In some businesses, end of year performance reviews consist of a manager lecturing employees on their behavior of the past year with little room for employee input. No wonder reviews can make employees nervous and discourage engagement! Break the mold and elevate your business strategy by reexamining the way you lead performance reviews.

Why should business owners conduct performance reviews?
By conducting employee performance reviews, you’re establishing a precedent that you care for both your employees and your business. They help reinforce your company culture, re-establish expectations and responsibilities, and determine needs for the future. Performance reviews can answer some of the following questions:

  • Connect with employees: Are they fulfilled with their work? Happy with their current position? Or are they stressed and looking for a change? Are you providing enough guidance, support and reinforcement?


  • Make HR decisions: Do they need help in their roles? Does your business need to hire new people? Do you need to expand or decrease your workforce? Do you need to update your employee handbook? (Hint: you do.)
  • Make payroll decisions: How to determine raises and bonuses for all employees? How to implement any changes to offered benefits such as paid time off and leave, or a work-from-home policy.


How should a business owner prepare for a performance review?
You should always enter into a performance review having thoughtfully prepared and organized your data and talking points. If you have not sufficiently prepared, reschedule the review for another date. Make sure to:

  • Gather employee data and work examples from prior meetings, surveys and hiring documents
  • Review previous reviews and cross-check with current data
  • Prepare notes and an agenda, and share the agenda with the employee prior to the meeting
  • Set expectations such as meeting duration, topics, and date and location so that your employee is adequately prepared
  • Establish the appropriate time and place and account for noise, privacy, and comfort


What should a performance review look like?
Every business is unique and some things that work for one company may not work for another, but the business owners should always choose phrases carefully, actively listen and conclude the meeting on agreed upon terms. Here are some things to keep in mind when conducting performance reviews with your employees.

  • Connect more than once a year. You might be doing one end-of-year review when you determine raises and bonuses earned and explain any payroll or changes to benefits occurring in the new year. Consider meeting with your employees on a quarterly or monthly basis to see how things are going for them. A lot can change in your business and a lot can change within your employees during the year. You’ll also be able to gauge their feelings about the job and see their professional development incrementally.


  • Have a conversation. Reviews shouldn’t be you telling your employees how the year went. It should be a two-way conversation where you can both discuss feedback, challenges and opportunities, and any future career goals. Avoid talking too much about the past and focus on coaching them into the future.
  • Be honest and transparent. Make sure your employee has read and understands the agenda that you’ve created. When you both know what to expect, there’s no need for stress or nerves. It also allows time for your employee to note what they’d like to discuss.
  • Be objective. Stay away from your personal opinions or the opinions or comments from others. Your employee’s review should be based solely on reliable data that shows their work performance and nothing else.
  • Follow up. Provide next steps such as needs relating to payroll, benefits or HR information, and short- and long-term goals for your employee’s development. The key is to make sure you follow up—you don’t want your employees to think your words don’t really mean anything.


How can performance reviews benefit your business?
Your business is dependent on your employees and how they view their individual position, their value, and the company as a whole. Benefits of employee performance reviews include:

  • Confirming employees are suited to their position
  • Reminding employees that their work directly impacts the company’s mission
  • Establishing compensation adjustments, which affect bottom line
  • Determining any employee exits or need for new hires


By having one-on-one meetings with your employees on a regular basis, you’re setting the expectation that you (and your company) care about them personally, their professional contributions, and their future goals. It also helps you to be more mindful of the day-to-day workings of your business, what challenges and opportunities may exist, and how to resolve issues before they happen.

At Payroll Management our employees matter a great deal, and we know yours do too. Have questions? We’re only a conversation away.


Sources: Northeastern University, Quantum Workplace