The Business Owners Guide to an Effective Employee Performance Review

As the end of another year draws near it may be a good idea to do some extra reflecting on the performance of your business over the past twelve months. Taking time to reflect on what went well, what could have gone better, and potential areas of improvement is important for every business owner to do. One major aspect of this reflection involves assessing how your workforce performed throughout the year.

Performance reviews can be a stressful topic for some because it usually requires a very honest conversation be had. Both the owner or manager and the employees within the company have to be honest with themselves about their performance. This means recognizing both strengths and weaknesses. But performance reviews should not be pushed to the side just because they require a little extra time reflecting. Most of the time these conversations can lead to growth for both parties. As we wrap up this eventful year, put some thought into your business and your workforce. Although it may be another addition to your “end of the year to-do list” an effective employee performance review can lead to positive outcomes for managers and employees; therefore, benefitting the entire business.

What is a Performance Review?

In order to make sure that a performance review is done effectively it is important to define exactly what it is. A performance review is an assessment where a manager or a member of the management team evaluates an employee’s performance This assessment usually reviews the strengths and weaknesses that the employee has relative to their position on the team. A performance review also includes a discussion regarding potential opportunities and sets goals for the future.

Documentation is a key part of a performance review. Not only do you want to document the details of the conversation such as when it takes place, who is involved, and the topics discussed. But, it is a good idea for both parties to be prepared with documentation to back up their various talking points. This documentation could include stats from a project that was worked on, it could be a certificate from a completed course or even goals from previous performance reviews that you have accomplished. Documentation helps to keep both parties on the topic of the individual’s performance, but it also ensures that both parties remain honest.

What Should You Include in a Performance Review?

As mentioned above, a performance review usually includes an evaluation of the employee’s role and how they have done throughout the year. Typically, this includes discussing the various things that they have done well and the positive aspects that they bring to the team. Likewise, you also will need to touch on the areas where you feel they can improve, or discuss some of the hurdles the employee had to overcome in the past year. It is best to have concrete examples when discussing both of these topics. This allows for more understanding on the employee’s end and helps the manager stay away from blanket statements that will not lead to any improvement.

Another aspect of a performance review is setting goals for the year to come. To make goals realistic, do your best to incorporate the employee’s strengths and weaknesses into specific goals. This sets the employee up for the greatest amount of success. Keep in mind that this a two-way conversation, so the employees’ point of view is just as important. Make sure they understand that their thoughts and opinions are welcome. Let the employee voice where they see they can grow within the company and how they can best achieve this. As the owner, this gives you insight into what their interests and motivators are.

How Often Should Performance Reviews Take Place?

Unfortunately, there is no answer that will work for all businesses when it comes to the frequency of performance reviews. This depends a lot on the business and specific industry you are in. The timing of performance reviews can play a big role in whether or not they are carried out consistently. Try your best to keep performance reviews out of your busy season. By doing this you eliminate any excuses or possible reasons to not hold the performance reviews. For some, quicker conversations that happen throughout the year may be better. But, for other industries, it may be better to have annual reviews that are much more detailed conversations. Overall, consistency is key. Make it a point to hold these reviews whenever it is best for your team and stick to the schedule you land on. Consistent feedback creates the opportunity for consistent improvement.

Why are Performance Reviews Important?

Performance reviews may not be something managers or employees necessarily look forward to, but they can have a lasting impact on your business as a whole. If done effectively, performance reviews create an environment that welcomes communication. Additionally, the goal-setting aspect of these reviews can showcase to your employees that the management team wants to see them grown and build on their past accomplishments.

Performance reviews can also be a great learning experience for the management team. As you begin to have meetings with your team, make sure to note any consistencies you hear – this may be an area your company excels at. Or vice versa, it could be a common struggle that multiple employees work through. If so, it may be time to offer assistance or put in a plan to help them. Understanding the employees point of view allows the owner and management team to put them in the best position to be successful – therefore creating more productivity for the business.

Focus On Your Business

Focus OneSource offers human resources outsourcing to help our customers feel confident about their policies and procedures. Keeping our customers compliant is our top priority. Business owners who outsource their human resources needs can focus on growing their business with the assurance that their HR needs are being taken care of.

Focus OneSource is Iowa’s premier PEO. Our dedicated team has been helping businesses across Iowa succeed for over a decade . As a Professional Employer Organization (PEO), we help business owners gain access to a rich suit of benefits at an attainable price point and monitor compliance with human resources practices.

Contact us today to learn how we can help your business to the next level!