The building blocks. Managing performance

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1 Managing performance The building blocks Performance management is not just about tackling underperformance but about creating a culture where good performance is encouraged and incentivised.

2 Introduction Every successful company tries to manage employees in a structured and caring way balancing achieving company goals with developing their employees. Performance management is not just a round of meetings with employees followed by endless paperwork. Companies need to develop a continuous process that helps employees contribute their best to the corporate goals. The best performance management systems create a culture of continuous improvement.

3 Performance management is not just about tackling underperformance but about creating a culture where good performance is encouraged and incentivised. You will create an environment where employees feel engaged and willing to contribute towards the company s vision. True performance management means that companies and managers must: Simplify policies and procedures Coach and mentor Give managers decision making authority Embrace failure Don t use a blunt stick approach Support personal development Empower Reinforce the positive Source: The Roffey Park 2012 Management Survey 1

4 Why manage performance? Small and medium sized companies have the most 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. It may sound obvious but studies suggest that having engaged employees lead to better financial performance. 2

5 What does the process look like? Company vision & goals Regular 1-1s Performance management Appraisal meetings Individual objectives

6 Company vision and goals You want your employees to contribute towards achieving the business goals. They are an important building block for your performance management process. Appraisal Meetings They set the structure of your process and should be booked in advance at least once or twice per year. Individual Objectives These give your employees and their managers a clear understanding of what is expected of them. Regular 1-1s 1-1 s are the glue that holds the whole performance management process together. They should be informal and encourage managers and employees to communicate.

7 How do I get started? Implementing and running a performance management process will take time so it s important to design a system that works for you and your business. In general, small businesses should make sure that its processes are straightforward and don t swamp managers with un-necessary paperwork. However, it is equally as important that the process is formalised as busy managers are prone to take short cuts.

8 The aim of any performance management process is to improve individual employee performance, there are three aspects to consider: setting objectives - what you expect an employee to achieve provide the ground rules - how you expect employees to work towards their objectives agree a training plan - how employees need to develop to achieve objectives.

9 S How to set objectives Employees need to know what your company goals are and how you expect them to contribute towards achieving those goals. Take time to share your company vision with employees, what goals you are working towards and how you will measure success. Then give your employees objectives that are centred on tasks that they have control over. Take into account that multiple employees might have similar tasks so might need shared objectives.

10 SMART OBJECTIVES When you set objectives for your employees they should be SMART: Specific make the desired outcome clear Measurable agree how you will measure progress and success Achievable need to be achievable but challenging Relevant to what the employee does and your company goals Time bound set a date and stick to it.

11 Example objectives: SMART Increase next year s sales by 5% over last year. Ensure all goods are delivered within 3 days of order receipt. Provide monthly absence reports 1 week before each monthly management meeting. DUMB Improve sales Speed up delivery Improve absence reporting. Sign up 10 new customers each month. Increase the number of new customers. Carry out performance appraisals for each of your direct reports within 1 month of kick off. Do performance appraisals in a timely way.

12 Provide the ground rules By agreeing the ground rules (behaviours) you set how you expect your employees to achieve their objectives. e.g. A sales person told to increase sales needs to be given the ground rules. Can they do it at the expense of margin? How must they interact with other sales people? An organisations values and culture will influence these behaviours. It s important that the management team discuss and agree the high level ground rules before communicating them with employees.

13 Most managers will instinctively know how they expect their employees to behave but have probably never thought about sharing them with the employees. When it comes to individual employees, managers need to think about what behaviours they want (positive) and just as importantly one they don t (negative). It s important for managers to take into account their knowledge of individual team members - their strengths and weaknesses, how they respond in different situations. The ground rules need to be discussed and agreed individually with each employee during appraisal meetings. They will also need to be regularly reinforced on an on-going basis.

14 P Agree a training plan If employees are to meet their objectives and those of the company, their skills will need to be constantly developed. Discuss with your employees what training they need. Take into account the objectives, their aspirations and the future requirements of the company. Providing opportunities for your employees to develop is a key part of every performance management process. Consider all the options for training and agree the most appropriate for each employee and your budget.

15 Designing a training plan... Don t make this complicated or time consuming. In essence you need to assess the current knowledge and skills levels of your employees and compare this with what they need to be, to achieve your objectives. Once done you can decide how to fill the gap. Take into account that training costs will vary dramatically depending on how fast you need to do the training so think about it in advance. Understand when the new skills will be needed and plan the training accordingly. Start early and where possible let employees manage their own training.

16 How to review performance The common approach to performance management is to operate on an annual cycle. However it s important to make performance reviews a continuous process: Annual appraisal formal review the year just completed, review past objectives and give feedback. Agree objectives for the new year. Interim reviews - discuss progress against the objectives, celebrate achievements and offer constructive feedback. Regular 1-1s - informal meetings between managers and employees to discuss progress, offer feedback and identify areas to improve

17 Record keeping It s important that record keeping is kept simple and open. If it is onerous on managers or employees it won t happen. Formal review meeting should be properly documented and managers should keep notes from informal meetings. Regular feedback A regular dialogue between managers and their employees is crucial to managing performance. Feedback should focus on: Monitoring progress towards objective Acknowledging achievements Consider areas to work on.

18 Conclusion 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. It will not work unless managers and employees recognise the benefits and actively contribute

19 Sources 1. Roffey Park 2012 Management Survey 2. Macleod report 2009 by David MacLeod and Nita Clarke. Engaging for Success: enhancing performance through employee engagement