We need to talk: the fine art of the performance reviews

Small businesses of all kinds should consider having regular conversations with their team about performance. Failing to do so can leave you out of touch and in the lurch.

Why review your people?

Many believe conversations about employee performance only tends to hinge on whether a pay rise is warranted and does little to develop people in a growing business. This cynicism usually arises when performance reviews are done badly and the manager and the team member are poorly prepared. When done well, you're likely to see increased productivity, a boost in morale and an injection of fresh ideas.


What’s not to like?

For a start, reviewing performance shouldn’t be a one-off yearly event. The business environment and people change too quickly for that to be adequate. Little and often is the general rule. And If you don’t already have a performance management scheme set up, don’t be alarmed. It’s a matter of having regular, albeit documented, conversations with your people to check how they're progressing, how happy they are, whether they have any gripes and what gaps they might have in their understanding of their role.

Owners and managers are often uncomfortable with conducting such conversations because they feel they're sitting judgement of their people. This is not the case, performance coach Tim Baker says. “I like to make a distinction between performance appraisal and development. I think we’ve been obsessed with appraising people. You get a better return by developing people, and you are developing them while you are actually doing the review and giving people feedback.”

Keep a record of your conversations

One important aspect of performance development is capturing the results of the conversation. Documenting regular catch ups also is great in cases of unfair dismissal, where a paper trail is key. There are cases of companies winning successfully defending cases of unfair dismissal after they were able to provide documentary evidence that an employee failed to improve after being put on an improvement plan and were given appropriate notice to improve.

You should have a system that reminds you and your people when it’s time to chat, so both parties are adequately prepared. If you wish to create your own format, consider the Fair Work Ombudsman’s checklist on setting up a performance system.

Keep records of your performance review conversations with your staff

Setting up a review system

Baker suggests five 15-minute conversations over a six-month period. All small businesses are usually time-poor when it comes to people management but this isn't an excuse for regular catch ups with your people. (See breakout box below.)

These conversations are best had in your office, or a meeting room, but if your business lack these amenities consider taking the conversation to a neighbourhood cafe.

While Baker recommends these conversations taking place in twice-yearly cycles, he understands that some business owners might baulk at the time spent, even though it amounts to just three hours of conversation overall with your team members. ”When some organisations are not ready for that I suggest once a year to start with and then if you can build it up to twice a year then great. It depends on your culture. We are talking about people’s development and that’s a good thing.”

Five conversations about performance you should have

#1. This is an initial chat about ‘climate’ (or job satisfaction) where team members are asked to rate their current satisfaction on a scale of one to 10 and are asked why they nominated their rating.

#2. Strengths and talents. Avoid concentrating on weaknesses, argues Baker, who believes business owners of can get stuck on what’s going wrong rather than what’s working.

#3. This is the chance to discuss gaps in development and opportunities for personal growth.

#4. Learning and development is the topic here. This doesn’t necessarily mean expensive outside courses. It could comprise a internal skills improvement program, with you or another member of the team (if there's more than two of you).

#5. Feedback on improving the business. Ask, ‘what ideas can we bring to our workplace to make us more efficient and effective?’