How can a performance evaluation system help your small business?

As a small business owner, you want to get the best out of your employees and help them grow professionally. A performance evaluation system can help you achieve these goals by providing regular feedback, identifying strengths and areas for improvement, and aligning individual and organizational objectives. In this article, you will learn how to design and implement a performance evaluation system that suits your small business needs and culture.

1 Benefits of performance evaluation

Performance evaluation is not just a formal process that happens once or twice a year, but an ongoing communication between you and your employees that helps you monitor their progress and recognize their achievements. This process has several benefits, such as increasing employee motivation, engagement, and retention by showing them that their work is valued. It also enhances employee performance and productivity by setting expectations and providing constructive feedback. Performance evaluation can facilitate employee development and career planning by identifying skills, interests, and aspirations. Additionally, it aligns employee and organizational goals while providing data and insights on employee performance, potential, and needs to support decision making and planning.

Add your perspective

Dr. Amber Bartlett, PsyD

I help CEOs, Executives, & Business Owners use the psychology of communication to TURN DOWN their employee turnover
Report contribution
If your goal was to lose weight, would you weigh yourself once a year? I’m guessing not. Same goes with performance. If we want our employees to excel we need to make sure we keep them apprised if their progress and motivate them to keep going. Regular check ins can help you as an employer minimize major issues by catching the minor ones. As an employee, you’re more likely to meet expectations by getting regular feedback and notification of any changes. There is no con to a business doing performance check ins on a regular basis…they can only benefit.

Like
Lori Power

Owner | MP Benefits Inc. * Industrial Athlete Benefit Specialist * Author | GBA | CEPA (Certified Exit Planning Advisor) | Certified Facilitator | Advocate of "Workplace Mental Health Leadership"
Report contribution
In my experience the best way to do a performance evaluation is to KNOW first what performance to measure. Tracking your customer experience to the employee response to that customer is the best way to determine which performance measures are most important/impactful to the bottom line. Then the organization should be able to answer am I providing my employees with the tools necessary to perform as I expect them to ... for instance, if employees are expected to be on the phone all day, what do I do to ensure their hearing is 100%. If they can properly hear the customer, how can they properly execute?

Like

2 Steps to create a performance evaluation system

Creating a performance evaluation system for your small business requires some planning and preparation. Firstly, you should define your purpose and objectives, such as what you are hoping to achieve with the system and how it will benefit both employees and the business. Secondly, you should choose your methods and tools, such as self-assessment, peer review, rating scales, checklists, or portfolios. Thirdly, it is important to communicate and train your employees on the process, expectations, and responsibilities. Fourthly, you should implement and monitor the performance evaluation sessions to ensure that they are effective and meaningful. Finally, you should review and improve the system by soliciting feedback from employees and stakeholders in order to identify any issues or gaps.

Add your perspective

Lori Power

Owner | MP Benefits Inc. * Industrial Athlete Benefit Specialist * Author | GBA | CEPA (Certified Exit Planning Advisor) | Certified Facilitator | Advocate of "Workplace Mental Health Leadership"
Report contribution
One thing to do is do a step by step metric of the customer experience ... then overlap the employee relationship to that experience ... tasks that need to be completed to execute. Work backward from the end result expectations. Then follow the three step rule: What works well? What needs improvement? What's the one thing that needs to change? Be flexible and agile which will boost productivity and engagement of your members to support the ultimate goal.

Like

3 Best practices for performance evaluation

To make your performance evaluation system successful, you need to follow some best practices that can enhance its quality and impact. For instance, align your system with your business values and culture; involve your employees in the design and implementation; focus on the future; be objective, fair, and consistent; and be supportive, respectful, and positive. Your system should reflect and reinforce your mission, vision, and values, while also supporting desired behavior. Involve employees by asking for their input and feedback, and give them autonomy in setting goals. Performance evaluations should not be backward-looking but should focus on what employees can do in the future by setting SMART goals. Objectivity is essential when evaluating performance; standards and expectations should be applied to all employees without favoritism or discrimination. Lastly, evaluations should be a supportive dialogue between employer and employee that emphasizes the positive aspects of performance.

Add your perspective

Lori Power

Owner | MP Benefits Inc. * Industrial Athlete Benefit Specialist * Author | GBA | CEPA (Certified Exit Planning Advisor) | Certified Facilitator | Advocate of "Workplace Mental Health Leadership"
Report contribution
Effective feedback never goes wrong ... The three step rule: What works well? What needs improvement? What's the one thing that needs to change? Remember the value of questions ...this allows us to uncover solutions, and create a deeper understanding. The key is positioning the question to pique interest, explore ideas, open creativity and be curious to the outcome. Instead of “why did this happen?” perhaps, “how can we think about this differently”, which removes the “blame” of the answer to move toward what is possible. “The power to question is the basis of all human progress.” ~Indira Gandhi.

Like

4 Challenges of performance evaluation

Performance evaluation can be a challenge for small business owners, especially when you lack the time and resources to devote to it. Your employees may also be resistant or anxious about the process, as they may perceive it as a threat or a waste of time. Furthermore, you may have unrealistic or conflicting expectations from your performance evaluation system, while your employees may have their own agendas. Lastly, you may face inaccuracy or inconsistency in your performance evaluation system, such as having incomplete data or unreliable methods.

Add your perspective

Lori Power

Owner | MP Benefits Inc. * Industrial Athlete Benefit Specialist * Author | GBA | CEPA (Certified Exit Planning Advisor) | Certified Facilitator | Advocate of "Workplace Mental Health Leadership"
Report contribution
Without ongoing effective feedback on a consistent basis for proper performance evaluations, the organization may sacrifice quality people and customers. For instance, recently a painter sent in their "B" team to complete a ceiling job. The client was left with a mess and splatters. They didn't pay less for the job so why did they get the "B" team? An unwillingness to engage in evaluation will cost this company a solid review, repeat business, potential referrals and a damaged reputation.

Like

5 Solutions for performance evaluation

To optimize your performance evaluation system and make it more efficient and effective, you need to find solutions. Prioritize and delegate tasks, outsource or automate aspects of the process, and communicate and engage with employees. Additionally, set and align expectations, define objectives and indicators, collect reliable data, use valid methods and tools, and apply fair criteria and standards. This will help ensure accuracy and consistency in your performance evaluation system.

Add your perspective

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

Add your perspective

How can a performance evaluation system help your small business?

1

2

3

4

5

6

1 Benefits of performance evaluation

2 Steps to create a performance evaluation system

3 Best practices for performance evaluation

4 Challenges of performance evaluation

5 Solutions for performance evaluation

6 Here’s what else to consider

Small Business

Rate this article

Thanks for your feedback

More articles on Small Business

More relevant reading

How can a performance evaluation system help your small business?

1

2

3

4

5

6

1 Benefits of performance evaluation

2 Steps to create a performance evaluation system

3 Best practices for performance evaluation

4 Challenges of performance evaluation

5 Solutions for performance evaluation

6 Here’s what else to consider

Small Business

Rate this article

Thanks for your feedback

Explore Other Skills