Written by Rovena Claxton, EFund Expert Network provider
Most, if not all, small business owners have been challenged over the last several years with engagement and retention of staff. Sometimes the issue becomes, “how much can I pay my team?” and “how much must I pay?” (to be competitive), along with “must I provide benefits, if so, what benefits?”. We have wrestled with these questions, made changes, only to have faced the heartbreak that a valued employee is leaving anyway.
Sometimes such puzzlements come because we haven’t paid attention to all the things that research has told us are important to employees. For example, the Gallup organization has told us that after decades of study, the keys to engagement and retention are “A boss that cares about me” and “A best friend at work”. Increasingly, in today’s environment, studies have suggested that an opportunity to grow and develop and work-life balance (flexibility) also play a critical role in staff retention.
An effective year-end performance appraisal, while seeming like a lot of hassle, can promote all of these engagement factors. Appraisals are important tools for:
- Staff development: A thoughtful conversation between the employee and the boss can prompt discussion about personal growth by highlighting areas of strength and opportunities for improvement.
- Communication and Retention: Is your employee getting the support they need? Is there anything that might cause them to leave? These conversations could reveal that others are not pulling their weight, the employee is experiencing difficulties with customers OR other factors that you as the owner had no idea were happening but that could cause a valued employee to leave.
- Satisfaction with Pay: It can be said that none of us ever feel we are paid what we are worth BUT compensation is best managed with transparency. Employees need to know what is expected and how pay for performance works in your organization. How much are employees worth in your business? Transparency is the key to fostering a feeling a “fairness” in your compensation decisions.
Keep your appraisal process simple. Start by listing the employee’s most important responsibilities (from their job description if you have one). For example: “Deliver exceptional service to our customers” OR “Use downtime wisely by cleaning work areas and restocking supplies”. Remember that examples and observations are more important than ratings. If you do rate performance, stick with simple definitions of Exceeds, Meets, or Doesn’t Meet Expectations. And don’t neglect to ask the employee to assess their own performance which can indicate a misunderstanding about expectations or even show contributions you might have missed.
Whether you’re in the midst of your business downtime or in the height of your season, the end of the year typically brings a time of reflection and planning for how we can hit the ground running in the New Year. Be sure to consider the importance of staff appraisal and goal setting in your planning efforts!
Rovena Claxton is an independent HR professional and owner of North Shore HR Consulting LLC, in Grand Marais Minnesota. Ms. Claxton has spent her career in a variety of Human Resource roles including executive leadership roles in manufacturing and healthcare and today works with a wide variety of small businesses across the state of Minnesota. Contact her for assistance with pay, performance, or other HR needs through the Entrepreneur Fund.