Authored By: Amanda Kevin, Founder of ExpeditionHR
I’ve partnered with many businesses that had never formalized performance reviews, or found value in them. When this happens, it’s likely because they’ve never been part of a good review system in the past, or saw the connection between their business’s profitability and the intangible returns from the review process.
Employees are the backbone of your business, so much so that if someone leaves, or we don’t have the right people on the team, our profit can suffer. We’re often left with one of these two realities:
→ High Engagement = Productive Employees = Profitable Business
→ Low Engagement = Churn of Employees = Fluctuation in Profitability
Exciting news! Performance reviews don’t have to be painful. In fact, done right they are a phenomenal way to create synergy with your employees, celebrate their successes, and help them grow into the professionals they want to someday be. Let’s chat about some of the other ways that performance reviews can impact your profitability.
Drives Accountability
How many times have you heard the response, “that’s not my job”? When we don’t provide clear direction around job responsibilities, we don’t have much to hold employees accountable to. We must get clear on who is responsible for each task, and better yet, show them how inaction disrupts the larger ecosystem they’re working within. This can incur significant cost to your business if work is being left undone and no one is holding themselves accountable. It will likely lead to unhappy customers too.
Promotes Loyalty
Employees tend to stay with a business when they feel appreciated, valued and heard. If employees don’t have a platform to talk about their performance, goals and compensation, they’re left to ruminate on what they are doing right or wrong, what their career path looks like, and if you’re even happy with the work they’ve been doing. I’ve learned that when you create this kind of space, it often leads employees to different companies where they feel a closer connection. Employee churn is an expensive cost, so build loyalty where you can – like with performance reviews!
Creates a Growth Path
No matter what kind of employees you have, everyone seeks growth. Both personally and professionally, we often want to know – what’s the next thing? Smaller businesses sometimes feel that their reach is limited, because they have slim resources and a small hierarchy. I encourage you to think bigger than your business and see what other opportunities are out there for your employees that better connect them to your brand or industry. Is there a conference they can attend? A course they can complete? This also helps you to create a succession plan, proactively identifying when an employee might be seeking bigger opportunities than what you can provide. This gives you a head start on the recruiting process.
Identifying Superstars
If we don’t track performance, how will we ever realize who our top performers are? How to decide who to give what percentage of your budget for raises? Or who you should spend the majority of your time with training for management? When we don’t prioritize performance reviews, there’s missing pieces of the puzzle, and we are left to make a less informed decision. Retaining your top talent is essential to having a profitable business. Top talent usually helps businesses run smoothly, customers enjoy working with them, and they go the extra mile to see the business succeed.
Performance reviews don’t have to be a heavy lift. And if your current process is painful and boring, re-evaluate it. It’s easy for things to fall through the cracks as a busy business owner, but I encourage you to shift your perspective and recognize that performance reviews are not just another HR task, but a way to support the overall growth and health of your employees and your business.
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Amanda Kevin is the Founder of ExpeditionHR. Leveraging her 10+ years of experience building HR functions for several high growth startups, her passion is in creating a fulfilling and meaningful employee experience. Through alleviating compliance stressors, creating policy that upholds workplace culture, and creating a work environment that professionals will be drawn to, ExpeditionHR will guide small business owners towards fulfilling their wildest dreams.