Part of running any successful business is conducting an employee performance appraisals. These reviews benefit both the company and the employees and can help determine pay increases or reductions.

The performance reviews also give employees an idea of how well they are meeting your expectations. However, the performance appraisal should never bring out something that comes as a surprise to the employee. If this happens it points out your failure to communicate with them on a daily basis.

While conducting employee performance reviews may seem like a daunting task, they are highly beneficial and do not need to be difficult or confrontational. Here are some thoughts on how best to conduct them:

A Positive Approach

One thing I often see is an owner using an employee performance review to simply point out an employee’s failures. You may be frustrated with an employee but taking this approach will never be helpful.

It is true that an employee performance appraisal creates an opportunity to tell an employee that they are not performing up to standards. However, if this is the case, the goal should always be to communicate it in a constructive manner.

If an employee does not meet your standards, explain what areas they are lacking in. Offer tips and explanations that teach the employee how to perform the job properly. Employee motivation will improve.

Always give your employee a fair chance to improve before demotions, firings, or pay reductions. If the employee still fails to perform then it’s likely best to let them go. One bad employee can negatively impact many others.

Preparing for the Performance Appraisal

Before beginning an appraisal, fill out a standard performance review sheet. Set a list of criteria that all employees should meet, such as appearance, timeliness, courtesy, customer service, and attentiveness to detail.

Include all criteria in your standard sheet that you will use to evaluate any employee. You don’t want to single out a flaw in one worker that you don’t others. It’s important that everyone is held to a consistent standard.

Objectively fill out the standard performance review sheet. If you do not work closely with a particular employee, ask a supervisor to fill it out. Only after fully completing and evaluating reviews should you meet with and review employees in person.

Conducting the Review

When the employee enters the room for the review, be certain to set them at ease. Make it clear that your role is to be constructive and foster improvement, not to punish them for their mistakes.

Always start the performance appraisal on a positive note, pointing out something that the employee excels at. This can be something like dealing well with problem customers or even something as small as always showing a willingness to learn. No matter the employee, always find a positive point to start.

Go over the entire performance review sheet with your employee, highlighting all strengths and weaknesses. Explain how problem areas can be improved and better yet, how more opportunities can be had to utilize their strengths!

If an employee excels in a particular area, find out what they do that is different and consider recommending it to other employees. This can be great for team building.

Be certain that the employee fully understands your review and rating, as well as any decisions regarding job title or pay. Ask the employee to sign the review and offer them a copy for their own records to help them remember your advice.

Just as the review started on a positive note, it should end on one as well. Find something good to say about the employee’s performance and let them know that you appreciate the effort they put into your business.

Recognition is a big motivator and can greatly improve job performance. Motivated employees make for successful businesses. Never miss the opportunity to build motivation.

See the Whole Picture

It is important to remember that an employee performance appraisal is intended to review performance since hire or since a previous review. If an employee’s performance hasn’t been good for a few days but has been exemplary otherwise, take the whole picture into account.

It is unfair and unproductive to give a negative review when the bulk of the work has been above standards. By giving a fair review, you can ensure that your employees understand exactly what is and isn’t working without feeling that negative feedback is personal in nature.

Ease the Stress

One way to ease the stress of employee reviews and improve job performance is to offer rewards with each review. Create incentives for getting an exemplary review, from a promotion or cash bonus to a day off or a gift certificate.

Create a reason for employees to strive to get the best review possible and make certain that they are aware of the incentive well in advance. A reward is often a great motivator.

Closing Thoughts

When evaluating employees, I have seen owners take numerous approaches. While there are certainly guidelines for reviews, there isn’t one set way to do an employee performance appraisal.

When it comes to yours, remember to stay positive. Keep your value proposition and your management style in mind when deciding how to do them and what to focus on.

Make sure that your reviews are personalized and that you give appropriate instruction on how to improve performance and how to capitalize on strengths. Give praise for a job well done.

While an employee performance appraisal may seem stressful to conduct, know that they are always more stressful for the employee. Work to set their mind at ease. Make the experience a win-win situation and help them excel. It will benefit you and your employees!


by Steven Schlagel