Ten points to active performance management in a small business

Entrepreneur Jonathan Richards reveals his tips to maintaining a happy and productive workforce.

I get an insight into a lot of companies in the work that I do, so when I see a really successful business I know that just beneath the surface there will be a well-thought-through process for managing employee performance. The best companies try to manage employees in a structured and caring way – balancing achieving company goals with developing employees.

SMEs have so much to gain from implementing even a simple performance management system. Businesses with proven performance management systems have motivated employees who engage with and work towards the goals of the business.

So what goes into a great performance management process? Here are my ten commandments for how to actively manage employee performance:

  • Get the culture right. There’s no escaping it, culture is at the heart of all great performing companies. You need to create a culture where good performance is encouraged and incentivised. Culture cant be forced so as a small business owner your business will need to reflect your vision and beliefs. You cant mimic another companies culture so start the process of evolving your own – it wont ever be finished and don’t expect to capture it on paper.
  • Company vision and goals. If you want your employees to contribute towards achieving your business goals then they need to know what those goals are. Make your vision and goals the foundation for your performance management process. It’s the reason you have a process and all employee objectives must be linked back to the company goals.
  • Continuous cycle. Many fledgling performance processes die after a few months because no one believes in them.  Make it clear from the start that this is not just a round of meetings with employees followed by endless paperwork. Make it an embedded mind set and you can expect great results.
  • Coach and mentor. Performance management isn’t only about regular meetings, companies need to expect and equip their managers to become coaches and/or mentors. Employees that are encouraged to make incremental steps become the best performing. Evolution, not revolution.
  • Give managers decision making authority. For a manager to function at their best they must be able to make decisions (and maybe more importantly be seen to make decisions). They need to do this for their own improvement but it also makes the organisation as a whole perform more fluidly.
  • Embrace failure. Often said but rarely done well – if things don’t go wrong occasionally then the business isn’t being pushed hard enough. Fail fast, fail often but find the right balance – don’t expect failure but embrace it when it arrives.
  • Don’t use a blunt stick. There are many ways to motivate employees to do go the extra mile and the stick is a valid one in some circumstances. However, employees need to know where they stand so the best approach is consistency. Take a certain action and receive an expected result – do your job and get paid, go above and beyond for reward, step way over the line and expect the stick!  BUT make sure the stick is sharp enough to catch the situation rather than dish out a blanket beating.
  • Personal development. Most people want to learn and, let’s face it, most of us need to learn so as businesses it’s only sensible for us to support development. It makes people feel wanted and gives them the skills they need to progress. To get the most out of any learning it needs to be planned so a Personal Development Plan needs to be part of any system.
  • Empower employees. It’s no good telling an employee that you want to develop them if you don’t give them a chance to practice. Look for opportunities where they can flex their new found skills.
  • Reinforce the positive. Catch an employee doing a good thing, praise them on the spot and you will do wonders for their motivation.
  • There are many studies that confirm having engaged employees leads to better financial performance. The essence of a performance management process should be to motivate your employees towards achieving your company goals. Employees should know what is expected of them and managers should have a process to review and give feedback to their employees. The system should be viewed and a continuous and living process.

    Sweat the small stuff

    Author Patrick Gruhn shares his belief on why attention to detail is one of the fundamental traits of successful businesses.

    One way to find bad corporate advice is to look at the titles of popular personal self-help books. ‘Feel The Fear And Do It Anyway’ – not the best strategic advice for a company. ‘I’m OK, You’re OK’ – due diligence, anybody? But I’d suggest the worst advice an enterprise can take would be the title of the bestselling book Don’t Sweat The Small Stuff. Because the experience of successful companies, and of ones that have gone under through ignoring this, is that you must sweat the small stuff. Details matter, and it is by getting the small things right that one achieves true excellence. This is as important in the treatment of staff and colleagues as anywhere else.

    Sir Ian McGeechan, the former coach of the Scottish rugby team who guided them to a Grand Slam victory in the 1990 Five Nations tournament and who was five times appointed head coach of the British and Irish Lions, is a strong believer in the value of getting the small things right – ‘world-class basics’ is his mantra.

    Espoused in his autobiography Lion Man as well as in the management talks and seminars for which he is famous, Sir Ian’s philosophy of people management and preparation centres on ensuring the minutiae are dealt with. Every small element of routine was carefully attended to; the right food, kit, personal items the team members needed, clothes, ties, aftershave, as well as emphasising to each player his individual role and responsibility for the team performance.

    The office environment at Google’s Googleplex has become the stuff of legend, with its slides, water lounges and massage chairs and the rule that no employee may at any time be more than 100 metres away from food. Shuttle buses serving employees around the Bay area, bicycles dotted around the campus for workers to use and a host of evening activities from dance to rock climbing; all these serve to make for a happier and more productive workforce.

    If attentive detail to employees’ wants makes them happier while at the same time improving the company’s bottom line, it’s churlish to ask if an organisation is being genuinely altruistic or somewhat Machiavellian. But there are companies that get it wrong.

    One example is a US media company that, although it pampers its workers with banquet-loads of free, fresh food and the use of luxury gizmos, has made a point of having very few chairs in the offices’ communal areas. The arrangement has caused resentment among some employees. Likewise the conical paper cups at water coolers that some businesses use – a means to discourage workers from putting their cups down and nattering – are also a misjudgement in the art of people management.

    As Sir Richard Branson has said, ‘The only difference between merely satisfactory delivery and great delivery is attention to detail’. Branson was known for taking notebooks with him and noting down any things he thought were sloppy or sub-standard at any of his operations.

    The Pareto principle, the idea that some 80 per cent of effects come from 20 per cent of the causes, has become a mantra for some businesses. See to the big issues, they say, and don’t worry about the details. The results, however, are often mediocre. Of course businesses should have an eye on grand strategy, should look to the big picture and should look to grow. But don’t let this be a distraction from excelling throughout the 100 per cent. Do sweat the small stuff.

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