It’s all about the people. Most of us agree that business performance is dependent upon the people, but it’s not always clear how to get the people to perform.
Many business owners wrestle with getting their teams fully aligned with their business mission. I hear the phrase “herding cats” from time to time in management discussions. Many business owners also view a formal performance management process as a bit of an afterthought and it tends to be the Charlie Brown of business disciplines in the entrepreneurial world.
During my years of large company management, I contributed my share of jokes and sarcastic quips toward our space-shuttle-esque performance management work flow. I often had a desk full of revenue-generating, operational-crippling, customer-facing needs that tended to take priority over internal human resource administration.
But it’s all about the people, right?
As my teams grew beyond a size that I could easily manage one-on-one, I developed a keen appreciation for how critical a robust performance management system had become.
As the business objectives stacked even higher upon my shoulders, it was clear that delegating accountability and, more importantly, truly achieving results demanded a consistent process and disciplined organization. I still shared a joke or two along the way but now only to lighten the mood and always with respect for the process.
Smaller businesses don’t often have a fully staffed Human Resource department; it’s common to find inconsistency in conducting performance reviews. Where my small business clients do have a decent performance review process, the continuity of company objectives cascading down to line level individual goals is lacking, which can have a service department feeling pretty good about performance while the company owner is losing sleep. A sales representative may see their commission check as the only thing that matters where the general manager struggles with cash flow due to receivables from the sales rep client list.
A consistent and robust performance management process drastically improves the linkage between the business leader’s vision/objectives and the rest of the company. It is the best thing you can do to keep your team engaged and focused on the right things; therefore, the best thing you can do to prevent your job from becoming the “herder of cats.”
Those of you in larger organizations likely have a well-developed process and if so, I recommend you embrace it and learn to use it well.
For smaller business where a solid and consistent performance management process is not in place or in use, take heart; it is not complicated to put something effective in place.
5 Base Elements of a Performance Management Process
I recommend the following minimum requirements for managing the performance of your teams and driving results that fit with your overall business objectives.
- Choose and publish a standard Performance Review Form template. There are many templates available in the public domain or you can have a skilled professional create one for you. The template should include sections for company values, individual behaviors, performance against specific employee goals/objectives, and comments by both manager and employee.
- Specify the frequency and where on the calendar you will conduct performance reviews. The best practice in my opinion is a full formal review conducted annually, a semi-annual written review at mid-year to identify key high points and areas needing focus, and quarterly or monthly verbal coaching linked to the review form. The optimal time to conduct the full annual review is very near the beginning of the fiscal year. Some use an anniversary date, but this gets confusing as the company business plans don’t usually align with team members not hired at the beginning of the year.
- Managers must document Goals/Objectives in each team member review that link directly to achieving the Company Goals/Objectives. You need to assign SMART (specific, measurable, achievable, realistic, time bound) goals for all employees. The sum of the team members’ Goals/Objectives needs to exceed the company Goals/Objectives as some people may not achieve 100% on their goals. I have coached numerous managers who miss this requirement. A business with a $5 million sales goal, but the sum of the sales rep goals was $4.5 million?
- Take time and effort preparing the Annual Review. Your preparation shows. Your team will recognize that you take the process seriously when you take the process seriously, just as they will see if you don’t. Put thought into the annual goals/objectives you assign and have substantive dialogue to ensure your team member buys in to the coming year goals. Have all employees prepare their comments on the template in advance of your annual review meeting to support open and honest dialogue.
- Accountability, Reward, Consequences. The Performance Review Process must include accountability, reward and consequences as appropriate for a given team member performance, good and bad. Be consistent in linking compensation, raises, bonuses, incentives, etc. to the results as reflected in the Performance Review. This piece is often missing in smaller business environments.
Putting together a basic but effective Performance Management Process in a business can be very inexpensive, straight forward and light in disruption to business operations while the dividends are high given that it’s all about the people.
Please share your thoughts and personal experience on how to build a strong Performance Management Process in a small business.