My business only has a few employees, do I need to implement an Employee Review program?

I owned a retail store a few years ago and I only had a few employees. At the time, I did not think there was a need for an Employee Review program.  We were like a family!  Everyone was working together and had the success of this business as their first priority.  Each individual in my store knew that we were happy with their work and grateful to have them as our employees.  …Or so we thought.  What we didn’t realize was our employees were missing the value that an Employee Review Program provides – letting them know how they were doing as well as areas for improvement. As the employer, we were also missing the value of a once-a-year opportunity to touch base, make employees feel appreciated and work on things we could do better for our employees.

We discovered pretty quickly there are several great reasons for implementing an Employee Review program, whether you have one employee or a hundred:

Training Opportunities:

We always performed a 30-, 60- and 90-day (about 3 months) review with our new employees which allowed us to determine what additional training the employee might require to be successful in their position.  With a seasoned employee, you might determine their desire to learn a different skill which will be a win-win opportunity for you and for them. Utilizing a review that asks employees to list their weaknesses and strengths in their positions provides you with the opportunity to provide additional training. If needed, investing in outside training shows your commitment to their success with the company.

Some employers worry that if they train their employees, they will leave and go work for a competitor. It is more accurate however, that employees who don’t feel competent in the job they are hired to do are more likely to leave if they don’t feel like they have had adequate training.

Identify Promotion Opportunities:

Some employees are content with coming to work and staying in the same position throughout their tenure. The employee review process will allow the employee who wishes to advance within the company to notify you of their desire to do so.   This will allow you to engage with this employee and implement a plan to set them up for a potential promotion.  It is a win-win opportunity for you and for the employee.  You are investing in their future with your company.

Improve Overall Performance:

Employees should never be surprised at their annual review to find that their job is on the line due to poor performance.  Do not wait until the next scheduled review if you have identified a performance issue with any employee.   During the 30- 60- 90 days (about 3 months), poor or excellent performance should be addressed to help the employee be successful in the position.   It is costly to hire employees, so addressing performance issues early allows you to potentially avoid going back to the hiring process.

Strengthen Relationships and Loyalties:

It costs an average of $4,000 and 52 days (about 1 month 3 weeks) to hire an employee and $1,075 to train them.  These costs hit your bottom line.  Spending time analyzing and providing feedback during the review process allows you to illustrate that you are dedicated to their success within your company, which in turn strengthens the relationship. Loyalty increases for the company because they see you setting them up for success.  Having employees share their personal and professional goals allows you to partner with them to be successful, which strengthens the relationship and builds loyalties. Remember the review should be a 2-way conversation.

Strengthen Employee Engagement:

Employee engagement is the emotional commitment the employee has to the organization and its goals. Your job as an employer is to foster and strengthen employee engagement.

By reviewing the performance of your employees either semi-annual or annually, they will gain greater understanding of how their position contributes to the goals of the company and will likely become more invested in the outcome.  Allowing them to share their ideas will allow them to know that you care about their input and inspire them to be creative. You may find their different points of view can offer new ideas add energy to the team as a whole.



For additional resources on employee review programs, how to create a review process and the best practices for keeping your employees loyal and happy please contact us at the Small Business Development Center – SBDC – serving Collin and Rockwall Counties, Texas.   


Blog post by: Karen Raymond