Performance reviews are an essential way to give feedback to your employees, but for the new entrepreneur, they can be intimidating. What’s one tip you’d give a new entrepreneur for how to make the performance review process go smoothly, and why?
These answers are provided by Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most successful young entrepreneurs. YEC members represent nearly every industry, generate billions of dollars in revenue each year, and have created tens of thousands of jobs. Learn more at yec.co.
1. Give the Employee Time to Prepare
Share the performance review document that outlines all the activities and metrics being evaluated with the employee well ahead of time. We also ask the employee to complete a self-evaluation on all the items. This allows the employee to be prepared and enables us to have a comprehensive discussion on where there may be misalignment on expectations.
2. Focus on Future Potential Over Past Performance
I advocate for “Feedback Festivals” over traditional performance reviews. Instead of intimidating formalities, make your regular reviews a collaboration about growth. I believe the best reviews aren’t about past performance but future potential. Address poor performance when needed. Then prioritize aspirations over appraisals. It’s not just about where they’ve been, but where they’re headed.
3. Take a Balanced Approach to Feedback
The mistake many new business leaders make is they are either too nice or too negative. Both can cause serious problems. When bosses are too nice, employees can get full of themselves and ignore glaring mistakes. Negative reviews can cause resentment. I recommend taking a balanced approach and focusing on what each employee did well and what they can do better next time.
4. Set Clear Parameters
The key to giving a good performance review is to have clear parameters for everyone. Both you and the employee need to know what aspects of work you will review. By sticking to predefined parameters like whether the employee hits their goals or contributes to meetings, you can stay fair and avoid personal biases. So, create a template ahead of time and let that guide your reviews.
5. Provide a Road Map for Improvement
To ensure that your performance review process goes smoothly, don’t just give your feedback to your employees; provide suggestions or a road map that can help them improve. This showcases that the review process didn’t just point out the problems but also offered potential solutions. This way, employees see you as a mentor rather than a supervisor being nitpicky about their performance.
6. Ask for an Honest Review of Your Performance Too
I like to make reviews a two-way street. I’m there to help them improve, but they are also there to help me improve. At the end of each review, I ask my employees to give me their honest review. I want to know what they think I did well and how I can do better next quarter. Opening yourself up in this way will make it much easier to build rapport, improve yourself and move everyone else forward.
7. Recognize Their Positive Contributions
I believe that performance reviews are about motivating your employees, setting expectations and helping them improve their performance. But in doing so, don’t be too critical about their work. Start by appreciating the positive contributions they have made toward your company. Then explain how they can improve their work to further enhance their performance.
8. Establish an Ongoing Dialogue
Ensure open communication and set clear expectations from day one. Establish a culture where feedback is not limited to performance reviews but is an ongoing dialogue. Formal reviews become less intimidating when employees are accustomed to regular, constructive feedback.
9. Build Trust With the ‘Sandwich’ Method
Plan your performance review by using a “feedback sandwich” approach. This means that you don’t pile negative news on your employees; rather, you compliment them, give criticism and then compliment them again. This helps build trust and keeps things light, and you still get your message across. In this way, you can make the review process smooth and easy.
10. Be Open to Discussion
A review process should not be a one-sided conversation where you assess the performance of your employees and give feedback. You should also listen to your employees and encourage a healthy discussion. If certain deliverables were unmet, ask for the reasons and assure your employees that you will do your best to get rid of the roadblocks and help them perform better.