Sunday, 26 April 2015

Performance Appraisal

How do you assess your employee’s performance in a small business? Traditional performance reviews or 360’s can seem very formal, almost artificial and influenced by perception particularly in a small business where you interact with your employees daily. Having some form of performance review system can however be helpful as a way to open the lines of communication and may highlight issues that need to be discussed but might not necessarily be as positive as they were once seen.

Many companies are transforming the way it carries out its’ reviews. Deloitte found that rather than focussing on what management thought of employees, it should focus more on skill sets, achievements and future possibilities. It is an interesting idea. I am always in favour of focussing on the positive rather than things not done or targets not met. I would be supportive and encouraging of the idea of looking at what skill sets your employees do have and what they can do to maximise their contribution to the company.

An employer posed me the question, how do ensure a new hire understands the company philosophy and ways of doing things and fits in? I suggest turning that on its head and looking at what the employee can bring to the company. The employee has been hired because of their education and/or experience and so assuming they are qualified to do the job then take it one step further to let them grow and be supportive of their skills and nurturing of their talent. Help your employee identify what they excel at and how that can best help the company. Deloitte believes its new system of reviewing performance allow them to spend more time ‘helping our people use their strengths’ (HBR April 2015).

Deloitte also found that annual reviews were not in line with the pace that business moves today. They now do quarterly or end of project reviews that focus on ‘future based statements’. The review has four such statements and it was decided the employee’s direct team lead is the best person to rate the statements. Each statement is rated on a five point scale. Prior to developing its new performance review system Deloitte was spending 2 million hours in meetings concerning reviews, it now uses that time on its employees rather than the system.

For you the small business owner, on a practical level an effective performance management system will:

Ø  Highlight poor performance
Ø  Reward good performance
Ø  Focus on strengths
Ø  Create training opportunities
Ø  Provide data for promotion or pay rise discussions
Ø  Improve performance


When designing the system focus on creating key statements relevant to your business on which you can rate an employees success in those areas or more importantly potential future successes. It is in directing attention to what can be achieved which will allow you and your employees to move forward and embrace all that your business can be.