Why performance reviews are critical for small businesses

By Chloe Smith

Plenty of elements go into making a successful small business. Entrepreneurship, adaptability, nimbleness, and just a bit of luck are just some of them. The one we are going to cover today is the people aspect. This crucial element is often the most elusive, volatile, and unpredictable one. Planning, machines, and software do the objective part of the work, but people are the bread and butter and the subjective component in this ecosystem. The way to neutralize this liability is to implement a process-driven approach to employees that is empathetic and intuitive.

Other than compensation, career growth is what matters most to employees. The obstacle we encounter is the subjective perception of each individual on what growth actually is. These are just some of the problems we can face when navigating through the “human” aspect of doing business. Here are some key points on how to go about it.

Acquiring quality employees and retention

It is important for any business, let alone a small, emerging one, to have quality staff. They set the bar and the pace for those that are just starting. These overachievers from the get-go are not always available. And it is also not feasible to instantly fire those that do not immediately meet our expectations. For these reasons, investing in our employee’s development is very important. It is what performance reviews rely on. Some current performance review systems emphasize or outright require accountability and ranking. But other than that, the additional focus should be made on working with employees to help them in personal and professional development. Improvement and growth are the names of the game.

Help with setting goals

Performance reviews have traditionally served as ways to hold employees accountable for past performance. These can be much more effective if looked at through a proactive lens. If we shift our view to a more forward-looking aspect, we can do much better than what was traditionally possible.

To discuss the big picture with our employees, even just annually, enables all of us to make goals. Each and every one of our employees can make their own personal goals for themselves that, in turn, can make them more invested in our business’ future. Combining their personal goals with our companies’ goals can show us different possibilities, like how to better use untapped talent. Setting goals and talking the big picture can motivate team members and get them excited about their work. This, in turn, will have great, long-lasting impacts on our company’s performance and success.


Performance reviews should not be a traditional, simple one-way monologue directed towards an employee’s performance. Rather, it is a chance to facilitate conversation between managers and employees about all the important subjects. Goals, objectives, and paths for personal and professional development are just some of the examples that require a bilateral exchange to be optimal.

Many people today, be it business owners or entry-level employees, are not well versed in the art of communication. It is especially important for new, emerging companies as it can mean the difference between networking successfully and going under. A comprehensive performance review system that promotes discussion in regular time intervals will undoubtedly have big long-term effects on positive relations between employees and managers.

The right tools for the job

The days of long hours spent on surveys, paperwork, forms, and manual input of performance data are a thing of the past. This especially holds true for small businesses as it can quickly appear to be more a hassle than it is worth. Modern technology has enabled us to benefit from a plethora of options when it comes to software solutions such as the MAUS software package. These pieces of software are designed to manage or performance review systems and streamline the process, thus making it much more efficient.

Gathering, analyzing, and properly interpreting employee performance data can be time consuming. By automating this task, we save time, man-hours, and money. Then we can truly focus on what is our primary goal in our selected industry and make performance reviews much less of a chore. Furthermore, employees and managers can follow up and review feedback back and forth as needed and everything is saved for future reference.

Today, the majority of hires in small, emerging companies are millennials. They are quite forthcoming about receiving feedback and performance appraisal is something small companies can no longer neglect. Luckily for us, these repetitive tasks are being automated more and more as time passes and technology becomes more ubiquitous. Now we can focus on what really matters, the qualitative aspect of the performance evaluation, rather than the quantitative. A quality exchange about performance, goals, and future has never been a more looked-forward-to subject.


Chloe Smith is a design enthusiast and a part-time writer always willing to share tidbits of advice. She believes that passion, courage and, above all, knowledge breed success. When she’s not working, she’s probably somewhere cuddled up with a good book, and a cup of lemongrass tea (or more honestly binge-watching the newest Netflix hit show).

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