Every business is reliant on the performance of its staff to succeed. Your business’s success is inherently tied to the performance of your staff, so having your team operating at their very best is essential.

Through misunderstanding and misapplication, performance management has fallen out of favour with many businesses. However, a properly implemented performance management process with support from senior decision-makers can significantly improve your profitability.

Here are some tips on getting performance management to work for you.

Define your metrics in advance

Every business operates slightly differently, resulting in different priorities. Your staff also work in a range of roles, each of which has different responsibilities. It is therefore absolutely essential that, before beginning any performance management review process, you know exactly who is being reviewed against what standard.

“Define your business goals clearly so that others can see them as you do.” – George F Burns

Nail the review process down

With the metrics in place, the next step is to educate line managers and staff in understanding:

·         What the performance management review process is for.

·         How the process management review process is designed to help employees as well as the business.

·         What the metrics being used are and why they matter to the business.

·         How to carry out a performance review.

For businesses implementing a performance review process for the first time, they may find that every staff member is rated as “excellent” or “above average” for each metric, as discussed in this case study from the Harvard Business Review. This is not only unlikely, but also generates results that are of little or no use when trying to improve your business. When this happens, line managers should be encouraged to understand that:

·         An average rating is not a sign of poor performance.

·         They will need to repeat the process until you feel that staff are being rated realistically.

Benchmark

To know whether performance is improving or deteriorating, it is essential to know what your company’s baseline is. This involves carrying out an initial performance management review for every member of staff to ascertain what their “normal” operating capacity is.

“If you don’t know what the standard is you cannot compare yourself against it.” – F. John Reh, business author and executive.

Use a suitable  HR software system, which provides tools to record the outcomes of these initial performance management reviews. You will then have a permanent record of current attainment which you can refer back to at any time.

Repeat

With the benchmarks in place, it is essential that performance reviews are undertaken on a relatively frequent basis. Whether you choose to do this on a formal or informal basis, most businesses would benefit from carrying out some kind of performance discussion with staff every three months.

Whether formal or informal, any observations of improvement or deterioration should still be recorded to help identify trends. Examples of great performance can be recognised and rewarded, whilst poor performance can be addressed before it becomes habitual or viewed as acceptable by other team members.

“The benefits of performance appraisals are tough to argue with. Conducting performance appraisals helps to decrease uncertainty about job requirements and manager expectations, opens the door for training and development opportunities, and offers a chance to reinforce positive behavior.” – UpstartHR.com

Review

Each time a formal, company-wide review takes place, use the information stored in your HR system to identify where the company is over-achieving and where there are things that can be improved. Analyse the data looking for trends such as poorly-performing departments, or instances in which employee knowledge is insufficient to complete tasks properly.

It is also essential that your staff see performance management data and lessons being fully implemented if they are to retain faith in the process and remain engaged. By recognising their attainments, you will also help to keep them motivated to keep performing to the very best of their ability.

Remember, the data you collect is just the first stage of the review process. Use your metrics and analytics to drive changes that will help improve your business for customers, staff, and shareholders.

“What helps people, helps business.” – Leo Burnett

Your performance management review process has the potential to significantly improve your business if conducted properly. These five tips should give you the basis you need to get true value from the process to the benefit of your business, staff, and customers alike.

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