Hands down, THE most critical element of an advice business is the people who serve within it, your human capital so to speak. Having the right people in the right roles is the first step to success, and empowering them through great management is the true key to outstanding business results and a great culture.
Your people are the absolute key to your success AND your enjoyment in running your business…. and yet we see so many business owners feel outside of their comfort zone and skillset in managing people.
We all know how important it is to hold regular performance reviews with our staff – they help us to recognise achievements and value our team members, clarify roles and identify training and development needs. However, completing an annual performance review is not enough to get the most for, and from your team.
Improving the productivity of every employee is the key to boosting profitability, and at the same time boosting employee morale. Higher morale generates even greater productivity which, in turn, improves your bottom line. It is an upward trend you’ll want to employ.
A Framework for Performance Management
All too often the phrase ‘performance management’ has a negative connotation, but I’d like to challenge that. Performance Management is about managing the performance of your greatest asset, your staff… to become the best they can be with your help. And if they are struggling, to identify gaps and help them improve their performance or work on knowledge gaps, or in circumstances where a behaviour is not aligned to the business values and expectations; to manage those conversations openly and honestly.
While formal staff performance reviews are a big part of the Performance Management framework, it is important to note that performance should be an everyday conversation (and that is whether it’s to address a positive or negative event or behaviour). Timely, regular conversations about performance are key – they help your staff to develop and ensure all those great things occurring keep happening, and things which are being done incorrectly or being missed get sorted straight away.
Why is Managing Performance important, beside the obvious?
Ultimately, managing your team well means increasing your staff engagement.
➢ Employee engagement increases productivity in the workplace. Engaged employees outperform their peers that are not engaged. Overall, companies with high employee engagement are 21% more profitable.
➢ Employee engagement improves morale in the workplace.
➢ Employee engagement reduces absenteeism. As decades of Gallup research shows, when employees are engaged their performance soars: Highly engaged workplaces can claim 41% lower absenteeism, 40% fewer quality defects, and 21% higher profitability.
➢ Engaged employees provide better service to clients.
➢ Low employee engagement is a costly problem! Research shows it costs businesses $4,129 on average to hire new talent, and around $986 to onboard the new hire. That means you lose over $5,000 each time an employee walks out the door, not to mention the unquantifiable cost of losing an experienced employee!
We’d argue that the cost of losing a professional staff member would greatly exceed these figures. Even if you don’t lose revenue from clients who leave the business as a result, think about the total cost of recruitment. We’re not talking merely the ‘recruitment fees’ for advertising and/or utilising an agency, we are talking about the disruption to business. The time it takes to find the right person, to on-board them, the time of other staff out of the business to train the new staff member.
Retaining good staff is about more than simply time and cost efficiency. When you have an employee who feels engaged, they are more likely to care about the company and your clients, to do their best work to achieve client and company goals and be a joy to have around!
Where to start??
Following a framework that provides clarity and guidance on what to do and when is the key to ensuring that you provide a consistent and constructive process and helps you ensure that everything you are doing centers around the business’s goals and values. Having a framework will assist you in managing team performance in a positive and meaningful way, helping you move towards the goal – great staff engagement that assists in improving productivity and delivering better client outcomes.
A suggested ‘performance management’ operating rhythm, including the types of activities which should be occurring, and the frequency is below. Keep in mind there is no one ideal model; you will need to adjust your own framework to suit the size of your team, your business needs, the roles, current performance and the experience of the team members.
You’ll want to ensure that you don’t fall into the trap seen all too often in large corporate businesses, where teams spend way too much time in unnecessary meetings just for the sake of it. Following good meeting protocol, such as running to an agenda, ensuring two-way discussion and input (not a lecture), minimising the time spent (not every meeting needs to be an hour!) and even having standing or walking meetings can be great ways to obtain engagement and collaboration and still stay dynamic and get your work done.
You can find more detail on how to conduct one-on-ones and formal performance reviews in the Evolve Alliance portal.
It can take some work to set up, but once you have a solid performance management process in place, it really takes the chore out of it. Be transparent about the process with your team and invite their feedback so you can ensure it’s beneficial for everyone.
It might all feel a little too ‘corporate’, but it really is as important for a business with 1 staff member as a business with 1,000 staff. Take a look at some of the benefits:
➢ Alignment of staff goals to company purpose = increased profitability as everyone is working to the common purpose.
➢ Identifying staff training needs = reduction in errors, continual process improvement and hence, better outcomes for your clients.
➢ Staff feel valued = reduced staff turnover which results in reduced recruitment, onboarding and training costs to the business.
➢ Staff are more engaged = happier work environment, lower absenteeism, increased productivity, higher levels of engagement with your clients
Overall Performance Management helps you create a culture of open communication in your business, which assists in improving both performance and productivity and results in an overall increase in staff engagement. Spending the time to do it right is a win for both your business and your staff.
As Henry Cloud said, “If you are building a culture where honest expectations are communicated and peer accountability is the norm, then the group will address poor performance and attitudes.”