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A small business guide to carrying out effective staff appraisals

November 7, 2016

When staff appraisal or review time rolls around, many small business owners view this as a waste of their valuable time. This is not the case, however, and employers who spend the time and effort to make these meetings are a success will often get much more out of staff appraisals than they put into them.

In this guide, we look at staff appraisals and outline how smaller employers can reap the benefits of an effective employee appraisal scheme;

What are staff appraisals?

Staff appraisals are periodic reviews between employer and employee to discuss performance, development and support, based on the employee’s job role, individual targets, key performance indicators (KPIs) and job-specific objectives.

Not only should performance since their last appraisal be reviewed but they can also be used to agree future performance until their next appraisal. They are usually held at regular intervals such as quarterly, half yearly or yearly.

The appraisals are usually carried out by line managers but, in small businesses, it is likely that the person carrying these out will be the only manager or the owner. This means it’s essential that preparation is put in to carrying out appraisals so they run smoothly and on schedule.

Preparing for appraisals

To ensure appraisals are an effective use of business time, some thought should go in to the appraisal before it’s held.

If this is the first time an appraisal has been carried out for a new employee, it’s important that both parties are reminded of the job description for that particular role and if any objectives had been agreed at the beginning of their employment.

If this is a continued appraisal, then the outcome of the employee’s last appraisal should be reviewed, ensuring that the employer understands what was agreed so this can be discussed.

Preparation may also require speaking to other people in the business to get their views on the individual’s performance, especially where they have a direct supervisor or report in to someone lower than who is holding the review.

Make notes of anything which needs to be discussed during the appraisal so that nothing important is missed out at the meeting.

Employers should also remind the employee that their appraisal is coming up; not to scare them but so they can prepare too. It may be useful to provide the employee with a copy of the notes made at their previous appraisal so they can also review what was agreed and think about their contribution to the appraisal in advance.

Appraisal meetings

Appraisal meetings typically comprise of reviewing the employee’s performance since their last meeting, discussing positives, concerns or issues with the employee and then agreeing aims and targets for the forthcoming review period.

Appraisal meetings can also be the best place to discuss additional matters such as salaries, bonuses, absences and general observations about the employee at work.

It is important to remember that the meeting is a two way street; the employee should be given an opportunity to talk. Not only could they bring up issues that the employer is unaware of but they may have ideas or suggestions that could be beneficial to the business in the future.

During the meeting, the employer should be taking notes of what is being discussed. It is important that future performance, targets or areas for improvement are agreed in this meeting with the employee. This will reduce the potential for any future fallout if improvement is needed in their performance.

If the business uses a standard appraisal form then the meeting should try and cover all the areas included in this, so long as they are applicable to the individual’s job role.

After the appraisal meeting has taken place

After the appraisal meeting, the notes should be written up, usually in an appraisal form. This document should be signed by the employer and then passed to the employee so they can review it.

Getting the employee’s signature on the form to show they have read it can be used as evidence at a later date that the employee was aware of what was discussed in the meeting.

Similarly, if the employer has to take action in the future because the employee has not met their agreed targets then they will be unable to complain they were unaware of these

The appraisal may have flagged up that the employee needs extra support or training in order to reach their required performance. It is important that employers are putting this in place as soon as possible after the initial meeting so the employee has the opportunity to undertake this and then has a reasonable period of time within which to meet their targets.

How to introduce an appraisal scheme in to the business

Many small businesses start off without a formal appraisal scheme, but as the business grows and the number of staff increases, appraisals are a useful way to keep track of employee performance and to stay up to date with the needs of the workforce.

When introducing an appraisal scheme, it is important that the scheme fits the needs of the business. The main factors to consider are how often the appraisals need to be carried out, who will carry them out and what will be discussed and included in the appraisal form.

Once the employer has decided the relevant matters, the scheme should be set in place and communicated to employees as soon as it is introduced. This allows them to know what is expected of them and will ensure the scheme is transparent; potentially avoiding any issues when implementing the scheme.

For an appraisal scheme to be effective and beneficial for the business, the person carrying out the appraisals needs to ensure that they are capable to do so.

This could mean undertaking training, either internally or externally, reviewing the particular appraisal procedure in that business, ensuring they understand what is expected of the particular employee and being confident with completing any appraisal documentation.

About the author

This guide has been written exclusively for ByteStart by Peter Done, Managing Director of Peninsula Business Services – the UK’s leading specialist Employment Law, HR and Health & Safety service. Other employment guides Peter has written for ByteStart include;

More help from ByteStart

ByteStart is packed with help on all aspects of starting and running your own successful business, just some of our other guides include;

Employing staff

Motivating your team

Leading a business

Going for growth

Funding your business