Many small businesses have informal employee performance reviews, but few take the time to create a formal process. Taking the time to put a formal process into place can be very beneficial. It helps employees clearly understand what is expected of them and how they can improve. It also provides documentation that you can reference when you are considering handing out raises or when you have to let someone go.  Here are some tips for putting the process in place:

1. Create a standard form that lists job performance items like punctuality, ability to work with a team, dependability, quality of work, etc.  Have the employee rank themselves in each area and have their manager do the same. Then review how the rankings compare. Discuss each item with the employee and be sure to let them know where they excel and where they can improve. Be sure to reference the rankings at the next review to see if there has been improvement.
2. Use specific examples to help illustrate the areas where you feel they excel. This helps employees see that their good work doesn’t go unnoticed.
3.  Include a section in the review for goals.  These should be measurable and specific to each employee. Talk with the employee about ways the company can help them achieve their goals. Then, review the goals periodically throughout the year.
4. Be honest. Most employees want honest feedback. They want to know ways they can improve in order to get a promotion or just do more valuable work. Just make sure that you are providing constructive criticism and suggestions on how to improve.
5. Give employees a chance to discuss any roadblocks they have encountered over the year.  Discuss ways the company can help them overcome these obstacles in order to become more efficient at their jobs. Document this as well so that the company is held accountable.