Evaluating Employees

Employee Performance Reviews

Do startup companies need employee performance reviews? We think they do. Starting an employee evaluation program is an excellent way to align employee actions with your business goals.

Most entrepreneurs wait too long to establish performance requirements for their employees.

That's a mistake. Conducting performance reviews with employees is an essential element of the growth and development of the employee and the company. If you don't measure and manage employee performance, individual performance doesn't improve and you have a hard time improving your overall business performance.

Benefits of Employee Performance Reviews

Performance appraisal ratings are very important. They are used in a variety of ways:

• In the event you have to terminate an employee, the performance review process is an essential ingredient in protecting your company and preserving the dignity of the employee.
• Performance ratings should play a key role in making promotion selections.
• Performance appraisals help in determining who will receive a performance award, such as a year-end bonus.
• A performance rating provides a basis for taking adverse action because of poor performance
• Employees have a right to know how they are performing. Most employees want to improve and an employee evaluation provides a means for them to improve.

Where Do I Start?

Establishing performance requirements, and appraising employee performance is a job that must be taken seriously. Here are some tips on conducting performance reviews:

• Tailor the Performance Plans for Each Employee - Performance requirements must be stated in a performance plan tailored to each employee's position and work assignments.
• Define Performance Requirements for Every Position - Every time you create a new position, identify the performance elements of the position - the major responsibilities of the position. Determine which performance elements are so important that unacceptable performance in one of those elements would constitute overall unacceptable performance by the employee.
• Provide Performance Criteria for Each Performance Element - Define how well an employee must accomplish each performance element in terms of quality, quantity, manner of performance and timeliness.
• Review Performance Plans Periodically - It's wise to review and reissue performance plans periodically. Remember that the performance plan is a "living document" that reflects changes in the employee's work assignment. It is not as static document.
• Get Employee Input - Since this document is meant to clarify for both you and the employee the work to be accomplished for the year, obtain as much input from the employee as possible. Greater employee input leads to greater employee "buy in" of the goals and tasks to be accomplished.
• Explain the Purpose of Your Employee Review Process - Let everyone in your business know why you conduct performance reviews. Explain that the results of the employee appraisal process are to be used as a basis for training, rewarding, reassigning, promoting, reducing in grade, retaining, or removing employees.

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