Small Business 101 - Managing Employee Performance

Written by: Christina Merhar
Originally published on July 18, 2014. Last updated February 14, 2018.

Whether your business is just getting off the ground or you are a well-established small and growing company, managing employee performance is a key ingredient to a productive and happy workforce.Managing Employee Performance

And yet without a formal human resources department, many small business owners lack a formalized way to manage employee performance. The good news is there are simple practices a small business owner can start to successfully manage employee performance.

Here's a quick look at what to include in performance reviews, tips for managing employee performance, and what to do when it's time to terminate an employee.

What to Include in Performance Reviews

Small businesses should have processes in place to regularly review how new and existing employees are performing. The performance reviews should include:

  • Objectives that an employee needs to achieve over a period of time.

  • An assessment of their progress toward those goals, and if needed, a way to address specific performance issues.

  • A consistent rating system or scale to determine how well individuals meet specific goals.

  • Goals based on an employee’s job description, projects, or behavior, as well as “stretch” goals that challenge or expand an employees’ ability.

  • An opportunity for the employee to provide feedback.

Employee Performance Tips

Remember, one of the reasons for formally managing employee performance is to stay comliant with labor laws such as treating employees fairly. As such, here are some tips for managing employee performance:

  • Keep up with regular performance reviews. While this feels like a challenge to any multi-tasking small business owner, a consistent process will make evaluations, compensation, and termination a smoother process.

  • Document everything. This includes all performance reviews, meetings to discuss performance problems, and any corrective actions.

  • Be consistent on employee evaluations (treat all employees fairly and equally with regard to leave, pay, discipline and other employment issues).

When You Need to Terminate an Employee

Despite a small business owner’s best effort, sometimes things do not work out. To properly deal with terminations:

  • Have procedures in place about performance management and termination.

  • Keep detailed records of any misconduct or violations.

  • Be consistent employee to employee.

  • Meet privately, face to face. If possible, have another manager in the room for support.

  • Have necessary paperwork complete ahead of time so the employee can leave immediately after.

What are your tips for managing performance at a small or growing business? Leave a comment below.
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Originally published on July 18, 2014. Last updated February 14, 2018.


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