Operating a small business involves engaging in various aspects of the business, such as sales, accounting, marketing, and human resources. Managing human resources encompasses more than just hiring and terminating team members, although these are significant components of the role. It entails overseeing the individuals who work for your business during their employment.
One crucial aspect of effectively managing your workforce is conducting regular evaluations of team performance. Although conducting performance reviews may initially appear challenging, having a well-defined approach and emphasising recognition for exceptional team members while aiding those who may struggle can turn these reviews into a motivational tool. Ultimately, they contribute to improving your business operations and reducing staff turnover.
Below are some recommendations for conducting productive performance reviews.
Do performance reviews frequently
Annual performance reviews are insufficiently frequent, as they leave team members without timely insights into their performance or areas for improvement. Waiting a whole year to address an issue often means it has persisted for an extended period of time.
A better approach is to engage in more regular conversations with team members and establish short-term objectives. Conducting evaluations every month or quarterly ensures that team members are regularly apprised of their performance and have the opportunity to act on the feedback provided. This approach instils a sense of security in their roles and facilitates alignment on expectations between team members and the business.
Here at Miss Efficiency we do performance reviews in the first week of the month, to discuss last month. But we don’t call them “performance reviews” because this can sometimes be a little confronting. Instead we call them “monthly check-in”.
Be present
Most team members are eager to excel in their roles and are keen on identifying areas for improvement. Performance reviews hold significant value for both them and the future success of your business. Demonstrate your dedication to your team member and their development by prioritising these discussions.
Avoid distractions such as checking emails, texts, or voicemails during the review. Clearly communicate to other team members not to interrupt you during this time. Additionally, ensure that the spotlight remains on the team member being evaluated, without diverting attention to other colleagues or office matters. Treat this performance review with the same importance as your team does.
Set the tone of the meeting
Ensure team members understand the feedback given is not a personal attack – it’s purpose is to enhance performance. We have a few guidelines our monthly check-ins follow, which are:
- The purpose of the monthly check-in is to support our team.
- The main objective of the review is that by the end of the session we’re both clear on one thing they’re going to focus on to improve performance in the coming month.
- This is not a conversation about where you’re bad or where you’re good.
- As the business owner, it’s my job to support my team in being the best they can be. So the conversation is about what we need to do to increase their performance.
Create an environment to help team members become better
Where performance is below expectations, the poor results are my responsibility so I ask myself four questions:
- What’s my part in the poor performance?
- What system haven’t I provided?
- What training haven’t I provided?
- What accountability haven’t I provided?
It’s crucial to reflect on my contribution to under performance. Have I failed to establish a comprehensive system that supports my team members in achieving success? Have I failed to provide necessary levels of accountability? Accepting responsibility involves acknowledging where I could have been a more effective leader and identifying the areas where improvement is needed. It’s essential to proactively address these aspects to enhance performance and foster growth within the team.
Be consistent and flexible
Owning a small business means you likely have personal knowledge about some or all of your team members. That’s why it’s vital you be consistent in how you evaluate the team. If one team member receives a special bonus for meeting their sales quota, all team members should receive that bonus. No one should receive special treatment just because you know more about their personal circumstances.
That said, it’s also important to be flexible. A person whose focus is sales can’t be measured on the same scale as someone in marketing. They each contribute differently to your bottom line but still have a vital part in the success of your business. Your reviews need to take into account each team members role within the business, what their goals are, and how effective they are at getting their job done in their department.
Decide upon a focus for next month
Deciding upon one focus for next month provides clear direction on what needs to be achieved in a specific timeframe. It gives purpose and helps prioritise tasks and activities. Having a goal to work towards boost motivation and engagements, and provides a sense of accomplishment when the goal is achieved. Setting a goal creates a sense of accountability. Team members are more likely to work diligently when they have a defined objective, knowing that they will be evaluated at the next review meeting. Setting just one focus means the focus can be targeted and it doesn’t become overwhelming. Once you’ve decided on the team members focus for the month, how can you support them in achieving that goal?
- How can I support you to achieve this?
- Do you need some check-ins between now and our next session?
- Do you need additional training to support you?
Final thoughts
Performance reviews play a crucial role in your small business by facilitating effective communication with your team members and assessing their progress in achieving their objectives.
Even exceptional team members can encounter occasional challenges. Regular performance reviews serve to detect these issues early on, allowing for timely intervention and the development of action plans to prevent minor concerns from escalating into significant problems.
Moreover, by recognising and rewarding outstanding team members during performance reviews, you can inspire them to reach their objectives and, concurrently, increase team member retention.
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