Performance Appraisals Benefit Small Businesses Too

Submitted by: Sarah Day - Founder, Managing Director

You may think there is no benefit to conducting performance appraisals for several employees – or even one – but think again!

It may seem unnecessary to conduct a performance appraisal with only one employee or a few. However, it can be an opportunity to reinforce your appreciation of an employee’s talent and to strengthen an employee’s performance. It can serve as a guide to achieve future objectives or set an underperforming employee back on track.

Even though you may have plenty of face time with a crackerjack small staff, sitting down with each of them to talk more formally on a regular basis gives you the opportunity to tell each what results or behaviors they have displayed that you think are most advantageous to your business. Use examples and be specific! It boosts morale, encourages them to continue to perform, and adds to their job satisfaction and loyalty. It also provides a safe forum for them to discuss their future goals, to discuss opportunities to develop their talents, or maybe even to offer new insights on growing the business.

You won’t require a lot of forms or extensive questions, but you need to know what qualities make a difference to you in employee performance. Two basic considerations are behaviors that you want to see and the results you expect. Once you have identified the expected behaviors and results, conducting performance reviews provides you with the opportunity to let your staff know what you expect from them, what they’re doing right, and what needs to change. For a new employee, a timely performance evaluation can clearly identify or reinforce your expectations and let the employee know how he or she is meeting them.

Performance reviews for small businesses also are crucial for identifying and correcting results and behaviors that could cripple your business. A small business with two employees is more severely impacted by substandard results or negative behavior than a business of 50. In a shop of two people, one underperforming employee is 50% of your work force. Think of the impact that could have on your customer base!

If you have a small workforce, chances are that you rely heavily upon their talents and their customer interaction to build a successful business. You can use the performance appraisal tool to keep that staff functioning at its best.

Sarah Day is the founder and managing director of Day One Business Services, a general management consultancy for small to medium sized businesses. Every day Sarah helps guide small enterprises through the process of change - whether that be through the start up process, rapid business growth or a turnaround situation. She does this using a wealth of management experience gathered during a twenty-year career managing a variety of functions in both small businesses and large corporations.

Sarah holds a BA from Marquette University and an MBA in Marketing from the University of Minnesota. She is also an accredited executive associate of the Institute for Independent Business, a nonprofit research, training, and accreditation organization established in 1984 to give independent businesses direct access to top management advice. She continues to work with a variety of small businesses on resolving their key issues and sits on the board of a local non-profit agency.

Sarah DayDay One Business Services
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