One of the questions I always like to ask managers is how often they conduct employee reviews. I am always shocked to find out well over 70% of the business managers I talk to do not conduct formal employee reviews. The typical reasons vary; many are not done due to manager’s time constraints. They often say, “I can’t afford the time to do them.” The truth is … they can’t afford not too!!!
Research shows that the number one reason employees’ work for a company is having the feeling of “what I do here matters”. Pay is only the number seven reason on the list of what employees find important in working for a business. Yes seven! So if employees are saying that they value feedback and their individual importance to the business why aren’t the reviews getting done? The fact of the matter is that owners and managers don’t know how to conduct a proper review.
Let me first start by saying that annual performance reviews are a complete waste of time. Why? Usually they are an unwelcome interruption in a managers already task filled day. Managers have to stop doing something they perceive as important just to fill out an employee’s annual performance review. It is, at best, a struggle for them to complete. Annual reviews are usually done for the wrong reasons; as an obligation or for employee pay raises, and most are never conducted on time. So the employee waits and waits. What kind of signal does that send the employee while they are waiting for their perceived/deserved pay raises and review? Soon they get the idea from management that they are not important, and isn’t that the number one reason they work for you?
So what is the answer? Frequent feedback is the key. Do your reviews quarterly. Most of us can actually remember what happened over the last three months. Fewer than 5% of the businesses I talk to conduct quarterly reviews. The best performance review is the ongoing review. Constant communication and making corrections or praise as you go makes the employee feel better and more appreciated in their work place. Communicate with your employees on how they are doing on a task-by-task, daily, or weekly basis. Let them know right away what they are doing wrong so they can correct it now, not twelve months from now when it has become an ingrained habit. I believe when all employees come to work they want to do a good job. The problem all too often is that management falls short in making clear their expectation and thus disconnect.
Be sure to also point out the things your employees are doing well. This should be obvious, but it is not always the case. Remember, we all like praise. If you neglect to tell them that something they are doing is right, they may not realize it and they may change it in the future. Employees that go above and beyond (exceed customers expectations) and are not recognized for it will usually stop going above and beyond!
The other benefit to doing frequent (continual) performance evaluations is that they become less formal. Neither you nor the employee feel stressed about it, job happiness is the key to productivity. With happiness comes higher efficiency and higher productivity. I like to say “We all have to pay our power bill, so let’s make it fun”.
Regular employee feedback is at the heart of superior job performance. Why?
1) It brings out the best in your employees.
2) It identifies under and over performers.
3) It protects your business legally. Regular, honest, and upfront reviews make lawsuits less likely and less successful.
4) It sets the direction for the future employee goals.
5) It signals that you care. If you want to keep employees interested in their job, you have to keep interested in them.
6) It helps you develop and grow as a manager and/or owner. As you hone your own skills of giving performance appraisals, you are polishing your business insight.
7) It helps reduce your turnover. If employees know that an honest, accurate appraisal of their work is coming up (and not just a perfunctory filling out of paperwork) it helps employees focus on the their individual job skills. It also helps you identify what they like and dislike about their work environment.
The key to your overall business success and your personal happiness as a manager and/or owner will be achieved when you develop open and honest communication with your employees though regular coaching and performance reviews. This will give the employee a real feeling of importance and worth. The result is job satisfaction for all. If employees are happy, you are happy and your customers are happy and just keep coming back. Ch-Ching, Ch-Ching!
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