Here’s a trend that small business owners should take note of: According to the Institute of Corporate Productivity, 10 percent of Fortune 500 companies have done away with annual performance reviews for their employees in favor of more frequent conversations and guidance.
“Sitting down once a year has never been a very valuable feedback tool,” says Kellie Conn, vice president of human resource services for Paradigm Group, an employee benefits, human resources, and retirement services consulting firm based in Nashville. “It’s difficult for managers to track performance and give accurate feedback for the entire year.”
And while employees of all ages appreciate acknowledgement and constructive criticism, the millennials are the demographic group that has pushed for more frequent reviews. “Younger workers place a high value on regular feedback,” says Conn. “Many of them are very comfortable asking for what they need. Finally, they are getting through to employers.”
As a result, the annual review has become out of step in today’s work environment. Because of this, many companies have shifted from this yearly event to quarterly or even weekly goal reviews or casual “check-ins.”
“These evaluations are still written-down, specific-performance indicators, but are done in smaller chunks,” says Conn. “The annual evaluation then becomes a summary of those meetings. That way, if the salary review is tied to the annual review, it will be a lot more accurate.”
Jack Elliott, vice president of operations for Muir Medical Group IPA, Inc., in northern California, supports a quarterly review process coupled with consistent feedback. “Address an issue immediately as it comes up, and be very clear about your expectations,” he says. Elliott also recommends weekly roundtable discussions to maintain ongoing dialog. “Take time each week with the employee to go over what worked and what didn’t,” he says. “You’ll avoid any surprises that way.”
Goal review points of discussion
During these more frequent review meetings, employers often set three to five goals with the employee that align with the department and the company as a whole. This adds meaning to the employee’s daily responsibilities. “The small business owner is entrepreneurial in spirit,” says Elliott. “So it may be hard to accept that the employee is more invested in a short commute than your vision or product. As a small business owner, you have to sell that employee, too. She needs to see that she can have some effect on growing the business.”
No matter how often a performance review is conducted, managers must continue to document the conversation. “For legal reasons the supervisor still needs to document everything thoroughly,” says Conn. “That’s why the annual evaluation hasn’t died completely—companies would lose their performance documentation system.”
In general, performance reviews bring structure to the workplace. Whether you decide to review on a monthly, quarterly, or even on a good old-fashioned annual basis, find a system that keeps employees motivated through the year and highlights their accomplishments.
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