I strongly recommend that you complete performance reviews every six months. Yes, this can be very time-consuming (i.e., painful) for the small business owner, but there are five reasons why it’s worth your time.
(How do I do it? See A Performance Review System for Small Business for my time-saving, five-step review process.)
The 5 reasons to do 6-month reviews
- Employee retention.
This is my #1 reason for doing reviews every 6 months. More than once, I have discovered an unknown burr under someone’s saddle and have been able to address it. If reviews were done annually, it may have been too late, and I could have lost a high-demand employee like a programmer.
- Frequent raises are motivational.
Some say that performance reviews should be separate from the money talk. That’s crap because the money is why people work, and it’s a great motivator. Doing performance reviews every six months gives me the opportunity to give smaller rewards for high performance, but more frequently.
- Creates formal documentation.
Sometimes it’s necessary to terminate someone’s employment. But in order to do so, you better have good documentation. Doing performance reviews every six months gives you the opportunity to document problems more frequently. We keep signed review forms in our online human resources software.
- A frequent opportunity to recognize and promote talent.
Semi-annual reviews are an opportunity to identify and promote undeveloped skills and employee potential. Two of the presidents of my companies started in entry-level jobs, but my review process helped me spot their true potential and move them along faster.
- Employees need positive affirmation.
Remember they are people. When an employee’s score goes down, it could be due to life events… or it may be that they are slacking. It is good to find out if their heart is in the game… better to know than not know. Most people want to do a good job and stay out of trouble, and a frequent evaluation system encourages employees to be consistent and helps them do their best. And it costs less to keep current workers happy and productive than it does to hire new people.
Do your key employees know how much they are appreciated and what a positive impact they are having on your small business’s success? Please comment with your stories, insights, and suggestions. And if you found this information useful, please tweet, like, or share.