Annual Employee Review: How Important Is It?

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.

Clipart18 - Performance form starting with Outstanding

Click Here for Your Free Employee Evaluation Form

Make Their Annual Employee Review Meaningful!

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 measurable.

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 measurable 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 and for reviewing this information on an annual employee review.

Written Example of Employee Evaluation

How to Write an Annual Employee Review Effectively

Acceptance Letter

Writing an effective annual employee review does not have to be that difficult provided you break it down into sections and approach it from an objective and not subject view point. 

Don't Take Issuing an Annual Employee Review Lightly!

One of the biggest mistake’s supervisors make today is not defining what the performance standards are from the very beginning. Instead, they wait until the year is over and then scramble to try and decide what or how they are going to rate their employees.

Let’s take a look at some examples you could use on almost any type of position in the work place today. So, what are some common performance standards? How about safety? How about customer service? Remember customer service can mean many things and not just actual customers walking through the front door. Customer service could mean another department that requires product or service from your department.

When it comes to safety it can be broken down into a couple of different performance standards, such as, accidents or unsafe acts. Of course, you can stretch it into a number of others but for this example let’s just use these two. A performance standard could be written something like the following:

Employees that have an accident as a result of an unsafe act will be rated less than fully successful in the area of safety. Employees that are witnessed performing more than X number of unsafe acts by their supervisor or other company official will be rated less than fully successful in the area of safety. You can substitute the X with any number from one to whatever you decide. Some unsafe acts are more serious than others so again you must be creative and very definitive.

Annual employee reviews are very important for a number of reasons. First and foremost employee’s truly want to receive feedback from their supervisor. Secondly if an employee is not performing well a performance review is designed to insure, they are made aware of that fact and hopefully improve their performance. Thirdly a performance review can act as a way to select employees for promotion and/or special privileges like training.

The final reason for performing an employee annual review is that it adds structure and professionalism to your organization. Your staff will know that you take their contributions seriously and you appreciate them. Of course, no employee wants to sit down to a performance review that beats them up, and in very few cases it should be used for that purpose. In fact, if an employee is performing poorly their performance should be addressed immediately and not wait until that one time a year you conduct annual employee reviews. Your organization can’t afford to wait until them.

Thank you and May God bless you, and for reviewing this information on an annual employee review.


Conducting an Annual Employee Review


Conducting a performance review must be taken very seriously!

Remember the consequences may be more far reaching than you think!

As an example, the words you put down on paper will last forever and ever! It generally doesn’t matter when everyone is happy; however, when an employee becomes disgruntled everything changes. Much like a marriage where two people stand up in front of God and witnesses and promise to love and cherish each other until death do, they part! We already know how that plays out.

So before conducting a performance review take a look at what you have...

So before conducting a annual employee review take a look at what you have put down on paper about the employee. If a promotional opportunity becomes available how will the review you have committed to paper play out if an employee challenges who received the promotion? If you stated in your performance review that the employee walks on water in an effort to make them, feel good or to avoid confrontation, you may be fighting an uphill battle that may be impossible to win.

Conducting an annual employee review is a very serious part of managing employees. When an employee is a good performer, it is a pleasure to meet with them and discuss how well they did over the previous year.

On the other hand, when an employee is not performing well there are certain things, we must make sure of throughout that year prior to sitting down with them during a performance review. First, anytime an employee is not performing well it should not come as a shock to them during the actual meeting with you at the performance review. You should have already been documenting any poor performance throughout the year. That may include a Performance Improvement Plan (PIP), or even some type of disciplinary action. The key is if it is important enough to rate the employee’s performance poorly at the end of the year then it must have been just as important throughout the year. In other words, document during the year if they are not meeting their performance standards.

Of course, one of the most meaningful reasons for conducting an annual employee review is because employees love feedback. One of the primary reasons an employee leaves a job is not based on how much money they are paid, but rather whether or not they feel appreciated. Not conducting some type of performance review program an employee feels like you are taking them for granted. If you want to decrease productivity and increase turnover, ignore a basic responsibility of your leadership role.

