two coworkers in meeting
Intentionally organizing employee reviews can increase productivity and retention among your employees. — Getty Images/fizkes

Many merchants know the importance of delivering feedback but are less certain how to structure employee reviews to keep employees from leaving. How often should you host an employee review meeting? Who should be in the room for an employee review? What are the best ways to track employee performance? This guide will cover everything you need to know to keep your best workers engaged and productive.

Why do good employees leave?

There are myriad reasons why employees leave a job. Some people resign to stay at home with children or to move cities with a partner. Excluding these extenuating circumstances, there are a few common reasons why great employees leave an organization.

There are multiple surveys and research reports that all come to the same conclusion: Lack of feedback is directly linked to employee turnover. Employee reviews provide an opportunity for career development, recognition and mentorship. Even informal reviews are critical to increasing engagement and productivity. When your team doesn’t feel recognized for their hard work or receives a piece of negative feedback at the wrong moment, morale can deteriorate rapidly.

Employee reviews are especially important to millennials and Gen Zers. Millennials want to be coached at work, according to the experts at Harvard Business Review. Their research found that millennials want feedback 50% more often than other employees. Employee reviews are one way to deliver that coaching in a way that feels productive for your managers and your younger workers.

[Read more: Employee Retention: How to Keep Your Best Employees Happy]

How to track employee performance

What’s the best way to implement goal-setting for your employees? Tracking employee performance takes a two-pronged approach. First, how are they performing as part of your business team? Second, how are they performing against their individual goals?

Obviously, if an employee is slacking off, there needs to be some metric against which to compare their performance. The job description is a good place to start, as the responsibilities listed with the role will be well-documented. Put in place specific, measurable benchmarks that align with the position. For instance, a salesperson should have a certain number of calls, closed deals or new leads to report each month.

Then make sure you take the employee’s personal career goals into account. Does this salesperson want to become a manager in six months? What opportunities can you provide to help them develop leadership skills? What has this person done in addition to their assignments to work toward this goal?

Some companies find it helpful to use employee review tracking software to keep track of each individual’s professional development. Read about some of the more popular performance tracking tools in’s “14 Tools to Measure Employee Performance.”

[Read more: How Do I Know It’s Time to Fire Someone?]

Lack of feedback is directly linked to employee turnover.

What makes a good performance review?

The best performance reviews are specific, frequent and tailored to the individual employee.

A formal performance review must be tied to the goal-setting process your employee went through with a manager or individually. Involve your employees in setting individual goals that link to company results. Help your team write goals that are action-oriented, measurable and easily trackable.

Goals should also be specific to each employee. A recent study by Gallup found that 71% of American employees believed their evaluations weren’t fair. This perception comes from the fact that employees are often evaluated in relation to one another, and not in relation to their own past performance. Each employee should receive a career development plan based on their specific skills, goals and job description. “By emphasizing how their performance has changed over time instead of how it fares against other people’s performance, organizations can offer what the employees want — individualized treatment — and thus achieve the goal of offering fair evaluations, which are much more likely to be embraced rather than met with scorn,” wrote HBR.

Lastly, the best performance review is a regular one. There’s nothing more demoralizing reaching a year-end performance review only to learn that you were making the same simple mistake over and over again. How often should you offer performance reviews? Most millennials prefer to check in monthly. For many small businesses, this isn’t realistic; try to host a review at least once a quarter.

How to run an effective performance review meeting

Many merchants feel uncomfortable delivering feedback, even when it’s positive. Here’s what the experts recommend to get the most benefit from a performance review meeting:

  • Be prepared: Part of the awkwardness of formal performance review meetings comes from the stress of not knowing what to expect. Tell your employees ahead of time what you’ll be discussing, and solicit feedback from key stakeholders who work with the individual. Give your employees a copy of their appraisal before the meeting starts to help alleviate any surprises.
  • Keep it positive: Concentrate as much as possible on what an employee has done well. If someone is under review for underperforming, don’t sugarcoat it: “Performance reviews are your chance to confront poor performers and demand improvement.”
  • Be specific: Frame your feedback in start, stop and continue terms. What are they doing well that they should continue doing? Is there any behavior or habit you would like them to stop? What part of their career development plan will they start working on next?

Employee reviews don’t have to be stressful. Prepare accordingly and your team will be grateful for the coaching!

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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