Small businesses or startups can keep a close eye on every one of their employees and ensure they’re getting the most out of each of them. For bigger businesses, however, it is much more difficult. So, metrics such as headcount and attendance are often used instead. The fact is that with the right technology, it doesn’t matter how many employees your company has – every one of them can be monitored for effectiveness, output and potential.
But why is that important? Here’s a 5-minute guide to why performance management should be your biggest priority.
What is performance management?
According to good ol’ Wikipedia, performance management ensures that goals are consistently being met in an effective and efficient manner. So, in the case of an employee or team, performance management is about checking that their delivery is maintained at an appropriate level or even improved over time.
Why is performance management something I need to worry about?
There are a huge number of benefits to being aware of the performance of your employees:
1. You’ll be able to identify who is consistently performing better than others.
Why is this important? Well aside from creating a bit of healthy competition among your workforce, knowing who is performing best can do wonders for your company.
- You can then reward them to ensure they stay within your business (and incentivise them to continue putting in so much effort).
- You can put them on training programmes to fast-track them to management positions. This in turn will give you a management team who knows the business from the ground up.
- You can look at what is driving them to perform well and learn from it so that you can apply those same practices when training your other employees.
2. Conversely, you’ll be able to see who is underperforming.
In a big company, it’s very easy for bad habits, slacking off and poor quality to slip through the cracks.
A robust performance management system will ensure sub-standard effort is identified. Then these people either need to step up via training, management support or disciplinary action; or get out of the business. They are costing your company money and it’s a problem that needs to be addressed as soon as it is spotted.
3. You’ll be able to more accurately price your products or services because you’ll know exactly how many man hours go into delivery of each one.
Full transparency. That’s the dream. Well, with performance management it can be a reality. You can instruct your sales team on exactly how much it costs to produce your product or deliver your service and they’ll ensure they don’t negotiate a deal below that.
By finding out exactly how many man-hours are required for each activity, you could discover that what you think is your most profitable service, is actually slowly killing your business.
4. You’ll be able to identify inefficient practices within the business, reduce costs and therefore make your company more profitable.
Wouldn’t it be amazing to create more of a profit margin without putting your prices up? If you’re scrutinising the performance of every employee, you’ll be able to see what is causing lags in output and what is making them inefficient.
What’s more, by talking to them, you could also identify the elements that they enjoy or hate which could be a huge factor behind the speed it takes them to complete the task.
5. By building a formal structure around performance management and publishing its progress internally, you’ll encourage a harder working environment.
If people know their performance is being monitored, they’ll automatically work so much harder, particularly if they’re aware of the rewards on offer.
Often, poor performance is due to a lack of incentive. If people feel like they’re underappreciated, then they’ll stop trying. So conversely, if you show people their hard work matters by developing a performance management programme for them, you’ll see their productivity levels – and their engagement – soar.
6. Good performance management makes a great PR angle.
It shows the world you care about your team, the work they do and as a result, what is delivered to your clients.
After as little as six months, your new performance management programme should present you with some fantastic statistics showing increased output, boosted morale, lower staff turnover, decreases in costs, and more. The press, and your investors, will love it.
7. Recruitment will be less of a headache.
If your staff don’t feel like their work matters to you, then they won’t hang around. And high staff turnover is costly.
By establishing a performance management system, you’ll not only find it easier to keep hold of your people but you’ll also find that the recruitment process is easier because your company will have become a much more enticing place to work.
There you have it. In five minutes, we’ve hopefully convinced you that you need to establish a performance management programme and fast.
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