Question: We currently have an informal review process at my company. As we grow, should we consider implementing a more formal review and feedback process?
A: For many business owners, the last quarter of the year is a time of reflection and goal setting. For your employees to perform at their best, they need feedback to know if they are doing their job correctly and what changes they need to make. The most effective way to provide this is by conducting formal evaluations and reviews consistently for both employees and managers. Doing so can help boost morale and job performance, and ultimately, your bottom line.
- Keep the team informed. It’s human nature to want to know how we’re doing, and this is especially true regarding our jobs. When employees don’t receive feedback on their performance – good or bad – they don’t know whether to keep doing what they’re doing or change course. Exceptional performers should be recognized and inspired to continue their performance.
Unfortunately, managers get so busy with all the tasks involved in running the business that performing employee reviews often gets pushed to the wayside. It can be easy to put off a performance review for a week or two (or longer) when there are other pressing priorities.
Continuing to postpone evaluations can lead to several problems. If employees do not receive timely feedback, poor habits continue while the opportunity for improvement is lost. Poor performance might cause issues to continue uncorrected, which can hurt overall business performance. Employees may also receive the subtle message that they aren’t a high management priority, which can hurt morale and make employees feel the need to seek out other job opportunities.
Employee reviews also serve as a formal record of employee performance. This may provide the formal documentation needed if you decide to discipline or terminate an employee for poor performance.
- Make it a process. The best way to make sure employee reviews occur on a regular basis is to implement an employee evaluation and review process. This will create a formal, structured procedure that should be followed by managers when conducting performance reviews for all employees.
- Make performance reviews a management priority. Require managers to conduct reviews on time, every time, for every employee. Managers should be held accountable by incorporating managing others as part of their own performance review process. Otherwise, reviews will inevitably get postponed as other more urgent tasks arise.
- Create a standard yet flexible performance review template. This template should include general performance criteria and standards that all employees are measured against, as well as standards that are unique for different jobs. A salesperson, for example, would have performance criteria different from those of a service technician. Each goal should be weighted in order of importance.
- Ask employees for self-assessments. Before getting started, managers should obtain a self-assessment to get the employee’s input on their own performance. This will help the manager view performance from the employee’s perspective, which may differ from the manager’s point of view allowing for rich conversation and dialogue.
- Seek input from the employee’s co-workers via 360-degree feedback. Keep co-workers’ feedback confidential, so they feel comfortable being honest in sharing their thoughts about the employee’s performance. To make the process truly full circle, you might also want to solicit feedback on managers from the employees.
- Annual and interim reviews. Formal performance reviews should generally be conducted on an annual basis, with interim reviews conducted at least every six months. This feedback will outline for employees what they’re doing well and what they need to improve, so they have time to make changes before their annual review begins.
By implementing a formal review process, you can show your employees that their performance counts and that you care about their success. When implementing an employee evaluation process, make sure you clearly communicate with your team, so they are confident in understanding what they will be evaluated on and make goals specified. Performance and productivity tend to increase with employee evaluations, which will better your business.
Crystal Faulkner is a Cincinnati market leader with MCM CPAs & Advisors, a CPA and advisory firm offering expert guidance and beyond the bottom line thinking for today’s public and private businesses large and small, not-for-profits, governmental entities and individuals. Tom Cooney is with Wealth Dimensions, an investment advisory firm. For additional information, call 513-768-6796 or visit online at mcmcpa.com. You can listen to Tom and Crystal daily on WMKV and WLHS on “BusinessWise,” a morning and afternoon radio show that profiles highly successful people, companies, organizations and issues throughout our region.