The Importance of Performance Appraisals in Small Business

August 24, 2008 By Mary White

No matter how small your business may be, as long as you have even one employee, performance appraisals are an essential part of your business. When you hire your first employee, you become a manager. It’s the responsibility of every supervisor to provide his or her employees with feedback regarding their work performance on an ongoing basis. Performing formal employee performance appraisals is an essential component of helping employees recognize what they’re doing well and identify areas where improvement is needed.

Annual Employee Performance Appraisals

At least once each year, you should sit down with each of your employees to discuss performance. It’s important to use a quantitative employee evaluation form that addresses the key skill areas necessary to perform the essential functions of the job. The form should also provide areas for comments and qualitative commentary. You can develop a custom evaluation form just for your company, or you can utilize a standard form from a human resources consultant or publication. Make sure that the information documented on the form and discussed during the meeting is accurate.

Even though it’s important to use a form, it’s important not to let the paperwork serve as a substitute for a one-on-one interaction with each of your team members. Performance appraisal meetings should be conducted in person. They should be scheduled in advance and you should make certain to avoid being interrupted while communicating with the employee being evaluated. At the conclusion of the meeting, it’s important to have the employee sign the form so you can document that the meeting did take place. This is an important protection in case recommended or required performance improvements don’t come to pass.

Ongoing Employee Evaluation Process

While an annual formal performance appraisal meeting accompanied by a completed evaluation form is important, it’s not the only thing that managers need to do to provide employees with the feedback they need to effectively perform their jobs. Good managers provide employees with feedback on a continual basis.

After all, if your employees do something wrong, it’s ridiculous to wait until time for the annual performance appraisal meeting to correct the behavior. The same goes for positive comments as well. When you catch your employees doing things particularly well, praise them right away. It’s a basic principle of performance management that reinforcement of desired employee behaviors should be positive, immediate, and certain. It’s important to make sure your employees know where they stand with you at all times. That’s why you can’t lose sight of the fact that providing employees with feedback is an essential part of every manager’s job – even those who are small business owners.

Posted in Human Resources