lot of people like to tie the wage and salary review in
with the performance review. I don’t. If you talk money at each
review, employees will be more interested in that than they will
the overall performance review. You’ll be going through the
positive and negatives and making suggestions for improvement, and
all the employee will be thinking about is, ‘how much raise will I
get this time?’ Keep the two separate.
Another suggestion: Don’t do wage reviews exactly at the same
time each year. It becomes expected. Vary the length of the time
and keep your employees guessing a little.
Define the Process
Good performance reviews
don’t just happen; they evolve, as a result of a well defined
review process. The basic components of a successful review process
- Goal Setting. Working with the employee, you must establish,
and agree upon, applicable goals. These goals should be developed
as soon as employees are settled in their new job. Then they should
be updated as necessary.
- Writing Performance Expectations. You must have written,
meaningful standards by which to measure the performance.
- Creating Critical Events Memos. During the course of each day,
week, month and year, there will be things that you should document
about the employees performance. These may consist of good and not
so good activities. Make notes and memos and file them in the
employee’s performance review file. At review time, pull out all of
your notes and format for the review.
- Conducting the Review. At last, the main event the time when
you compare actual performance with expectations and goals. This is
the time when you should start forming new goals and expectations
for the next six- to 12-month period. Remember that the reviews are
intended to motivate the employee to improve their performance in
the upcoming period.
- Scheduling the Follow-Up Review. This should be held quarterly
or semi-annually if the situation dictates this. If there are some
serious concerns and areas to be improved, you may need to meet
weekly or monthly to review progress.
Following are guidelines for providing effective performance
- Hold the review at least once a year as close to the same time
- Schedule the review in advance, giving both parties time to
prepare. Go off site if you expect the review to be
- Prepare for the review with the same thoroughness as you would
for any important meeting. Remember, reviews are benchmarks in the
- Begin each review with a generous helping of compliments,
citing specific accomplishments of good work. Reinforce the intent
of the review early. This will improve the employee’s
- Evaluate the employee based on the past year’s performance, not
just the recent past. We’re talking careers herenot just
- Back up subjective comments with objective facts and stories.
These will be extracted from the critical event memos you’ve filed
in the personnel file.
- Don’t forget that this is a performance review, not a character
review. Keep personalities out of it!
Not all reviews will go well. Sometimes it may be you, other
times it may be the employee. Some employees don’t take
constructive criticism well even when it’s well presented. If you
have to schedule another sit down to try and improve the situation,
Ask the employees how they feel about the review. If the
employee is visibly upset and goes away angry, the review was a
failure. However, it was a success if they go away with new
incentive and motivation.
At our business we did a double evaluation, with the supervisor
and the employee completing identical evaluation forms. It rated
the employee in 11 separate areas. At the sit down, the two
evaluations were compared. It always amazed me how close the
supervisor and the employee ratings were.
You owe it to your employees, your company and yourself to make
regularly scheduled performance evaluations part of running your
business. Do them well and watch the productivity, efficiency and
work environment improve.