Many small business owners think of formal employee performance management as “overkill” administrative activities that they can put off until their business gets bigger. After all, you spend every day working closely with your employees. Why should you implement a formal process that adds administrative burden and stress?
Actually, a good deal of research shows that effective employee performance management enhances employee morale and performance, and helps drive better business results. As a small – medium sized business, you likely can’t afford to ignore any program that is proven to help you better run your business.
While there is no one-size-fits-all approach to managing people and their work performance, there is a range of core management practices that can help managers and supervisors maximise individual and team performance.
I recently wrote this post on the importance of performance management in SME’s, today I want to focus on the big picture, how performance management relates to your organisations strategic plan and how you can utilise the methodology to build a performance culture.
Effectively managing an employee’s performance is a hallmark of a successful manager. Research shows that employees work best when they have clear goals and understand what is expected of them and their work; receive fair and regular feedback about how they are performing; are recognised for a job well done; and get constructive advice about areas of unsatisfactory performance and how they may improve.
An organisation’s performance is the result of the combined efforts of the individuals within it. Managers and supervisors play a critical role in aligning employee capabilities and efforts with organisational outcomes. This involves ensuring employees clearly understand what they need to achieve; what capabilities they need to be successful in their role; any processes and procedures they are expected to follow; and the standards and behaviour expected of them. Managers also need to work with employees to identify their capabilities, leverage their strengths and provide development opportunities to close any gaps between their capabilities and what is expected of them.
The figure below illustrates how every employee plays an important role in achieving organisational objectives. Leaders translate the organisation’s strategy into the set of capabilities and behaviors required to deliver it; what began as the strategic priorities and vision, mission & values cascades down to operational outcomes and workplace policies and then broken further down to an individuals performance indicators and the creation of day to day structure, systems and processes.
According to research, an employee’s understanding of expectations and standards – and how they relate to their work and the organisation – is the biggest driver of employee and organisational performance. When employees understand this, their performance can improve by as much as 36%.
Good performance management practice features 6 essential components and related core elements that occur on a continuous basis, are cyclical or driven by an event.
Set and clarify expectations Collaborative process between manager and employee to set performance expectations and clarify them on an ongoing basis.
- Each employee has an up-to-date description of their role, including required capabilities and responsibilities, linked to the organisation’s strategy.
- All employees understand the organisations values, the capabilities required of them in their roles, and the deliverables for which they are accountable.
- All employees are aware of the codes of conduct, policies, procedures and standards they are expected to observe.
- All new employees undergo a review process that includes informal and formal reviews.
Monitor Ongoing joint evaluation of progress towards achieving work goals and expectations, involving regular two-way feedback.
- All employees have regular opportunities to discuss their work with their manager and receive informal feedback on their performance (either individually or as a team).
- All employees have the opportunity to provide informal and formal feedback (through a structured assessment method) to their manager.
Plan and review Collaborative process between manager and employee to plan performance, linked to corporate objectives, with periodic reviews of progress towards achieving work goals.
- All employees have an annual formal performance agreement with their manager that sets out individual performance objectives linked to corporate objectives as well as the capabilities they are required to demonstrate in their role.
- All employees have a formal performance review at least once a year.
Develop Collaborative process to identify and develop employees’ capabilities with periodic reviews of progress.
- Development plans are based on the capabilities required in the role, the employees’ existing capabilities, and his/her performance objectives and/or career goals.
- Progress against development plans is formally reviewed at least once a year
Recognise Regular practice of recognising employee efforts and excellent performance outcomes and achievements.
- Organisations have guidelines in place to help managers appropriately recognise employees at the local level.
Resolve unsatisfactory performance Process of addressing employee unsatisfactory performance.
- Managers promptly work with the employee to understand and resolve instances or patterns of unsatisfactory performance.
Want to learn more about the essential components of managing employee performance? “Managing Performance – A guide for Managers” is available for purchase, please contact us for further information.
Organisations who exceedingly outperform the competition foster a strong employee culture. We view culture as the cumulative effect of what people do and how they do it – and it determines an organisation’s performance. There’s always a culture. You end up with one whatever you do, so you can either choose to shape and influence it or take your chances.
High performing teams and people thrive in high performance conditions and leaders play a massive part in creating and sustaining those conditions. Too many leaders don’t understand what that takes, or are too busy, or say that the time isn’t right. Then they become unhappy about the culture they’ve got and the performance they’re getting. Or they only put the effort in for a while, the culture weakens and people think high performance is a fad. The best people leave, the worst behaviours thrive and results suffer.
Leading a high performance culture makes a massive difference to performance and results. It takes discipline, time and effort because these cultures are not normal and without that leadership focus, they will whither and die. So like behaviours, leaders end up with the culture they deserve.
Choosing the high performance life
Leaders have a massive impact on culture. The behaviours they demonstrate, encourage and tolerate pretty much are the culture
Excellence here has a structure. You need to make sure the key elements of a high performance culture are in place or you’re getting them in place.
You need to line things up. Vision, purpose, goals, behaviours, rewards, signals and messages are all tools that leaders who build high performance cultures use wisely and in combination. After all, you’re out to build a culture that outlasts you, not a cult that’s dependent on you.
You need to show that culture matters to you. Rewarding two results equally even though one reflects and supports the culture you want to sustain and the other doesn’t, is only going to get you what you don’t want.
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