Choose your words carefully as we have already discussed. Stick to the facts only and try and avoid feelings. Try and reference actual performance. It’s ok to use broad brush statements like, “John is an amazing employee…” but make sure you follow it up with substance. As an example, “John is an amazing employee when it comes to stepping in and volunteering to work overtime when the department requires it.”

Also, we must be careful or how we use our language. As an example, we may think we are saying something very benign but to someone else it could mean you are headed for a discrimination charge.

As an example, you may think you are throwing out a compliment by stating to a great female employee a statement like, “As a female employee you one of the most talented welders we have.” Stating that they are a female has nothing to do with their ability to weld and may cause you a discrimination charge if a male employee receives a promotion or any other benefit over her.

So, just be careful and think before you write it down and give it to them when conducting an annual employee review on any of your employees.

Thank you and may God bless you!


How to Conduct an Annual Employee Review

Clipart9 - Small group giving high fives

The answer to the question of how to conduct an annual employee review is much easier than you think!

However, before we go any further the most important part of any conversation you have with an employee as it relates to performance is to be honest. Do not over rate them in an effort to make them feel better or avoid confrontation. Remember that anything you commit to writing lives forever and ever and may come back to haunt you.

Why would I say this?

First step in how to conduct a performance review is establish common categories for all your employees

If a promotional opportunity becomes available in your organization and you select someone else for the position other than the individual you inflated a performance review on you have set yourself up for a possible law suit. Combine that with the possibility of a discrimination claim if they are in a protected class (race, religion, sex, age, etc.)

So bottom line is be fair, honest, and consistent! Don’t regret what you put into writing!

First step in how to conduct an annual employee review is establish common categories for all your employees. As an example; safety, dependability, initiative, productivity, adaptability, interpersonal skills, team work, communication skills, judgment, customer service, etc.  These skills can be a part of almost any job skills; therefore, you are being consistent when you are rating all your employees.

Let’s break out dependability as an example. In order to be fair and consistent we must establish what exactly we mean by being dependable. Are we only talking about showing up for work or are we also including completing assigned tasks. We could also mean that they volunteer to work overtime or a holiday when needed. Once you establish this compare this employee to all your employees for that specific category. Be honest, fair, and consistent.

The hardest part of conducting an annual employee review is when you have an employee that performs exceptionally well but may not have a good attendance record (dependability). Remember to be fair and consistent or you may end up in court fighting a discrimination claim when you rated a less productive employee who has a great attendance record and they happen to be a female over forty (a protected class).

So, let’s get back to our original question of how to conduct a performance review.

Step one is make set aside enough time so that you are not rushing through the review. The employee will recognize this immediately if you schedule all employees a few minutes apart and run them through like cattle. This clearly shows that you are trying to get this off your plate and not that you are truly trying to give them feedback on how they are doing.

We all understand that we have many things to do, but this one thing is more important than you might think. The number one reason an employee stays at a job is not money. In fact, money is several reasons below the number one reason. The number one reason is that an employee wants to feel appreciated.

Marriages fail for the same reason. People want to feel wanted. Giving time to anyone is the best way you can show that you truly care about them. Example! If you are speaking to someone about something very important to you and they are distracted by their cell phone how does that make you feel? Invest in your employees with time!

No matter what you have to present to the employee as it relates to their performance over the previous year try to make them feel important. Stand up and greet them when they come into your office. Offer them a cup of coffee or a soft drink if you have them available. Let them sit down before you do. Ask them how their day is going. If you know of something that is happening in their lives like a son or daughter in sports ask them about that. All of this should take place before diving into the actual performance review. Take your time. This is how to conduct a performance review!

An annual employee review should be an opportunity to teach and guide even the best of your employees. As you are going over their performance for last year talk about the challenges ahead for the new year also.

