Typically, small businesses employ a small number of people before they expand and grow.
As small businesses grow, the way they develop and grow their people will help them grow their business as well. So, the performance of those people in the early years is fundamental to the performance of the business as it grows.
Therefore your small business should attempt to ensure the best performance from your employees, and systems to help them grow and develop along with your business.
The best way of developing your employees is to implement an effective review system where they are shown what their key performance indicators are, where they can be given clear targets to achieve, and where positive but honest feedback can be given both ways so that they are helped to develop and that they provide feedback to you on how you can best use them in your business.
In order to implement an effective staff performance review system, you first need to have something against which to measure.
That means that before you try to implement a review system, you will need to have done your work in preparing their position descriptions that describe their roles and responsibilities.
A Position Description is a statement that:
- identifies the title of the position,
- their main objective as an employee of the business,
- who they report to and who reports to them,
- who else they engage with,
- their responsibilities and daily duties, and
- how their performance will be measured.
If you take the example of the Sales Person in charge of, say, North-West Region, their Position Description may look something like this: –
|Title:||Sales Person North-West Region|
|Objective:||Generate increasing sales from the Region|
|Reports To:||Sales Manager|
|Supervises:||Sales Assistant, North-West|
|Sales Manager’s Secretary|
|Stores Warehouse Staff|
|Responsibilities:||Generate sales from existing customers|
|Find new customers|
|Maintain CRM records daily|
|Meet Manager weekly to report|
|Follow up all customer orders|
|Supervise work of Sales Assistant|
|KPI’s:||Sales growth in Region|
|Contact with customers|
|Customer Order Fulfilment|
|Development of Sales Assistant|
|Performance Measures:||Sales growth 15% per annum|
|Record contact with 75% of all customers every week|
|90% of Customer Orders delivered on time|
|Sales Assistant position filled long term|
Their performance measures should be tailored to the successful meeting of their responsibilities, setting targets, and outlining standards of behaviour. As far as possible they should be objective and quantitative. They can be qualitative, as long as they are also objective and not dependant on individual interpretation.
Finally, make sure that their Position Description makes sense in the context of your overall Organisation Chart.
Once their Position Description and Performance Measures are clear, you can then develop a regular, consistent staff review system.
The most important aspect of a performance review system is consistency. Whether you decide to do this once a quarter, twice a year, or once a year, it must be done as publicised.
Appointments need to be made and treated as importantly as customer appointments. It is unforgivable to break these appointments because it sends the message that you don’t really care about their performance.
If you don’t keep these meetings, it’s too late down the track to say that they under-performed because you should have been concerned enough to conduct the interview when it happened, not a long time after.
Write up a standard series of items to discuss at the review. This should be standard throughout the business so that all reviews are conducted on a level playing field.
I suggest that the items include: –
- A discussion of whether any aspects of the position description have changed. Sometimes, variations creep in because of changing circumstances that create changed responsibilities. Record these to update the position description later.
- A discussion on whether they met their own performance objectives (which should have been set at the last review), then discuss the new performance objectives they would like to set for the next period. Employee-set performance objectives are about how they would like to improve performance or learn new skills to develop their careers, not necessarily about their performance measures.
- A discussion on each of their areas of responsibility, and how they found their work in those areas. This discussion should give ideas about room for improvement as well as good feedback about any changes to systems, policies and work procedures.
- A discussion about their performance measures, pointing out from the employers’ point of view how they have been measured. If these have been objectively and quantifiably measured there should be no room for the employee to provide different measurements, so the following discussion should focus on how to improve.
- Note any significant contributions the employee has made to the business and make sure they receive thanks.
- A discussion on career planning – what they aspire to, what they will do to attain that career path, and what the employer can do to assist.
- A discussion on rewards and remuneration.
Once you settle on a standard set of interview discussion items and questions, make it consistent by capturing it into a standard form that you can use every review period. This is also useful as a record that you can go back to and compare what was said with what then happened.
To implement the system, schedule review interviews with all staff for at least the year ahead, whether you do it quarterly or six-monthly or annually.
When you conduct the interviews, be prepared. Respect the employee by making sure you have reviewed their file and thought about what you expect of them for the period ahead.
Use the review form at the interview and write down their responses and your comments. Allow them to provide feedback on your comments and on the job. A completed form becomes the formal documentation of the review interview, and if acceptable, both parties should sign the form to indicate agreement.
As soon as the interview is completed, schedule the next period’s review, as well as any actions that you have both agreed to.
Over time, follow up on those actions and ensure that both parties keep to their commitments.
However, the performance review system should not end there.
Aside from the formal performance review system, the business owner and any responsible managers should make sure that they are providing constant feedback on the job. If the salesperson is not providing the weekly reports to the manager, this should be pointed out to them and referring to their position description. If the accounts receivable person is not keeping adequate records for the audit trail, this should be discussed as soon as it is seen and they should be shown how.
The point is not to punish but to provide people with timely feedback, not only once a year when the behaviour may already have been established and when the negative effects of poor standards may have already affected the business, but regularly as it is seen to happen.
At the same time, any positive behaviour seen should also be reinforced immediately with praise and not kept until the end of the year.
If you implement the performance review system early, it becomes a really positive enhancer of performance. Along with defined position responsibilities and the organisation chart that shows them how they contribute to the whole business, a fair performance review system builds a high-performing team.
Exactly what you need in a small business – everyone pulling their own weight and contributing to the business’ success!
This is part of our series of blog posts on growing your small business. We have already published posts on:
- Growing Your Business – Measure Everything
- Growing Your Business With A Strategic Plan
- Growing Your Business With Your Annual Business Plan
- Growing Your Business With A Marketing Plan
If you are starting, and growing your small business, you will find these series invaluable.
Next, we are going to deal with Growing Your Small Business By Employing With Intent – don’t miss it, you can register here to get it emailed directly to your inbox in case you forget to check here.
See you next time!