Establish a Fair and Accurate Employee Review System

Conducting employee reviews is a task that many business owners and managers dread, especially if they have yet to develop a sound system for conducting those reviews. However, a practical and well-designed employee review system is a vital element to attract, retain, and encourage top talent in this competitive marketplace.

Here are 10 tips for creating and implementing a fair, accurate, and discerning employee review system:

1. Write it down. When creating a formal appraisal system, everything should be documented. Specifically, your system should provide supporting documentation for any actions that may ensue. Without a written record, the fairness and relevance of your evaluation may come into question. Read Performance Reviews: A Guide for Managers for additional pointers on this topic.
2. Be focused and clear in your purpose. The purpose of an employee review is not to mete out punishment or to merely avoid lawsuits. It should act as a solid and fundamental method of communication for you and your employees; it should function as the yardstick by which you set common goals and measure progress.
3. Keep it simple. Keep the process and the paperwork as simple as possible. A basic and standardized evaluation form can have several advantages, such as greater uniformity among reviews. The forms, like their function, should be direct and on point.
4. Be flexible. Conversely, rigidly maintaining a uniform system of appraisal does not work for every employee, every time. Some employees — especially in small businesses where people tend to wear many hats — possess unique competencies that may not be covered on your stock evaluation. Have a system in place to commend and critique any particular or specific qualities and accomplishments of your staff.
5. Solicit feedback. Employee feedback during the review process is as important as the review itself. Moreover, you should let them play a hand in how the review will be conducted. Ask your employees ahead of time to list their strengths, weaknesses, and goals for the coming year. During the review you can compare notes. This element of the review allows you to see not only how your employees are meeting your goals and expectations, but also how their goals and expectations match with yours. Also read The Benefits of Employee Self-Reviews for some helpful advice on this topic.
6. Encourage self-evaluations. Exhorting self-evaluations also encourages the person being evaluated. It offers your employees a chance to review the quality of their work, to highlight the projects or responsibilities of which they are most proud, and to reflect on mistakes made and lessons learned.
7. Set realistic standards. Let's face it, if you're the business owner, you're probably going to work night and day to make sure your business succeeds. It would be exceptional to have employees as committed as you, but that's unlikely. So set realistic standards for your employees. You want to create a work environment in which your employees feel appreciated for and capable of the work that they do.
8. Chart a path. When properly administered, performance reviews can motivate employees to improve. These reviews can help you and your employees clearly identify their worth and value to the business. When employees know where they are going, they're more likely to get there.
9. Define discussion topics. Important review topics to cover include: the employee's role in the business; how well he or she performs that role; areas in which he or she needs to improve; and identifiable goals to be attained over the coming six months or year.
10. Create a plan. Together, you and your staff should develop a list of clear, action-oriented steps to be taken following the review. This list should detail any improvements that must be made or skills that must be acquired in order to maintain or achieve progress.