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Annual performance reviews serve a vital function for both your employees and your small business. Namely, they allow you to acknowledge and celebrate an employee's good work while also identifying how any gaps in performance can be addressed and resolved. The best results come from an open discussion that takes place in an environment of mutual trust and respect. Managers and employees alike can then walk away with renewed commitment and purpose.

While you can do this on an annual basis, why wait a year to achieve this goal?

Benefits of Ongoing Performance Reviews

Business experts stress the value of implementing a regular, ongoing review process. As Forbes asks: If the evaluation only takes place at year's end, how are employees "supposed to know what's going right or wrong the other 11 months of the year?" By contrast, setting up a schedule for regular performance reviews (on a weekly, monthly or quarterly basis) offers a compelling range of benefits so that you can:

  • Establish new objectives for the next month or quarter
  • Assess how well employees are progressing toward their goals
  • Address any work-related obstacles on a real-time basis
  • Resolve any issues arising from manager/employee miscommunication

Further, ongoing meetings offer the chance to more closely assess an employee's level of engagement with the business. Engagement, after all, is the foundation of effective retention. If and when an employee starts to "check out," you can detect a dip in enthusiasm sooner rather than later. Explore new projects or opportunities, or a different way of going about their job, that improve overall engagement.

Tips on Conducting a Performance Review

Managers can be more effective in their role specifically, in managing and motivating their small business teams by conducting regular performance reviews. Keep these tips in mind:

  • Talk, but also listen. The best results come from an honest conversation, not a one-sided critique. Think about how you want to approach the review and look for ways to encourage a two-way dialogue.
  • Ask open-ended questions. An evaluation isn't just about identifying shortcomings. It's a venue to look at the bigger picture, including how your employees see themselves moving forward. Ask them about their goals. Are there ways in which the manager can support a new direction? What's your idea of the effectiveness of ongoing performance review sessions?
  • Be constructive. Sometimes, performance discussions accentuate negative aspects (at the expense of positive input), and leave employees feeling discouraged about the future. Even with employees who need more intensive reviews, try to highlight areas in which they meet or exceed your company's standards. Praise works as a motivator. Harping on shortcomings without providing constructive suggestions for improvement does not.
  • Consider training. Look at ways in which formal training can improve the overall performance review process. Performance management training focuses on building techniques that boost employee engagement and development. Often, the focus is on enhancing a manager's ability to address job performance and priorities, as well as encouraging an employee's professional growth.

Achieving Success With Effective Reviews

Once you explain how performance reviews can help your team, employees will be much more receptive to them. These conversations can truly benefit everyone involved. While annual performance reviews are a time-proven tradition and the frequency of your reviews will ultimately depend on your business needs briefer, regular reviews can achieve the same desired results and help keep everyone on the same page.


Lee Polevoi is a veteran freelance business writer specializing in exploring the opportunities and challenges facing small businesses in the U.S. today. A former senior writer for Vistage International (a global membership organization of CEOs), Lee regularly produces articles, white papers, blog posts and more for the diverse small business audience.