Employee performance management isn't just for the larger end of town. Sean Conrad explains how solid people management practices can help SMEs get the most out of their people.
When you're an SME, often functioning without a dedicated HR staff, employee performance management can seem like an administrative overhead – something you don't need to even think about until your business is larger. What this thinking overlooks, however, is the fact that, ultimately, your employees are your only true, sustainable competitive advantage. And solid people management practices can help ensure you get the most from this strategic asset.
There are three fundamental employee performance management practices that every company should have in place, regardless of their size:
1. Setting, aligning and managing employee goals.
2. Giving employees formal and informal feedback on their performance.
3. Providing employee with opportunities for development.
Setting, aligning and managing goals
The best way to get the most from your staff is to assign everyone goals that are aligned with your organisational goals. In fact, this is the only way to ensure your organisation will meet its goals. But many SMEs either don't set goals formally, don't make employees accountable for contributing to organisational goals, or don't assign employees goals at all.
By first setting organisational goals, then assigning every employee individual goals that link and contribute to organisational goals, you set clear expectations for everyone, and give employees a context for how their work will help the company achieve success. This context really helps to drive everyone's focus, but it's also a key contributor to employee engagement.
Next, it's a good idea to periodically review everyone's progress on goals (both the employees' and the organisation's) and communicate the status of goals to keep everyone accountable and make sure everyone is on track. Some experts recommend you do this at least quarterly, particularly if you're in a competitive or changing industry.
And because business and priorities can change throughout the year, it is also a good idea to regularly review all goals to ensure they are still realistic and relevant. Formalising this process is a great way to communicate company values and priorities, and ensure everyone is working collaboratively towards the same objectives.
Giving employees formal and informal feedback on their performance
Receiving regular feedback on performance is important to everyone's success. While managers should be doing this informally, on an ongoing basis, they often don't. So it's important to set up one or more formal performance review sessions for giving feedback each year. Ideally, managers should evaluate each employee's performance of both their goals and the competencies important to their role and the company. (Competencies are "how" you do your work; some companies call them behaviours, skills or values.) Giving employees regular feedback is a vital way to manage employee performance, and identify, document and address any performance issues early on.
Providing employees with development opportunities
Finally, it's important that your employees have an opportunity to develop and expand their knowledge and skills. Managers should start by looking at each employee's performance, and identifying strengths and areas for improvement. They should consider the employee's goals, as well as the company's when they do this. They should also reflect on the competencies that are vital for both the employee's and the company's success. For example, if customer service is an important company differentiator, you'd want to make sure all your employees have strong skills in a competency like "customer focus" or "listening skills".
Wherever managers identify a skill gap, they should assign the employees some form of development plan to help improve or expand their abilities and expertise. There are lots of cost effective, formal and informal ways managers can support employee development. They can sign them up for a one or two day course, or some online training. But employees can also learn from webinars, books/general reading, job shadowing, mentoring, developmental work assignments, etc. Research tells us that up to 90 per cent of learning is accomplished on the job, so make sure you support this form of development.
Providing employees with opportunities for development helps increase their value to the organisation and demonstrates the company's commitment to them; both of these drive up employee engagement. And that’s never a bad thing.
Employee performance management best-practices aren't just for large companies. Putting these three practices in place, regardless of your company's size, helps set your company and your employees up for success. It establishes a work culture that's focused on solid communication, ongoing development and high performance.
Sean Conrad is a Certified Human Capital Strategist and Senior Product Analyst at Halogen Software.
Follow @mybusinessau on Twitter for breaking stories throughout the day.