By Robert Reddin
As a business owner, you will have a business plan and business goals. You know what it is you intend to achieve and by when you expect to reach your goals. You might even have devised a mission statement for your business. You will also need to have their counterpart, which is a systematic way of measuring performance to achieve your goals. A plan without action is merely words on paper. A goal without effective action is just a dream.
You cannot measure how well or otherwise an employee is performing unless:
- You communicate to him or her what your goals are; and
- Tell them what they are expected to do to help achieve your goals.
A performance management policy is the tool with which to align your business goals with the work of your employees to:
- Get better results for your business;
- Monitor and improve individual and team performance; and
- Understand individuals and how they need to develop.
Your business plan and goals are the strategic part of your business. Managing performance is about looking after the people side of your business. It is also about taking your employees seriously in terms of how they do their work, how they contribute to the success of the business, and the support and coaching they may need to overcome any problems.
What is involved in managing performance?
There are three aspects to managing performance. You will need to:
- Set objectives for your employees to achieve. These objectives should be linked directly to your operational goals and business vision.
- Agree competencies or behaviours to establish the way in which your employees work toward achieving the objectives you have set.
- Plan an individual’s personal development, including any future training or coaching they need to help them achieve their objectives and to realize their potential.
These three elements often form part of an appraisal system
Benefits of a performance management policy
Having a performance management policy enables you to:
- Lead your business. There is a saying that the view from the engine room is different to the view from the bridge. You are on the bridge; you have charted your course and know precisely where you are taking the business. It is part of the leader’s function to communicate that information to others so that they can see where their work fits in with achieving your business goals.
- Listen to your employees’ real concerns. Employees will feel happier and perform better if there is an open two-way system for talking to their line manager, getting feedback on how they are doing, and getting help to improve and develop.
- Understand your employees and how they contribute to your business success. Performance management helps develop this understanding through regular and open interaction.
- Achieve best results. To work at their best, achieve better results, and continually improve, your employees need an ongoing system for adjusting and reviewing the way they work.
Having a performance management policy also provides you with a way of dealing with unsatisfactory performance and to improve future performance.
Not all performance management policies are successful
It is no secret that in some businesses, some managers and probably more employees think performance management is a waste of their time. When looked closely, the cause of that attitude can often be linked directly to a failure of effective communication.
Whilst there may be a strategic business plan, and business goals have been set, these may not have been communicated to employees in such a way that they know the part they have to play in achieving those goals.
- Instead of Specific, Measurable, Achievable, Realistic and Time bound (S.M.A.R.T.) objectives, employees were given vague targets to achieve.
- There is no agreement on the expected competencies and behaviours required from the employees, so the employee does not understand what is expected of them.
- There is no open, two-way system of communication between employees and their managers.
Consequently, the emphasis is on punishing past failures and not on improving future performance.
In contrast, a performance management policy that is built on effective communication of the business’ goals, S.M.A.R.T. objectives based on those goals, agreed competencies and behaviours, and encouraging personal development will result in a happier and better performing workforce.
There is a connection between performance management and disciplinary procedures as a deliberate failure to meet reasonable performance standards can lead to disciplinary action being taken. The next article in this series answers the question: Why You Should Have a Fair Disciplinary Policy.
About
Robert Reddin has been providing HR support and guidance to a wide range of businesses in England and Wales since 2001. He has worked with hundreds of companies in many business sectors.
He is the director of My Virtual HR Ltd which provides HR support and a range of employment contracts, employment handbooks, HR forms and template letters. For more information visit our website at: http://www.myvirtualhr.co.uk
