Performance reviews are necessary in any business. When hiring employees, always have a starting wage, usually based on experience. Starting an employee at top pay gives them nothing to work towards. People need goals and structure. Without policy and procedures, you may find yourself with your back against a wall at some point. The employer/employee relationship is a very delicate one. No matter how well you get along, it is a business relationship not a personal relationship. These lines can become blurred easily. With specific policies in place and follow through, you can protect your business from potential future crisis.
Keep an individual employee file for each employee. The file will contain their employment records. This keeps each employees’ personal information available, in one file, for reference. Use this file when making decisions regarding pay and promotions. This information is also important when downsizing.
Following is a list of procedures and processes affecting advancement and raises. This list is a solid foundation and starting point. It will ensure employees are aware of your expectations, so there are no questions when review time rolls around. You should have these procedures listed in your company handbook and written out in detail.
Pay rate and raises – Document a specific starting pay rate for each individual employee, and their position with the company. Track pay rate and history of employee raises in the individual employee files. You will reference this when it is time for employee reviews.
Attendance – Maintain specific employee attendance records. An attendance policy is important. Include paid time off, unpaid time off, limits of time off, vacation pay, and disability pay required by federal and state law. This policy should also be in your company handbook and tracked in the employee files.
Job Performance – Document any issues with job performance, include verbal and written warnings. Discuss areas where a need for improvement exists. Discuss the outcome if applicable and if a need for change still exists. Devise a plan of action. Also discuss accomplishments of each employee. It is important to point out strengths in employee reviews with weaknesses to keep moral up.
Performance reviews are important for small and large businesses. They outline your expectations as an employer and ensure you won’t feel obliged to bend the rules. Without performance reviews, you will experience employees with unrealistic expectations. Be honest from day one, so there is no confusion in the future.
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