If you’ve ever worked for someone other than yourself, chances are you’ve had to deal with an icky performance review. This hasty corporate exercise is rightly despised—they’re often tedious and time-consuming, yet offer questionable benefits to companies, managers, and employees.
Simple time tracking that syncs with payroll.
But owning your own business gives you the opportunity to mix things up.
We quizzed three small business owners on their performance review practices to glean some tips on how you can kick off a meaningful and memorable performance review cycle. Stop Googling “annual performance review templates” and instead, read on for some advice on how to shake things up.
Step 1: Know your audience.
For Albert Ciuksza, conducting a successful performance review all comes down to research. He’s the director at Solutions 21, a Pittsburgh-based consulting and leadership training organization with offices in Nashville, Kansas City, and Phoenix. Albert says that Solutions 21’s research shows that traditional annual performance appraisals simply don’t work, particularly for Millennials.
Here’s what Albert recommends you do instead:
Recognize that annual chats aren’t going to cut it.
Albert says the “once-a-year, holy-crap-what’s-coming?” conversation is common because bosses and companies aren’t willing to spend the time on regular reviews. But setting up more frequent one-on-one discussions about what an employee is supposed to accomplish by a certain date creates a regular agenda for performance evaluations.
“The increase in time needed to implement is greatly offset by the effectiveness of everybody in the process,” he says.
Give real-time feedback.
Albert says this is especially important if your team includes a lot of Millennials, who experts predict will make up half of the workforce by 2020.
Millennials like to know where they stand on a consistent basis, and conducting eight to ten “check-in conversations” a year helps make sure you’re on the same page as your employees about what’s expected of them.
Dedicate the time.
Being present is important. Block off time to have regular conversations, and make it clear to all of your employees that this is an important process.
Here are a few more must-dos:
- Put a do-not-disturb sign on your office door.
- Turn off your monitors.
- Leave your phone in another room.
- Don’t let the conversation veer toward the drama of the day—focus on the employee’s performance.
Albert says Solutions 21, which is a team of 12 spread across four locations, is “incredibly disciplined” about the performance review process. “We eat our own dog food, absolutely,” he says. “Everyone respects the process. No one interrupts one-on-one meetings.”
Divvy up the performance-review workload.
According to Albert, you should only be managing the performance of a select number of people. So if you have 20 direct reports, it might be worth thinking about a restructure.
“Are you really making each of those individuals better?” Albert suggests asking yourself. If not, hiring or promoting some people might be necessary.
Step 2: Ditch the corporate model.
For those starting their own business after spending time in the corporate world, it can be easy to run with what’s familiar. Joe Serkoch, owner of Orionvega, a Pittsburgh-based video production company, says he realized quickly that a performance-review model that works for 200 employees won’t work for a small team.
Here’s how Joe was able to make reviews work.
Joe says that when he started the company, he found a template online that covered eight different aspects of performance, ranging from punctuality and communication to quality of work and ability to work independently. He used that to evaluate employees.
But after awhile, Joe realized an approach like that doesn’t work on such a small scale. “We used to put things on paper, and it seemed like every year, we were just writing the same stuff,” he says.
When you’re dealing with so few people—Orionvega has just four employees—it makes sense to figure out what works for each individual employee.
For someone focused on sales, Joe says their performance is “really driven by the bottom line—how much money did you bring it? How much money didn’t come in that should’ve come in?” But for creative types, measuring performance can be more difficult. Orionvega’s performance reviews are “extremely personalized,” Joe says. “We don’t follow one model across the board.”
Pick your employee’s brain.
For small business owners, performance reviews aren’t just about the employees. Joe says he has his employees also review him during performance review chats.
“A lot of times, your employee’s work is only going to be as good as the resources you provide,” he says. Gathering information from the team about what would help them improve allows Joe to give them the tools to help his employees have a better year.
As small businesses grow from just one or two employees to a team of full- and part-timers, the performance review process will change. For Matt McIver, co-founder of Laxalt & McIver, a design studio based in Reno, Nevada, the process has become more formal.
He says his team of five is “a tight-knit little family.” But when he had just one employee, it was easy to have casual chats every other week over lunch. With a recent hire, however, he conducts more formal sitdowns, giving him an opportunity to evaluate the employee’s performance as well as ask for feedback on his leadership style.
Don’t do away with data.
Even if you opt for an informal review process, it’s important to measure employee performance in some way. Matt says Laxalt & McIver uses Harvest, a time-tracking tool, to keep tabs on his team’s hours, allowing them to offer scheduling flexibility without worrying about employees taking advantage of the policy. Consider incorporating other tools to help you get a clearer picture of how your team is operating.
The performance review process for your small business might look different than the process at your previous corporate gig, and it might change as your business evolves. And that’s okay. Chuck the generic review and instead, thread together an approach that provides a real snapshot of what’s happening on your team—no annual awkwardness needed.