As a small business owner, you wear many hats within your organization. In addition to being in charge of product or service development and marketing, you also have to function as the chief operating officer and human resources manager. That’s why it’s so important to make sure you understand the importance of evaluating employee job performance from the time you add the first person to your team.

When you’ve been accustomed to working on your own for a while, it can be hard to adjust to all the responsibilities associated with managing employees. It’s easy for small business owners to get so focused on the day to day tasks of trying to stay in business that they overlook the importance of providing their employees with feedback about how they’re doing in their jobs. Without letting employees know what you expect and how they are performing, it’s impossible for them to know if they are on track and if you are satisfied with their job performance.

It’s a fact that no matter how small your business is, if you have at least one employee, it’s important to focus your attention on evaluating employee performance on an ongoing basis. Workers have a basic need to know how they are doing, and how their supervisors perceive their performance. It’s important to provide your employees with positive reinforcement when they are doing a good job, and to offer constructive criticism when they notice areas where workers need to improve.

Making a habit of providing employees with performance feedback on an ongoing basis can have a powerful positive impact on productivity, creative problem solving, and employee morale. It opens the line of communication between workers and their supervisors, and helps ensure that employees are very clear regarding what is expected of them. Failure to provide employees with information on how they are performing can lead to serious problems, including diminished productivity, poor performance and turnover of high potential employees.

Conducting formal employee evaluations is a necessary part of maintaining personnel files with accurate documentation related to how employees are doing in their jobs. In the event you need to make a performance related termination, having formal documentation of worker performance issues can protect your company against unemployment complaints and accusations of wrongful termination. When you own a small business, you can’t afford to overlook the necessity of maintaining proper documentation about how employees are doing on the job.