Don’t skip performance reviews at your startup—do these 6 things instead

There is hardly a word in the world of work that can more quickly evoke emotions of fear, dread and contempt than “performance review”. Most of today’s workforce endures the ever-popular “annual performance review,” while others receive bi-annual reviews. Most startups, however, skip the valuation process altogether, but is that wise?

There was a time when I firmly believed that the “no review” approach was infinitely better than the annual review approach. Especially for small businesses and startups. But, I know now that I was wrong.

The nature of a startup is often very casual, fast moving and fairly flat from a hierarchical perspective. At first, chaos works. But as the company grows, things can get challenging. Most of my career has been spent working in small businesses, varying into mid-sized companies. Organizations that experience Such scaling and growth Endure what I lovingly refer to as “growing pains.”

These “growing pains” include many challenging obstacles. Most of which focus on scaling processes and systems. One of these systems is performance appraisal. By the time it is realized that an organization needs a review process for employees, they are usually at a stage where implementing it is challenging and cumbersome. So, they either avoid them altogether, or paste together something that sounds like a good idea and it ends up being a terrible idea.

At that point I canceled the “review”.

My deep-seeded problem with employee “reviews”—which for the sake of this conversation can be used interchangeably with the word “evaluation”—is based on my perception that they are time-consuming and expensive to perform. and also did not produce the results (improved performance) that they intended. From an operations perspective, activities that require a ton of effort with low ROI are a bad idea.

I have seen no fewer than six iterations of annual performance reviews. All of which failed to improve long-term performance. They did, however, do other things such as:

  • Improve performance temporarily and briefly until review.
  • Make employees anxious and self-aware, reducing engagement and energy levels.
  • Frustrated employees who wanted to discuss compensation, but were given the line “wait for your annual review.”
  • Increase excitement among employees (when applying 360-degree review methods).
  • Individuals fail to be specific enough to fully capture the goals and expectations of each position.
  • Selecting N/A for these categories was easier but still left many individuals with reviews that did not accurately evaluate their specific position or job duties.

Things got serious around review time!

So naturally, the first chance I got, I nixed the review. Instead, I focused on providing ongoing and real-time feedback. I set clear expectations for employees, created a few metrics by which to measure their achievement of those expectations, and praised the Lord that I didn’t have to spend weeks every year remembering all the positive and negative things each employee had done in the past. 365 days.

I felt wonderfully progressive and rebellious but in a productive way. Like I just saved the team hours of time by emphasizing the evaluation and thousands of dollars worth of value to the company from having to do the evaluations and then meet with me to review them in staff time. All was good!

Until the employees wanted them back.

“What?!” I can hear your disbelief. Why would anyone want to review, when I discussed, they were so painful and ineffective?? The answer surprised me.

At that point I restarted the review

At first, I had a hard time wrapping my head around why. After they showed such displeasure at being reviewed, they now sought review. I will save you all the suspense and details of my investigative efforts and tell you; They wanted one-on-one time with leadership.

Turns out, while the evaluation process wasn’t fun, it wasn’t even very valuable to them. They enjoyed the opportunity to sit down with a leader and discuss their careers, their goals, their opportunities and their engagements. Not just their daily agenda items.

What surprised me the most was that this same desire was not expressed only by millennials. Those often called “redundant” for their desire to provide mentorship and development programs. But also the older generation party members. Consistent across my team of over 40 engineers, I wanted to set aside regular time to discuss their careers. Not just their job.

They wanted feedback, goals and they wanted strategy. These employees wanted to use the ongoing feedback and metrics they were now receiving on a regular basis to determine how to take it to the next level. Whatever that may mean for each person. Thus, the bi-annual formal coaching session was born.

Also read: Importance of keeping employees happy

6 Keys to a Review Process Employees Are Waiting For

When I decided to re-implement the assessment, I decided that they should follow a few guidelines.

