Performance Management: Reviews, Feedback, and Accountability

Stop Avoiding the Conversation

The number one performance management failure in small business isn't a bad review form or a broken process. It's avoidance. Owners see a problem, hope it fixes itself, and then explode six months later when it hasn't. That's not management -- that's time-delayed conflict.

A real performance management system gives you a framework for addressing issues early, recognizing great work, and making sure everyone knows what's expected of them.

Set Clear Expectations First

You can't hold someone accountable for expectations you never communicated. Before you can manage performance, every employee needs to know:

What they're responsible for (job description, KPIs, goals)
How success is measured (specific metrics, quality standards, deadlines)
When they'll be evaluated (review schedule)
What happens when performance doesn't meet standards

Put this in writing. A verbal conversation isn't enough. If it's not documented, it didn't happen.

The Annual Review Is Not Enough

If you only talk to employees about their performance once a year, you've already failed. Annual reviews should be a summary of conversations that happened throughout the year -- not the first time someone hears they need to improve.

Build a Regular Feedback Cadence

Weekly or bi-weekly one-on-ones: 15-30 minutes. Cover current projects, roadblocks, priorities. These aren't formal reviews -- they're check-ins
Quarterly goals review: Are they on track for their annual goals? What needs to adjust?
Annual performance review: The comprehensive conversation that covers the full year

How to Give Useful Feedback

Be Specific

Bad feedback: "You need to communicate better." Good feedback: "On the Johnson project, the client called me twice because they hadn't gotten status updates from you. Going forward, I need you to send a weekly update email to every active client by Friday at noon."

Be Timely

Address issues as close to the event as possible. Telling someone in December about a mistake they made in March is pointless. They can't fix it, and they'll resent you for sitting on it.

Use the SBI Framework

Situation: Describe the specific situation
Behavior: Describe the specific behavior you observed
Impact: Describe the impact of that behavior

Example: "During yesterday's team meeting (situation), you interrupted Sarah three times while she was presenting her project plan (behavior). It made her visibly uncomfortable and the rest of the team stopped contributing ideas (impact)."

This framework keeps feedback objective and reduces defensiveness.

Conducting the Annual Review

Preparation

Review the employee's goals from the beginning of the year
Gather data: metrics, project outcomes, feedback from others
Have the employee complete a self-assessment beforehand
Block at least 45-60 minutes for the conversation

Structure

Start with the employee's self-assessment: Let them go first. You'll learn a lot about their self-awareness
Share your assessment: Be direct. Cover strengths and areas for improvement with equal energy
Compare notes: Where do you agree? Where do you differ?
Set goals for the next period: Collaboratively define 3-5 goals with measurable outcomes
Discuss development: What skills do they want to build? How can you support that?
Discuss compensation: If raises or bonuses are tied to performance, this is the time

Document Everything

Write a summary of the review, including ratings, key discussion points, and agreed-upon goals. Both you and the employee should sign it. File it.

Handling Underperformance

The Progressive Approach

When someone isn't meeting expectations, address it immediately with a clear conversation. If verbal coaching doesn't work:

Verbal coaching (documented): "Here's the issue, here's what I need to see"
Written warning: Formal documentation of the performance gap, specific expectations, and a timeline for improvement
Performance Improvement Plan (PIP): A 30-60-90 day plan with specific, measurable milestones. Meet weekly to discuss progress
Termination: If the PIP doesn't produce results

Make PIPs Real

A PIP should be a genuine opportunity to improve, not a paper trail for termination. Set achievable goals, provide the support they need, and give honest feedback throughout the process. If the employee improves, great -- that's the whole point. If they don't, you've documented your effort and have solid grounds for termination.

Recognizing Good Performance

Performance management isn't just about fixing problems. Recognizing and rewarding strong performers is equally important -- and most small businesses are terrible at it.

Be specific in praise: "Great job" is nice but meaningless. "The way you handled that client escalation yesterday saved us that account" is powerful
Be timely: Recognize good work when it happens, not months later
Make it public when appropriate: Some people love public recognition; others hate it. Know your people
Tie rewards to performance: Bonuses, raises, additional responsibilities, development opportunities

Common Mistakes

Avoiding difficult conversations until they become emergencies
Giving everyone the same rating to avoid conflict
Making reviews a one-way lecture instead of a conversation
Not documenting anything until you want to fire someone
Only focusing on what's wrong and never what's right

The Real Goal

Performance management isn't about forms and procedures. It's about building a team where everyone knows what's expected, gets regular honest feedback, and has a genuine opportunity to grow. If your system achieves that, the format doesn't matter much.