Are Small Business Owners Using Performance Appraisals to Their Full Potential? An Exploratory Study

Abstract

Recent articles have discussed the importance of the effective use of performance appraisals and creative ways that corporate America is using these tools to increase their managerial effectiveness. However, the study of the actual use of performance appraisals in small businesses has received little attention. This exploratory study examines the appraisal process within these organizations. Small business owners were randomly surveyed to discover who did the appraisals, how frequently they were done, what dimensions were deemed important, and what corrective actions were taken by the employer. Findings suggest that while small business owners realize that they should conduct some type of employee evaluation, they do not see the importance of incorporating a formal evaluation process into their management strategy. Guidelines are proposed for small business owners for the effective use of performance appraisals.

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