How Important Is an Annual Employee Review



I’m not sure why but small business owners fail to take advantage of conducting an annual employee review on their staff. The excuses range from I don’t have time to they already know how I think they are performing. Try this methodology on your spouse and see where it finds you.

















That’s right! Anyone that has been married for more than ten minutes knows that open communications with one another is critical to maintaining a healthy relationship. The workplace is no difference. The moment you take your staff for granted is the moment you lose them and control of your business. Never take anything or anyone for granted. This is a key reason to conduct an annual employee review and if possible something in between that period.

The first step in conducting an annual employee review begins a year before the meeting is ever held with the employee. It begins with establishing your expectations with them. Your expectations should be performance standards that can be measured. If you are in sales it may be that you expect them to place a certain amount of cold calls every day. If you are in the restaurant business it may mean keeping food costs at a certain level. If you are in retail it may mean following the “First In First Out” principal. Of course your expectations would be far greater than just one thing but it must be measureable.

The second step in the process is to measure the performance of that employee throughout the year and if they begin to fall behind in an area coach them to success. If the expectations are measureable this should be easy to do. This goes along with what I mentioned earlier about having open communications. If the only time you communicate the employee’s performance is during the annual employee review you are headed for a disaster. Therefore, nothing should come as a big surprise at the annual employee review.

The actual review should be communicated honestly. Do not mislead an average performing employee in thinking that they are better than they are. A couple of main reasons for this! First and foremost an employee that is only performing in an average level will continue to perform at that level. The second reason is that employees talk. When employees begin to compare notes and finds out that you think the same thing about them as you do about an employee that doesn’t perform as well they will lose respect for you. Be honest but not mean! Follow up any issue where they can improve with how that can take place.

Let’s explore improving an employee’s performance for a moment.

One of the major mistakes new supervisors make is that they have no idea of how to go about improving an employee’s performance. Most believe if I yell loud enough or act serious enough the employee will do better.

Let’s take a look at a sports analogy. If a baseball player is not batting very well it will not do much good to tell them to improve without providing them with specifics. In order to bat well there is a lot that goes into it; such as, the right stance, how to hold the bat, how to step forward during the swing, head movement, bat speed, bat grip, etc.

My point is that you must focus on the specific area that needs improved and offer training or corrective action to improve it. Break the performance down to the smallest denominator and then work on that. Take the process of an annual employee review very serious and use it as a tool to build your business into even being more successful than it already is.


Thank you and May God bless you!

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