Medium-sized businesses can encounter very specific problems in maximising employee performance. Vincent Belliveau explains why these problems arise and outlines how they can be overcome.
While small businesses have fewer employees and shorter chains of command, providing greater transparency to individual performance, large organisations benefit from comprehensive systems and processes to help measure and manage their employees. In between those two extremes, medium-sized organisations can find it difficult to maximise employee performance. Some may have grown rapidly, and the internal systems and processes that were appropriate as a smaller organisation are no longer fit for purpose. Others may recognise the need for greater control over performance management but lack the leadership or resources to make the necessary changes. Yet this will be putting the business at a competitive disadvantage.
The cost of ignorance
Research from industry analyst firm Bersin & Associates has found that organisations with high quality development plans build a high-performance culture that generates twice the revenue per employee as organisations with poor or ineffective development plans. In addition, it has been proven that organisations with consistent, company-wide performance management experience lower turnover among high performers. There are a number of reasons for this. First, measuring performance gives managers a clearer perspective on the contribution of each employee, enabling them to make more informed decisions regarding promotions, pay increases and bonuses. This in turn helps the business to retain talented employees who make the greatest contribution. Second, ongoing monitoring of employee performance can also help to highlight where employees have particular learning or development needs. Addressing these needs in a timely way may not turn an employee who is struggling into a superstar, but it may improve that employee’s performance and their contribution towards the organisation reaching its objectives – positively impacting the bottom line.
Third, better performance management information can help to improve benchmarking and target setting across the entire organisation. For example, it becomes easier to identify the norms for a particular team, highlight potential high-flyers who might be “coasting” in their current role or individuals who may be better suited to different roles. These employees can be moved into new, more suitable positions, and developed and incentivised in order to maximise their performance – and the business’ results. Finally, in an increasingly litigious and regulated world, organisations need to ensure they – and their employees – have the right systems, processes and training to ensure compliance. Performance management systems can help managers to identify and fill gaps in knowledge and behaviours around compliance issues with greater accuracy, reducing the organisation’s exposure to potentially costly risk.
Gaining control is easy
Many medium-sized businesses are failing to achieve these financial benefits because they believe that comprehensive performance management is more suited to large organisations. However, that is not the case – any organisation can improve the performance of its people. Along with securing buy-in from executives internally around these initiatives, the most important determinant of success is to select a cost-effective performance management system that delivers robust functionality and a user-friendly interface, so it can be rolled out to employees and line managers across the organisation with no training requirements. Ideally, it should be integrated with the Learning Management System to streamline HR processes. Software-as-a-Service options are fast and easy to implement and don’t require costly new hardware.
A targeted communications campaign to launch the system is essential to encourage uptake, and “champions” should be used to communicate success. In addition, there needs to be a change of focus, from formal annual reviews to more frequent discussions and assessments of performance. When managers monitor and record performance on an ongoing basis, it improves the accuracy and timeliness of the information used to make business decisions. Entering such information directly onto the performance management system minimises the likelihood of mistakes, and there are time and cost savings from removing duplication of effort, such as the HR manager inputting information supplied by the line manager. Such a strategy also improves consistency and creates a paper trail that can be used to support any action taken against poor employees.
Delivering competitive advantage
Performance management is one of the most important activities an organisation can undertake to ensure the best use of its human resources. However, it is essential that it is an ongoing process – not a once a year event – for it to deliver real value to fast-moving, competitive organisations. Arguably, this is even more important for medium-sized organisations because they tend not to have the spare capacity of a larger organisation, nor the speed and flexibility of a small business in addressing change. However, the implementation of performance management systems and processes must be part of a wider change towards a performance-orientated culture. While the global economic recovery remains fragile, competitive advantage is most likely to be gained by aligning and measuring the individual performance of every employee against the objectives of a high-performance organisation.
Vincent Belliveau is EMEA General Manager for Cornerstone OnDemand
- For further information please visit http://www.cornerstoneondemand.co.uk or email info_UK@cornerstoneondemand.com.
