Should we hold performance reviews if we don’t have the budget for increases in salary?

There’s no federal law requiring you to conduct performance reviews. However, regardless of your budget for salary increases, having performance reviews is a best practice.

Purpose of Performance Reviews

The purpose of performance reviews isn’t only to determine whether or not an employee gets a raise or promotion. They’re also meant to provide constructive feedback for the employee so that they can improve their performance and benefit your company.

How to Conduct a Good Performance Review

Here are a few tips for conducting a good performance review:

• Be specific – Don’t just tell the employee they need to improve performance; tell them how. For example, We’d like to see your sales increase by 15%.”
• Set deadlines – For each change you suggest, tell them when you’d like to see improvement, such as, We’d like to see your sales increase 15% by the end of December.”
• Be realistic– Increase your sales 15% by the end of the month, probably isn’t feasible. We’d like you to increase your sales 15% by the end of the quarter, is a much more realistic goal.
• Evaluate performance, not personality – Focus on how they do their job, not their personality traits. Don’t say, You’re aloof.” Say, You don’t seem to be connecting with your customers, which is affecting your sales numbers.”
• Listen to the employee – Performance reviews can help you improve too. Ask the employee what’s working and what isn’t. Ask, Is there anything that we as managers can do that would help you improve your sales?”

Final Tip

If you follow the tips above, performance reviews will encourage employee improvement
and ultimately benefit your company. So regardless of whether or not you have the budget for raises, conduct performance reviews anyway.

Helpful Links:

10 Tips for Effective Performance Reviews – humanresources.com

Effective Performance Appraisals – smallbusiness.com