I find that most employees like to be challenged. You know who they are.

When you have an employee, who is not performing well I hope it does not come as a surprise to them.

Throughout the year I am hoping that you took the time to coach them and point out weaknesses and how to correct them along the way.

This is how to conduct an annual employee review! Invest the time and effort to do it right!

Thank you and may God bless you!

Clipart14 = Graphic charts showing results

Ready to use Performance Appraisal Phrases

Clipart13 - Graph showing growth

Consistently exceeds sales targets

Continually demonstrates a high level of ethics

Needs to quickly identify projects and tasks that waste time and resources

Finding the perfect appraisal phrases when you are identifying poor performance is important.

Here are a few appraisal phrases that may help; however, keep in mind some of these may be behavior and not performance related:

You continually have a difficult time with assigned tasks

You do not grasp new assignments quickly and always require additional training

You have a difficult time understanding the basic requirements of your position Is goal oriented

You continue to need assistance when performing the most basic tasks

You fail to follow simple instructions

You continue to miss routine deadlines

You continue to fail to get certified or licensed

You continue to fail to perform routine scheduled maintenance

Keeps supervisor appropriately informed of progress toward meeting deadlines

Your attention to detail is lacking

Fails to identify cost saving measures to meet new budgetary goals

Has the ability to create new and improved ways of increasing sales goals

Is always improving techniques that increase productivity

Continually motivates her staff in new and innovating ways

Has the ability to create fun yet extremely valuable training sessions

You have poor time management skills

Needs to improve in prioritizing assignments

Always concerned about attention to detail

Continually takes the time to instruct new employees on safety rules

Needs to improve on attention to detail and following safety guidelines

Needs to pay more attention to quality than quantity

Must pay more attention to accuracy in financial reporting

Needs to become more informed of company policies and procedures

Has an excellent way of communicating to customers

Communicates exceptionally well all levels of management

You are very poor at organizing your work

You do not deal with customers well on the telephone

Demonstrates ability to manage resources and staff very well in meeting deadlines within budgetary guidelines

You have poor customer service skills

Your ability to understand company policy is poor

You need to improve your use of the language

You need to improve your verbal and written communication skills

You need to be more punctual

Effectively prioritizes tasks to meet organizational goals

You need to improve your personal appearance when meeting with clients

You continually leave work early

Needs to improve the use of available time and resources

You fail to notify your supervisor when problems arise

You make poor use of your time

Works very well with multiply supervisors

You need to improve your computer skills

Achieves all assignments on time with excellent results

You continually fail to take advantage of company sponsored training events

You continually fail to volunteer when asked to perform special duties

Continues to fail at budgeting the appropriate costs

Produces unrealistic and inefficient budgets

You have trouble working with co-workers

You need to improve in your ability to write reports

You need improvement on prioritizing your work

You need to improve on your ability to follow through on assignments

Keep in mind you can reword any of the above performance appraisal phrases to meet your needs. For instance, on the final phrase, you could state it this way also:

You fail to follow through on assignments

A great book by Peter Gray and John H. Carroll is "Performance Appraisal Phrases." It's the pocket Idiot's guide with over 1,600 results-focused phrases that will help you write the perfect appraisal.

This is offer through Amazon and you can pick it up right here on my website through the special relationship I have with them.

Thank You and May God Bless You!

Competency Poster

Creating an Effective Annual Employee Review System

Clipart6 - A cube with words of management terms

Creating an effective annual employee review system can help to improve productivity while also aiding in retaining your best employee’s. Too many times smart management teams over complicate processes thinking that the bigger the proverbial mousetrap the better the outcome. The problem with that theory is that the more complicated something is the chances of repeating the process drops dramatically until at one point it stops altogether.

Therefore, let’s talk about as annual employee review system that is simple and effective. First, why do we even want to bother having an appraisal system at all? Surveys continue to show over and over again that the main reason an employee leaves a job isn’t for more money, but instead they didn’t feel appreciated. Human nature is a powerful thing and harnessing the power of it just makes sense.

