The Vital Role of Performance Reviews in Small Business Success

Some of the most important characteristics of small businesses are entrepreneurship, adaptability and agility. These important characteristics often lead owners and managers to decide that a traditional employee interview process does not fit into their small business culture. After all, the standard model of employee interviews can seem old-fashioned and more suitable for directed large companies than for flexible small businesses.

However, routine staff meetings have great benefits for small businesses, while still being able to stay true to their own culture and goals. Here are seven reasons why employee reviews are particularly important for smaller companies.

It is Difficult to Find Good Employees, and even More Difficult to Keep Them.

As the owner or manager of a small business, you want to assemble a team of employees who are dedicated, exceptional and over-ambitious. After all, each individual employee's contribution is much more important in a small company than in a large group. However, superstars are hard to come by, and it is likely that these employees want opportunities to develop and grow in their careers. That is one of the reasons why it is so important to have an established system for employee interviews. A properly designed evaluation process can help identify the strongest employees and, together with them, create a development plan that can promote their long-term career development, while giving employees who need improvement the tools they need to flourish.

Employee Interviews Can Help to Set Goals for the Business in General.

In an older view of employee interviews, the process has been seen as a way of making employees responsible for previous work - and especially for less good performances. However, performance appraisals for employees in small businesses can be more effective if the process becomes more future-oriented. By discussing the broad lines and helping the employees to set goals, they can become more committed to the company's future and success. When you discuss each employee's individual goals, it can in turn help you set goals for the business in general, while at the same time you can see opportunities to utilize skilled employees in a better way.

A Standardized Evaluation Process Makes Rewarding the Employees Transparent and Fair.

All employees want to be recognized for hard work and good performance, and for many this means a pay rise, a bonus or a promotion. Difficult situations can arise when one employee gets a promotion that another wants, and you have to explain why this is so. By integrating and linking annual salary adjustments and promotions to the employee interview, you can make these conversations much easier. Even if you don't use a formal rating system, communicating clearly and giving thorough feedback during employee reviews can help employees feel that any raises, bonuses or promotions are being distributed more fairly.

Planned Employee Meetings Help to Improve Communication.

As mentioned, effective employee interviews are not just one-sided monologues about the employee's performance. Instead, a good evaluation process can function as a platform for conversations between manager and employee about goals and development opportunities. Many people - from business owners to new hires - are not naturally confident and proactive communicators, but good communication is nevertheless essential for small businesses that want to face challenges and create growth. In this way, a comprehensive employee interview system that promotes regular discussions can have an enormous long-term effect on the relationship between manager and employee.

Potential Problems with the Employees Can be Handled Properly.

While you may hope that every employee you hire is a superstar, chances are that at one point or another, you'll run into employee performance issues. It is not necessarily necessary to have a formal evaluation process to deal with such problems, but many small companies have a close and "familial" culture that makes it difficult to have ad hoc discussions about the employees' performance. Moreover, a conversation in the lunchroom over a cup of coffee about an employee's constant tardiness is much easier to dismiss as a friendly reminder than as a serious discussion. Managers and small business owners who make decisions and communicate with employees about performance-related issues outside of a formal evaluation structure run the risk of legal problems if employees are treated differently. A structured performance review software makes it easier for small businesses to develop improvement plans for under performing employees, while avoiding the appearance of illegal discrimination.

You Can Design a System that Suits Your Needs and Your Style.

Formal employee interviews have a bad connotation for many, especially for owners and managers in small businesses. Such a system can seem excessively focused on ranking and disciplining the employees, while also creating a lot of unnecessary paperwork, and often this process seems like an antithesis to the small business culture. The beauty of the modern employee interview, however, is that it can be exactly what your company wants and needs. If you want to eliminate time-consuming written evaluations, you can do so. Are calls once a year too rare? You can introduce a monthly or quarterly system of one-to-one calls. In short, you can adapt employee conversations to your business style instead of the other way around.

Tools Can Make the Evaluation Process More Efficient.

A rule-based process for employee interviews often gives associations to long hours of surveys, filling in forms and manual compilation of performance data. Especially for small companies, this can make employee interviews seem like more work than they are worth. However, by adopting a software designed to manage employee interviews, you can streamline the entire process. Such programs make it much more automated to collect and analyze employee feedback, which saves a lot of time. Reports that would be overwhelming without software support, e.g. 360 degree assessments are now possible, which gives both managers and employees a better picture of their strengths and opportunities. In general, employee engagement software can take care of the heavy lifting often associated with the process, allowing you and your employees to reap the benefits of regular employee engagement without the burden of administration.

In essence, performance reviews play a pivotal role in the success and growth of small businesses. From identifying and nurturing talent to fostering communication and fair recognition, a well-designed review process, facilitated by tools like IceHrm, becomes a catalyst for individual and organizational advancement.