Generally, you want to conduct formal employee reviews once per year.

Both managers and employees typically approach performance reviews with a lot of anxiety.

Managers tend to put off preparing for performance reviews because they can be an emotional issue. They also tend to rush through reviews because they are not comfortable giving them and can’t wait to get them over with.

This isn’t fair to employees, and is bad for morale even if the overall performance is rated positively or above average. A quick, sloppy employment review sends a negative message. Those being reviewed will feel that they are not important to you—that you really don’t care about them.

Conducting a good performance review requires careful preparation in two different ways. You need to decide what you are going to say, and how you are going to say it.

Performance Review Criteria

Large companies generally have highly specific criteria for reviewing the performance of employees. Small companies often let individual managers determine how they will conduct their employee reviews. The problem with this haphazard approach is that employees will discuss their reviews with one another. Unless your firm has developed a consistent review process, some employees will feel that they have not gotten the same or as fair an appraisal as others.

A simple approach to performance review criteria is to primarily review an employee’s work based on quantity and quality relative to the job requirements. Secondary considerations might be attitude, willingness to help other personnel with their work when appropriate, and ability to get along with others. Another approach is to set a standard “laundry list” of factors to consider in reviews.

Whichever method you decide works best for your company and your employees, discuss it with your managers and make sure they are using the same performance criteria consistently.

Performance Ratings

You should rate employee performance and do so in a consistent manner. Top performers like to hear affirmations from management regarding their exemplary efforts. Weak performers need to know that their performance requires improvement. In addition, you may want to couple performance ratings with appropriate salary increases and, if applicable, performance bonus awards.

Putting time into the employee review process may seem tedious and perhaps not necessary from the standpoint of the entrepreneur, but from the perspective of the employee it is a very important time. It is a time not just to hear whether they will get a pay increase, but also to hear whether the firm values them and their work. Employees have a lot at stake emotionally at these meetings and entrepreneurs need to be cognizant of that.

Takeaways You Can Use

  • When it comes to performance reviews, what you say is as important as how you say it.
  • Use the same performance criteria consistently to promote fairness and accuracy.
  • For employees, performance reviews aren’t just about pay increases; they’re also about feeling valued.