Ten Tips for Conducting Employee Performance Reviews

You’ve invested your time, your money, and all your energy into building your company. But no company can function for very long without a team of productive employees supporting it. It’s important not only that your employees feel appreciated, but also that they feel they're progressing steadily in their careers.

One of the best ways to ensure this level of job satisfaction is by holding employee performance reviews at least once a year. However, as essential as these reviews can be for the growth of the company and the well-being of its employees, many small business owners remain uncomfortable with the entire process.

To make your performance reviews as productive and as painless as possible, follow these 10 tried-and-true suggestions:

1. Be prepared. First of all, make sure you are fully prepared before sitting down with the employee. Decide both what you're going to say and how you're going to say it.
2. Lead with the positive. It’s important to reaffirm the employee’s strengths at the beginning of the review. Since job security is the number one concern of most people, the performance review is a good time to tell an employee how much you value their contributions to your business.
3. Don’t be confrontational. It’s also important not to criticize the employee in general terms. The goal is to evaluate job performance and not the person. A performance review that turns into a gripe session misses the opportunity to raise employee morale.
4. Keep it real. Human resource professionals recommend that you avoid detailed reviews that are too complicated and mechanistic, which can leave the employee feeling like a drone rather than a human being.
5. Be consistent. Make sure to handle performance reviews in a consistent manner. Top performers should hear affirmations from you regarding their exemplary efforts; weak performers need to hear that their performance requires improvement. A simple approach to review criteria is to evaluate work based on quantity and quality relative to the job requirements. Secondary considerations might be employee attitude, willingness to help other personnel with their work when appropriate, and the ability to get along with others.
6. Make it a two-way conversation. An effective performance review requires an interactive discussion with an open agenda. Try to formulate questions that seek the employee’s ideas and input. Remember, this will help the employee feel you value his or her opinions. The review should also be a forum for employees to voice their concerns.
7. Address what’s important to the employee. Since job satisfaction is the most important factor affecting an employee’s attitude (and therefore his or her level of performance and value to your company), an effective review should delve into areas that include issues most important to that employee.
8. Discuss work/life balance. The performance review is a good opportunity to show your concern for the employee’s work/life balance, and to jointly discuss solutions to improve that balance. It’s also a good time to create a plan for the employee’s career advancement and discuss what future opportunities might exist for him or her.
9. Be a good listener. Remember to be an active listener and to pick up on your employee’s verbal and nonverbal cues.
10. Review regularly. Reviews should be done proactively with the purpose of improving employee morale and productivity. When you conduct them on a regular basis, you avoid reviews prompted solely by the need to document an employee’s poor performance. This in turn can imply that the information is being collected as evidence to avoid litigation, should the employee ever be terminated.

The sign of a successful performance review is an employee who leaves the meeting feeling motivated and excited about his or her job. If the employee’s job satisfaction needs are unmet, it’s less likely they will be motivated to focus on your goals for the company. But if an employee feels acknowledged, appreciated, and fairly rewarded for past efforts, he or she will indeed become a valuable asset to the future success of your company.