Purpose: The purpose of this paper is to improve assessment and feedback processes in the training practices of very small firms, thereby improving the firms' human capital. Design/methodology/approach: The paper reviews research and practice on effective assessment and feedback. Findings: Based on this paper, human resources are increasingly seen as a potential source of sustained competitive advantage, and well-trained workers can boost the performance of even very small firms. Hence, a method is provided which very small firms can use to create and implement a structured assessment tool that builds on observation of critical incidents to illustrate the differences between poor, average, and good performance. Practical implications: The paper shows that readers can use the provided tools to assess and improve employee performance, thereby enhancing their firm's competitive position. Originality/value: This paper can be used by very small firms to evaluate employee performance and provide employees with both positive and constructive feedback. Additionally, suggestions are provided that allow these firms to use this feedback to effectively set employee performance goals and action plans. (Contains 2 tables and 1 figure.)