1. Be regular and frequent, but not too frequent.

2. Consider the past but look primarily to the future.

3. Share responsibility equally with the employee.

4. No surprises included. Coach, don’t criticize.

5. Create actionable SMART goals that align with company goals.

6. Include follow-up for continuous improvement.

Using these guidelines, I established a bi-annual schedule. I decided that once a year was not frequent enough for a company with aggressive growth/change goals, and any more frequent than that, and evaluations would lose their effectiveness by not providing enough time to achieve the SMART goals that would be set.

The evaluation framework was set up to have two main sections. The first section asks them to rate their performance on things that we, as a company, have identified as important to the vision, mission, or values. The second section asked the employee to commit to how they would work to improve their personal performance in ways that would help the company better achieve its mission, vision and values. They then had to recommend commitments that could help the company achieve their goals. All commitments should be in SMART goal format.

Create an “Other” category

It is worth noting here that the first section of the self-evaluation asks employees to rate their performance using a rating scale of “not meeting expectations,” “meeting expectations,” or “exceeding expectations.” Note, there were no “Other” or “N/A” options. There was no “sometimes meeting expectations”. I chose these options specifically because I felt that if employees only sometimes met expectations, or even usually met expectations, they were, overall, not meeting expectations.

Expectations should be set at a level that all recruits can achieve at all times. “Expectations” are the baseline of performance, and anything that falls below that is underperformance. Thus, if you have a team member who doesn’t always achieve one or more expectations, it’s worth discussing why.

Here’s a low-level example: Are they sometimes late to work? Why did this happen? Traffic? Will it be possible for them to leave earlier? Or, maybe they have five children under the age of 6 that run out the door in the morning.

Perhaps you can arrange for the start and end time of their work day? This exercise is not about admonishing people for not meeting expectations; It’s about uncovering the obstacles to success and then celebrating the successes they’re having!

Creating a welcoming meeting environment

Two things had to happen for these meetings to be truly successful:

1. Assessment should be a safe space for self-awareness and self-improvement.

2. Both parties should be open, honest and receptive to feedback.

The primary way I established “safe spaces” was no surprise. These meetings were not an opportunity for team leaders to address behavioral or performance issues unless it was already a part of the dialogue between them.

Team leaders received roughly the same evaluation form to fill out for each team member as the team member had to fill out for himself. The only difference was an additional category in the evaluation of the team leader. The department asked them for summary data on how well team members were performing against measurable metrics that were tracked on an ongoing basis. This additional section provided a great way to measure improvement from one review period to the next. It also highlighted areas that should be included in the commitment section.

The outcome of the review will be 1-3 commitments that each employee has made to complete through the next review. and 1-3 company commitments to help that person achieve those commitments. Note, company commitments must be approved by a senior leadership member to ensure they properly align with company goals and are something we can commit to.

After each evaluation period there will be a quick survey to the whole team asking how valuable they think the process is, what they like about it, what they don’t like about it. And, did they have any suggestions for improvement? Constructive feedback will be implemented before the next round of reviews.


Don’t avoid or discard reviews, modify them to suit your needs. It’s likely that the exact method above won’t be the perfect solution for your startup, but then again it might be. The underlying caveat here is not to avoid implementing a formal review process or wait until your startup is “big enough” to implement one. Think of them as one Invest in your employees.

They don’t need to be overly formal, time-consuming, expensive to execute, purely metric-based, or fear-inducing to move your startup and your team forward. Even if it’s a quarterly cup of coffee with each of your startup employees where you talk about their contributions, their future, and their growth opportunities, it’s worth it. I promise you, they want it.

This article was originally published in October 2016 but has been updated and expanded

Sarah Murphy

Sarah Murphy has over a decade of experience in leadership positions, most recently from a management position at one of Nashville’s top IT consulting firms where she managed over 40 engineers. Sara holds a Master’s Degree in Management from Cornell University. He started his career in the hospitality industry; Managing front-of-house operations before transitioning to business operations and finance as director of profitability for a large restaurant company in Washington, DC. She is passionate about team culture, helping new and young managers develop into effective and empathetic leaders, and helping seasoned leaders better prepare for the unique challenges associated with the growing millennial workforce. Follow her on Twitter at @sarahmmurphy

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Business Opportunities · Featured · Find Your Way · Leadership · Success · Your Mindset

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