Small businesses and startups need performance reviews in their business growth strategies. In fact, to be successful in the long run, every business must conduct performance reviews on its employees. This is because dedicated employees can take a business’ current level to the next level. 

Similarly, many dedicated employees want advice on what to do to increase the success of a business. They love to be a part of the growth of a business. They are most times willing to do anything just to be recognized as a dutiful member of the organization. 

Aside from being willing to do anything, they also need to know what and where they need to improve. This is where performance reviews come in.  Performance reviews show where an employee needs improvement.  It also shows what employees must keep doing to hasten the overall growth of a business. 

If you are reading this, you are either a small business owner or an employee wanting to know more about performance reviews, right? Maybe you also stumbled upon this article. Good, all the same. 

In this article, you will learn what performance reviews mean, how to conduct one, its importance, and how it helps in the growth of not only the employee but also the business at large. 

What Does Performance Reviews Mean?

A performance review or appraisal is an evaluation of an employee’s work for a period. This evaluation is conducted by an employer or a manager who checks the strengths, and weaknesses of an employer. A performance review is also called an employee review. 

In the same vein, an employer gives feedback on an employee’s performance review. The employer shows the employee the areas in which they can improve to increase their success rate.  Generally, performance reviews examine the overall progress of an employee and the business. 

Small businesses must conduct performance reviews to track their success and growth. Since employees also aid in the growth of a business, a performance appraisal must be carried out on them. 

Performance appraisal is a part of the growth strategy of a business. It checks what and where a business needs to do better. Also, it enlightens a business on what it should stop doing if it is to be successful in the long run. 

Furthermore, performance evaluation inspires employees to do better. With the feedback on their performance, they are motivated to do better to keep working. 

Why Is It Important To Conduct Performance Reviews? 

The truth is, whether small or big, every business owner must conduct performance reviews. If you are intentional about the success of your business, then conducting a performance evaluation will do you a lot of good. 

One importance of conducting a performance appraisal is helps in the growth strategy of a business. Every business likes to track its growth. Performance evaluation helps to check what a business must keep doing to be successful. It also shows where they need improvements and what they must stop doing to obtain their business goal. 

Moreover, it reveals which are the most dutiful employees. In the case of promotion, employers realize which worker deserves rewards. This will make other employees work harder to enjoy such rewards. 

Also, employee reviews improve the level of communication between an employer and their workers. When an employer gives feedback on workers’ performance, it leads to strong communication, after all, communication skills are essential in small businesses. 

Types of Performance Reviews 

To find where your business stands and where it needs improvement, there are different types of performance reviews you can conduct. They include: 

Self-Assessment

As the name implies, self-assessment is when employees are allowed to assess themselves. Traditionally, they may be asked a series of questions in the form of a questionnaire or even be in face-to-face conversation with a manager. 

Employees evaluate themselves based on their strengths and weaknesses. Self-assessment checks where an employee stands and their progress for a period. 

After the manager shows the worker where he can improve, a manager could also offer solutions or ways an employee can do better.

Team Assessment 

Although self-assessment is very necessary, it is also more necessary to evaluate the whole team. You never know if an employee is inefficient because of their team members. Evaluating the whole team reveals which worker is working harder than the rest.

It also shows if everyone is working together at the same pace. Moreover, a manager through team evaluation comes to know if there is a strong relationship among team members. 

360-degree Feedback Rating

This type of performance review is when everyone who is directly or indirectly involved with a business gives feedback on the business. In 360-degree, the employers, workers, stakeholders, customers, and consumers participate in the performance review.

Everyone conducts a performance review and at the end, all the reviews are brought together. The reviews are compared to give feedback on the business. 

Goals And Results Evaluation

This review is a bit like the self-assessment. In the goals and results evaluation, the results of an employee is measured. Goals evaluation checks if an employee made themselves available, if they have a customer base relationship,  the sales closed, and the reviews from customers. It also reveals which employee is more productive than the other. 

A Step-By-Step Guide: Conducting Performance Reviews For Your Business 

To get the best from performance reviews, you need to do a few things since it is a process. To get the most out of performance appraisals, do the following:

Choose The Right Evaluation Criteria

Before conducting a performance evaluation, ensure you know you use the right and best type of performance review. Do you want to assess everyone individually, make use of the self-assessment performance review, and for the whole team, you may use the team assessment review.

Also, for performance criteria, you can use the quality of work of individuals, their availability, communication skills, customer satisfaction, and teamwork skills to conduct performance reviews on your workers. 

Gather Feedback

The truth is that many employees want constructive feedback about their progress. They may be lost so giving them feedback is a good way to help them stay on track and do better.

Also, as a small business owner, you must gather enough feedback from customers, and stakeholders if you want to be successful. The information obtained from your clients shows your employees areas where they need to improve. 

Conduct The Review

This is when the real review is conducted. It could be in the form of a questionnaire or a face-to-face conversation with the employee. Most times, employers prefer the latter because you get to capture every expression on the face of the employee. 

Document Performance Outcomes 

After conducting a performance evaluation, it is necessary to document every bit of information obtained from the evaluation. The manager gets to sit with the workers to address the outcome of the performance. This helps to track the growth of the worker when such an evaluation is conducted in the future. 

Address Challenges And Improvement Areas

You then advise employees on areas where they need to improve. When you address their challenges, make sure you also pat them on the back for even the littlest efforts. Also, in areas where they may have challenges, guide them on ways they can manage such challenges. 

Follow Up

After the whole performance review, don’t expect everything to be fine. You must follow up with your workers. Make sure they completely understand the feedback you’ve given them. Make sure they are on their way to improving on aspects that need improvement. After a week of the performance, you can call them to inquire about any small improvements. 

3 Best Practices When You Are Conducting Performance Reviews 

In the process of conducting performance reviews, a few best practices you must follow are:

Set Clear Expectations

As a manager or an employer, what do you expect from the performance? Do you want your workers to improve in certain areas after the evaluation?  Also, do you want them to stop doing something that’s hurting the business? Pen down every expectancy as it helps to track the success of your small business. 

Involve Employees in the Review Process

Since it is a performance conducted for the workers, they must be involved in every process of the performance. Small businesses usually have few workers which makes it easier to carry them along with the performance process. 

Recognize And Reward Achievement 

Although it is necessary to criticize workers when they are unproductive, you should also reward even small achievements. This inspires and encourages them to do more. Rewarding their little efforts can be a driving force to work harder. 

Conclusion 

As said at the beginning of this article, every business must conduct employee reviews to track its success and growth. Small businesses, however, must consistently conduct performance evaluations to get insights into where they need to improve. 

Moreover, performance reviews also check the progress of not only the workers but also the business. It checks if small businesses are break-even and unable to move forward. Generally, conducting employee reviews should be included in small businesses’ growth strategy. This is the best way to track your growth.