The Performance Review Dilemma

The Performance Review Dilemma

I had a very interesting conversation with a client recently. She mentioned that her small company hadn’t done performance reviews in several years. The reason…? The company wasn’t in a strong enough financial position to offer raises. 

This particular company had several years of tough times. Financially, they weren’t in a position to offer raises or bonuses to their employees as they had done in years past. Because they couldn’t offer raises, they believed that they shouldn’t do performance reviews.

They believed that the only purpose of the performance review is to determine a new compensation structure. I was disheartened when I heard that line of thinking from this executive. Many times, a raise or a bonus is just one of several potential outcomes following an appraisal.

Believe it or not, your employees have a vested interest in their progression as an employee. The performance appraisal time is an opportunity to share information with the employee, and more importantly, an opportunity to LISTEN to how the employee feels they have done over the past year. How have they improved this year? What is it that they are doing right? What new directions could this person pursue within the company? How are they progressing in their career? Are they aware of what their next step is internally? What learning opportunities exist for this employee? What are your thoughts on their future with your company?

These questions form the basis of a really productive and valuable conversation with your employee. Dig into the last year – congratulate them on what went well, discuss opportunities where they might have done something differently, and LISTEN. Listening to your employees cannot be overemphasized. What do THEY want? Usually, money isn’t the top of the list. Often it is a desire for new opportunities or challenges. Maybe it is professional development. Sometimes they would appreciate some flexibility in either their hours or their work location.

In lieu of a salary raise or bonus, what else might you be able to offer your employees? Perhaps it is updated software for their specific job, maybe you can send them to a course to progress towards a  professional certification. Maybe you could bonus them a few days extra vacation. Get creative. Listen to your people and find out what is important to them.

Communication has to be there. Don’t hide from the fact that you can’t afford raises. Admit it, ask for your people’s help to move the company forward. Be creative in how you can reward them. But, please don’t ignore the performance appraisal – you might just give your people the impression that they are in a dead end job, and they might leave for a better opportunity.

If you’d like some help brainstorming how to approach performance appraisals in a meaningful and productive manner, send an email to me. I want to help you focus and thrive in your business.


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