Why evaluate employee performance?

Cindi Filer, CEO of Innovative Outsourcing shares helpful advice you can use. First in a three-part series on performance evaluations.

The small business community is abuzz now, debating this hot topic. Is it still correct to do employee performance appraisals?  Some argue that leaders should have “evolved” past this fossil management tool.  I’m going to make an argument that they are still relevant and actually, critical.

Over the next three weeks, look forward to receiving some practical advice on why and how to successfully implement performance appraisals.

Why do performance reviews? Let’s boil it down to these four critical reasons:

  • To INFORM employees – “Where do you stand with your boss?” If I asked your employees that right now, would they know how to answer? 
  • To INCREASE productivity – Studies show that when you regularly evaluate employees and they know that they are being evaluated based upon a measurable standard, their productivity increases.
  • To RETAIN staff - According to the research by Direct Recruiters, Inc , feeling undervalued and lacking feedback are two of the top seven reasons why an employee quits. Both of these issues can be addressed by using employee reviews.  For millennials, this is even more crucial.  They need reviews at least quarterly and perhaps more informally. They crave feedback, and will perform much better if provided appropriately.
  • To be able to FIRE with less risk - You have heard this from me before - document, document, document!  Performance review records document that your poor performers have regularly been coached and given deadlines for improvement.  Without this, when you call me for advice on letting someone go, I will likely say that you are in a position of RISK. Employee reviews mitigate this. 

Designing the best performance review is critical, or you could fall into the trap that has given traditional performance reviews a black eye. The key for small business is to make this tool inspire instead of deflate, and make it simple enough that both the employee and the manager find it a valuable use of everyone’s time. Next week, we will investigate the critical task you must accomplish prior to your performance appraisal. In the meantime, I’d appreciate your feedback or questions on this topic.  Email me at cfiler@innovative-outsourcing.com.