Why a small business should conduct an annual appraisal

Lee Biggins discusses how annual appraisals can help to define clear objectives that keep staff motivated throughout the year.

Many companies are doing away with the staff annual review in favour of more regular interaction between employer and employee; however, while some businesses think it’s a good move, others may be debating how this will factor in with time constraints.

This is particularly significant at a time when the festive season has come to an end and people have a serious case of the post-Christmas blues. As New Year’s resolutions unfold, staff will be looking to invigorate their careers, so while regular meetings are important, they shouldn’t replace annual reviews, which are essential for establishing longer term goals. Here’s how to conduct appraisals that keep staff motivated throughout the year.

Manages alignment with employer expectations

Annual reviews provide the perfect opportunity for businesses to set out their expectations and ensure each member of staff is delivering. It’s useful to list these down and go through them one by one with the employee in the annual review, using them as a guide to set clear objectives. This will ensure both parties are on the same page and will help employees to work effectively in order to achieve these mutual goals.

This also helps managers to check in regularly with each member of staff to see how they’re doing and how they feel. It’s a great way of pinpointing their strengths and weaknesses and identifying which objectives need to be in place to improve any shortcomings.

Avoids mid-year spending

By having a structured review in place, businesses can forecast their spending and avoid issuing additional bonuses at other times of the year when it may not be so financially viable. This is especially important when employees regularly approach management for a pay rise or make sporadic bonus requests. Having a system in place that will enable businesses to plan their spending will help them to effectively manage their finances.

Furthermore, this gives employees the opportunity to have something to work towards. If they know that a pay rise or bonus is only available during their annual appraisal, they will feel more motivated to prove themselves throughout the year in order to achieve a financial reward for their hard work.

Determines career objectives

Having a structured annual review in place provides the opportunity for all employees to work towards new goals. It also helps employers to understand what exactly it is their staff require from them. Hiring new members of the team doesn’t mean bringing them in to do a job and ignoring their ambitions during their time with the company; if this happens, businesses just aren’t going to be in a position to retain their staff. Getting to know each other is part of the process and it’s important to work together to gain an understanding of what both parties expect.

The annual review is the ideal time to find out what an employee wants from their career and what they aspire to be. If a company took on an assistant and ignored their career objectives, that member of the team is likely to continue being an assistant. If, however, the assistant could meet with their employer and make him or her aware that they aspire to be a manager in five years’ time, there is a clear goal in place that can be worked towards in a structured way.

This also introduces training opportunities and career development choices which, ultimately, leads to the possibility of a promotion. This is a huge benefit to the employer; they will have staff who are committed to doing well in the company and are bringing new skills to the table.

Ignoring ambitions will cause staff to feel demotivated with nothing to work towards. This could potentially lead to job dissatisfaction and, eventually, the employee will likely hand in their notice in order to move onto a new venture; somewhere where they offer the opportunity to meet their personal career objectives.

A final word

Some businesses already have review schemes in place and, as long as they’re carrying out the process effectively, should be reaping the rewards. However, those companies who don’t believe appraisals are necessary are in danger of losing their staff. From the points mentioned, it’s easy to see why annual reviews are a powerful tool for defining clear measures, managing resources and ensuring employees are kept motivated and eager to perform well.

Lee Biggins is the founder of CV-Library.

Further reading on appraisals

Lee Biggins

Lee Biggins

Lee Biggins is founder and managing director of CV-Library.

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