Every large corporation has established procedures for periodic performance reviews for its employees.
But do only large companies require such protocols?Employee reviews are a vital tool for compensation, promotion, and coaching that even the smallest business can use to its advantage.
Even if you only have two employees and one of them is your brother-in-law, you can use periodic performance reviews to strengthen your organization.
The need for equity and accountability exists in every company, large and small.
Large companies use appraisals to manage a workforce that by virtue of its size requires standardized formats for setting pay rates and employee status.
Though, large organizations have the tools in place, they frequently overlook appraisals as a coaching tool.
But in a small company, the value of performance reviews as a coaching instrument can be the difference between a stagnant and developing workforce.
The key thing to remember is to keep your review format objective and standardized.
Too many times employee evaluations become the province of opinion and assumption.
Before undertaking the review process sit down and examine every position in your company.
Look at the required tasks, expertise, and experience it takes to complete every function of a given job.
This examination can be time consuming and tedious, but a thoughtful examination can standardize each job in a way that will remain constant, no matter who performs that job.
These examinations will result in a thorough and objective job description that is essential for your business as it grows.
The operative theme here is to describe the position, not who currently fills the position.
The job description must be neutral to the personality and background of its present holder.
Once an exhaustive job description is completed, the appraisal process moves to valuing each element of the job.
Which functions are primary and which functions follow from those initial efforts?How much cooperation from others is required?Weigh each function according to its importance to complete assigned tasks and develop a quantitative form that is specific to the job.
Give each item a range of value from Exceeds Expectations to Requires Improvement.
The stages of value will depend on your own formula for competence.
Now you have the seeds of a system that is tailored to your business.
Having an objective and fair program in place is essential and will allow you to set compensation rates that you can use when you promote your brother-in-law and hire the college student down the street.
But compensation is only one factor in the equation.
What about using this appraisal system to guide the development of your employees? In evaluating personnel look at areas that you have identified as "Needing Improvement" or "Below Expectations.
"These comments are more useful as coaching tools because they have an objective base.
They are not personal opinion or assumptions and can be presented as your way to guide employees to areas of weakness.
This is also a valuable time to offer training and development opportunities to your workers.
Simply identifying areas of deficiency is pointless unless there is a solution extended to change these areas of weakness to ones of strength.
This takes the punitive element out of the performance appraisal process.
It will build a bond between employer and employee when presented in the context of coaching rather than criticism.
It can allow you to set and achieve common goals.
Even the smallest business needs objective standards because you might be small now but you won't always be small.
Be prepared for growth and have systems in place that will grow with you.
Your employee base will not always consist of your extended family and future workers will have expectations of fairness and equity that do not depend to relationships.
A sound performance appraisal system is a necessity for your small business as it evolves into larger and sometimes more wieldy concern.
Be ready for the success you are destined for and meet it with a system tailored for your small business but still custom made for your big business.