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Establishing an Employee Review System

By setting clear standards and involving employees in the review process, your entire company can benefit from formal appraisals.

Opinions expressed by Entrepreneur contributors are their own.

Q: I'd like to establish a formal review process for my employees. Do you have any suggestions?

A: Increasingly, entrepreneurial companies are implementing formal employee evaluation tools. Both in the short term and long term, if properly administered, this process will be extremely effective and motivating. Some of the common benefits are increased revenue, creativity, , employee satisfaction and career path clarity. Why? Because employers and employees can clearly understand and chart employee value and potential to the company.

Career specialist and author David Campbell once said, "If you don't know where you're going, you'll probably end up someplace else!" When and non-management can work together to improve performance and outcomes, everyone wins.

Generally, the three areas you need to comment on are quite similar. They refer to what the person is doing now; how well he or she is doing it; what needs to be changed, improved or learned now and in the ; and their career path: where the individual is or can be headed in the short and long term at your company.

Employers and employees have the opportunity to share their current and individual assessment of the employee, plus discuss plans for growth into future positions, knowledge and skill bases. I specifically added the word "employee" to the previous statement. I firmly believe that if the employee can provide input to the performance appraisal interview prior to the evaluator's providing comments, the employee will feel he or she has had an opportunity to offensively evaluate self-performance.

Clear, action-oriented, positive and negative statements and steps need to be expressed here by both parties. In that way, the employee can learn what areas need to be improved or acquired in order maintain or continue to move ahead on the career path. The employer can learn the employee's goals and, if interested, assist the employee in gaining the desired position or responsibilities.

Specifically, as a leader, you can address the particular actions and knowledge sources where the employee achieves or is deficient. Hopefully, these comments and interventions will be made all during the year, as opposed to the more common practice of a once per year formal or informal evaluation event. Take this occasion seriously as an opportunity to praise and therefore further motivate the individual. Also, use this to identify key deficiencies and opportunities for growth in the employee. Many evaluators either understate or overstate the negatives or positives. The usual result is that the employee is overwhelmed with either the number or intensity of negative statements or is disappointed with the lack of positive ones.

I strongly urge that these statements be balanced to point out that no totality of employee performance is all effective or all ineffective. Rely on these key questions to guide your comments: "How can the employee grow, improve and build on his or her current set of successes to contribute a maximum to the company's success?" "What can I as the leader do to point out and/or provide resources, guidance and opportunities, while minimizing the obstacles for the individual to grow, change and achieve?" "What does the individual need to do on his or her own to continue to grow and succeed?"

Once both you and the employee seriously and objectively assess the employee's current and future resources, interests, knowledge, skills and abilities, you, that employee and your company will benefit!

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