Back to news
20 March 2019

Why should small companies start employee evaluation?

Many small businesses make the mistake of thinking that there is no need for them to implement the same kind of practices as large businesses. From team building to corporate functions and goal-setting meetings to employee evaluations, small businesses have the tendency to believe that since they don’t have a large workforce, these practices don’t fit in with their small business culture. 


Contrary to popular belief, regular employee review is a fantastic HR management tool for small business managers. As a small business, your goal should be to put together a team of employees who are dedicated and exceptional overachievers. If you think about it, every single staff members contributions are a lot more important at a small company in comparison to a large one. These are the people that are integral to the company’s success and growth.


What to know about employee evaluations

Employee evaluations are a great way to improve employee performance and efficiency while still keeping employee self-esteem intact and turnover low. Here’s the main things that an employee review should accomplish:

  • Offer praise and motivation where due
  • Address any shortcomings or areas that need improvement
  • Give employees the opportunity to address any problems or concerns
  • Serve as written proof for future goals that will be evaluated at the next meeting 


It’s important that you always be consistent with the evaluations. All employees should be treated the same in terms of leave, pay, sick days, discipline, and other employment issues despite any personal connection that you may have with one or few of them or what you know about their personal lives. All employee evaluations should be structured in the same manner and address the same issues - except, of course, they should be personalized for each employee. But no preferential treatment should be give to any employee. Check out Mark the Job if you want some guidance in setting up self-evaluations that can be used during the employee evaluation process.


Employee evaluations at a small company help to build a business that is destined for success when it grows and takes on new employees. If all these processes are already in place as a small business, it makes expanding a business that much easier. When you take on new employees important formalities and procedures are already there which makes expansion that much easier. 


How small companies benefit from employee evaluations

Employee evaluations are a great way to create a culture of open communication within a company. They have proven to be a major advantage for small businesses for multiple reasons. For starters, they can help to identify the strongest employees in the company - this can be very important for overall growth. They also help to develop a personal relationship between employees and their superiors. Another big benefit is that it’s a great way to create a successful business development plan that can help you to achieve long-term business objectives and goals.


Let’s look at a few other reasons why it’s beneficial for small businesses to conduct employee evaluations.


Good employees are hard to find and even harder to retain

Keeping people who are focused and motivated is key if you want to keep moving forward as a business. If you don’t give your employees regular feedback on their performance, they won’t know where they stand and you won’t know who is meeting and exceeding expectations. If you don’t give frequent feedback, there’s always the risk that your employees will be left feeling demotivated and unappreciated.


Avoiding the issue can become the issue

As a small business, you may be tempted to let performance problems slide. Nobody likes confrontation and having to address problems directly with an individual. However, it’s absolutely necessary, especially in small businesses, because you are trying to grow and succeed with your business. It’s no good having a casual conversation in the breakroom and leaving it at that. You need to set up a formal face-to-face meeting and discuss the issue thoroughly.


The thing with employee evaluations is that they give you the chance to do this. If an employee knows what their goals and objectives are and aren’t performing up to standard you need to address it in the review. If you don’t, the problem will only get worse and correction methods become more difficult, not to mention more awkward. At the end of the day, one of the advantages of working for a small company is the company culture - having a personal and open relationship between employees and managers. Be firm and understanding and always document the meetings in writing.


You can design a system that fits your needs and style

Formal employee evaluations have a bad undertone for being rigid, overly focused on rankings, and creating unnecessary paperwork. The great thing about the modern employee evaluations is that it can be designed to be anything that your business needs and wants it to be. If you want to reduce or eliminate paperwork, you can. If you want to have evaluations only once a year or at least three times a year, you can. If you want to set up one-on-one meetings monthly or quarterly, you can. In other words, you can make the process fit your business style.


Posted by: Edit Ford

Back to news