Evaluating employee performance is critical to managing human resources for large companies and small businesses alike. However, communicating strengths, areas that need improvement, and establishing future goals with employees can be an uncomfortable position for many managers or business owners. It’s understandably difficult to rehash professional and personal shortcomings in a business setting, but successful managers can leverage performance evaluations into a valuable tool for improving employee productivity and moral with honest and accurate employee performance evaluations.
Think of a performance evaluation as a recap of a journey after a destination has been reached. The summation of that journey and the checkpoints along the way aren’t easy to recall if the employee wandered around aimlessly until an arbitrary destination was reached. Use the following guidelines to help map the journey and recognize important checkpoints along the way. Doing so will improve your company’s evaluation of employee performance.
1. Develop Clear and Concise Job Titles and Descriptions
Evaluating employees fairly and accurately requires that employees are actually being evaluated on the job duties that are required of them. A concise and well thought out job description for each employee is the key part of the “map” that the employee is expected to follow. Every position in your company should have a documented job title and corresponding job description that outlines day-to-day job requirements. This is important, especially for small businesses, where job titles and job duties tend to overlap with others and might even be intentionally ambiguous. If employees don’t have a clear picture of what job duties are expected and required of them, how can they successfully perform those duties?
2. Document and Track Everything
Documentation is arguably the most important, and yet the most overlooked, piece in evaluating human resources. Every manager would be wise to create an evaluation file on every employee and update it throughout the year. Document everything, no matter how inconsequential it might seem in the moment. It will still be valuable to look back upon during evaluation time. Keeping an accurate record of both positive and negative behaviors and job performance instances throughout the year will help articulate the areas in which an employee excelled, and most importantly, help in developing a plan for improvement going forward.
3. Carefully Consider “Pay for Performance” Policies
Pay for performance policies are common in larger businesses and sales industries, but are equally important for small businesses to consider. You’d be hard pressed to find a better performance motivator than money, but for small businesses, pay for performance policies could be problematic. What are the effects on employee motivation for those who don’t receive financial bonuses or pay raises? What if the company isn’t in a financial position to offer bonuses after establishing a policy of “a good performance review is due a raise or bonus”? Small businesses would probably be better off disconnecting the performance evaluation process from employee compensation.
4. Establish Goals and Update Them Frequently
Use employee evaluation time to communicate company goals and direction. Help your employees develop and document relevant personal and professional goals. Show them how their goals coincide with company goals and strategies, and how their success will contribute to the overall success of the business. Once again, documentation is critical. Put things in writing! Develop time frames or deadlines, strive to stick to them and celebrate completed goals. Publicly celebrate achieved goals with other employees, if possible. That’s Team-Building 101 – Bring People Together. Most importantly, update goals throughout the year. Goals are the checkpoints on the journey, keeping employees on track and focused on the destination.
Employee performance evaluations, when executed effectively, can be a vital tool in motivating employees and inspiring them to achieve a greater level of productivity. Better employee performance can only lead to a more successful small business.