In a small business, the effectiveness of any staff you have is critically important.
Typically, small businesses employ a small number of people before they expand and grow. So in this period, the performance of those people is critical because of the leveraging effect of their impact. In much larger workforces, one slow performer is not as noticeable in the outputs generated.
It makes sense then that a small business should employ effective methods to ensure the best performance from their employees. These include the best recruitment procedures, to ensure that you not only choose people who have the skills you need, but who also fit into the way you do things in your business. These methods also include the preparation of an organisation chart or staff structure system with position descriptions so that everyone knows what their roles and responsibilities are. They also include the need to have a performance review system.
In order to implement an effective staff performance review system, you 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. These position descriptions should also include performance measures so that everyone knows from the start how they will be measured. 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.
Here are some examples.
For a salesperson, their performance measures may be: –
- To increase sales from your region by 10% per annum;
- To provide monthly reports of prospects and how you intend to convert them in the following month;
- To engage with existing customers at least once a fortnight;
- To return all phone calls within 2 hours, and all email by the next day;
- To be able to demonstrate that 80% of your customers are satisfied with your service.
For someone responsible for accounts receivable: –
- That the details of customers, the amounts they owe, and the age of debt is accurate at all times;
- That all account queries are satisfactorily answered within 24 hours;
- That aged accounts receivables reports for the week ending Friday are provided to management by C.O.B. on Monday;
- That all accounting entries are properly documented to provide an audit trail;
- That all late payments are followed up one day after the date, and then followed up every two days unless an acceptable settlement is negotiated (the accounts manager will set acceptable terms).
For the receptionist: –
- All phone calls are answered using our telephone answering script within 3 rings;
- All mail is opened, logged, and delivered to addressees by 10 AM every morning;
- All messages that are taken for people to be delivered by email immediately after hanging up;
- All visitors to be greeted using our welcome script and the appropriate person meeting them informed immediately.
Once these performance standards have been established within the employees’ position descriptions, the performance review system can be designed to discuss, improve, and reward performance, or to change behaviours to attain the standards.
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.
Create a standard series of items to discuss. 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. Records 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 what 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, and what the employer can do to assist.
- A discussion on rewards and remuneration.
The implementation of the system is then to ensure that everyone’s position description is up to date, to ensure that they are aware their performance measures are being measured and how, to set up formal review dates, and then to hold those meetings. The interviews should be documented and the record kept in their staff file.
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 idea is 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.
At the same time, any positive behaviour seen should be reinforced immediately with praise and not wait 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 where everyone pulls their own weight and contributes to the business’ success!