The best and most effective performance systems start on the very first day of employment. The key is to ensure that each employee knows what is expected from the very beginning. This means that you should have a written position description that outlines the duties of the position. However, in addition to the position description you need a written list of expectations. As an example, the position description may state that the employee is responsible for cleaning hotel rooms. On the other hand, the written list of expectation may state that an employee is expected to clean a hotel room in thirty minutes with little to no errors.

The best performance appraisal system will be one where the employee understands where they are throughout the entire rating period. There will be no question in their minds when you finally sit down and discuss their performance. In other words, there will be no surprises. If the employee has not been performing to standard at any point during the year it is to everyone’s advantage to immediately inform the employee and attempt to correct the issue right then. Using our above example if the employee is not cleaning the rooms in an average of thirty minutes or less correctly you must determine the issue and retrain or correct it.

In order to have an effective annual employee review system it must be objective and not subjective. Subjective rating systems cause more problems than they solve. It allows for favoritism which is a morale killer! The fastest way to create back biting in your organization is to have a performance system that is not based on performance that can be measured. Again, using the above example if an employee knows that they can clean rooms correctly in thirty minutes or less they know they are performing to standard. On the other hand, if they are cleaning rooms on an average of twenty-five or even twenty minutes or less, they are exceeding expectations.

Finally, the annual employee review system should be explained to your employee’s so that they understand the rating system up front. This means that it should have the items that they will be rated on clearly defined. Remember we spoke about having the expectation in writing. The rating system will primarily mirror those expectations. As an example, if you have a rating element called working safely define what this may be. It should be more than working all year without hurting themselves. It may be insuring, that they wear the proper personal protective equipment or can identify lock out tag out procedures.

So, to recap, you should have written position descriptions and communicate them, written expectations and communicate them, communicate the rating elements up front, correct any issues during the rating period, and finally make sure that your annual employee review system is objective and not subjective.

Thank you and May God bless you!

Clipart3 - One red cartoon with other regular people

Written Example of Annual Employee Review for a Good Performer

Man Writing a Letter 1

This past year you have contributed in many ways to our success. Here are a few examples that stand out.

1. You did not have any incidents or accidents leading to a perfect safety record.

2. You continued to meet the targeted production goals leading to our department’s ability to meet our customer’s deadlines.

3. You continued to meet the quality control goals leading to less waste and satisfied customers.

You are also an excellent team member. There was numerous times this past year that you volunteered for overtime. This allowed our department to meet our goals even though staffing was short. Its selfless acts like this that contributes to our overall success.

You are always on time for your scheduled shift and rarely have an unscheduled absence.

You have excellent written and verbal communication skills. During staff meetings I know that I can always count on you to report out on your team’s progress.

You can always be depended upon to act professionally and appropriately in all types of situations. Even under the most severe staff shortages this year you continued to set the example for the rest of the team to focus only on what you have control over.

This past year you demonstrated that you need to continue to improve in a number of areas so that you meet our Company’s goals and objectives.

You need to improve on adapting to new policies and changes to our processes. This past year we introduced two major changes to the Federal safety requirements and you had difficulty in accepting the changes. It is critical that you are more willing to accept these types of changes to our industry.

This past year we also experienced a high amount of turnover creating an opportunity for our existing staff to experience new assignments; however, you need to be more open to accepting additional duties and new assignments. It is important that you strive to take advantage of any new opportunities to learn new skills.

This past year you were involved in two accidents. It is very important that you use good judgment when operating the power equipment. It is very critical that you understand the consequences of your actions.

Enjoy this page? Please pay it forward. Here's how...

Would you prefer to share this page with others by linking to it?

  1. Click on the HTML link code below.
  2. Copy and paste it, adding a note of your own, into your blog, a Web page, forums, a blog comment, your Facebook account, or anywhere that someone would find this page valuable.