Running a Small Business

Lesson 4: Subcontractors and employees

Performance reviews

You have a great team and they're doing everything you want done extremely well but there are a few things you'd like to change. One of the team members has also changed and not for the better. Finally, you want to take the company further, do new things and don't quite know how you can get the team on side. There is a ready-made tool which you can use and it is the performance review.

A good performance review in a small business is a mechanism which allows the employer to set the course for the future and lets the employee address concerns in a formal setting. Sure, you see your employees every day and your door is always open but when can they count on an hour of your undivided attention on general questions? That's what the performance review guarantees.

If you've done your hiring in an organized way, an employee was hired to perform certain tasks. He received a job description which described what he was supposed to do, how to do it and how his success would be measured. The first job review with an employee should re-visit that document.

In preparation for the job review, you have to look at the record and find out how the employee has performed. The job description said how that would be measured - now you have to get the figures. The employee should also be given time to prepare and be told that his performance will be discussed in terms of what was expected when he was hired. That way, there are no surprises.

Proceeding this way means that personalities are not an issue. The facts will speak for themselves. If the employee has surpassed expectations, congratulate him, discuss how he sees his future in the company and set new goals for his performance for the coming year together. It is in setting these goals that you have the ideal opportunity to influence the direction of the company. These goals will then be looked at again at the next performance review.

If he has not performed as expected, ask why. A good employee will offer explanations, not excuses, the difference being that the former is an account of what happened while the latter are reasons why he couldn't perform. Never dwell on his failure - your expectation must be that he will do better in the future. After all, you hired an excellent employee. With this in mind, the atmosphere will be positive even if targets have not been met.

In any case, ask how he sees his future role in the company and set new goals together which will be just as challenging as those he didn't meet. Your purpose here is to avoid de-motivating your employee and to give him another chance to show what he can do. That's what you're doing by setting high goals and, at the same time, you're sending the unmistakable message that here, in your company, performance is tracked and consistent failure to meet goals is not accepted.

It may be appropriate to raise issues other than performance at the review and the employee may also have concerns. If anything raised is important and cannot be resolved at the meeting, it should be recorded. In all cases, whether the concern is yours or the employee's, you would not impose a solution. Make several suggestions how the situation could be handled and then ask what the employee will do. It is much more effective to explain what the possible solutions with their consequences are and to let the employee make the appropriate decision. You want your employees to be motivated, self-sufficient performers and they have to make the decisions which concern them. Such decisions should be recorded and followed up.

Once you have structured the performance review so that it is always a positive experience, it will be regarded as a good opportunity for you and your employees to make sure you're on the same page as far as performance is concerned and to raise any other issues which may be troubling the relationship. If performance reviews are dreaded, there is something wrong and they are not being carried out as detailed above.

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