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How to Choose the Right Performance Management System for your Small Business

You don’t need to have a 100-person company to develop that idea.

Larry Page, co-founder of Google

Using a performance management system for small business requirements: creating an architecture for sustainable growth

Business leaders looking to choose the right performance management system for small business requirements understand the need for systems and processes oriented towards growth. Successful small businesses have great potential for scaling up, so choosing the right tools is essential for ensuring such growth is sustainable.

As such, many small business owners tend to shift away from reactive management to strategic planning. By matching the strengths of the business to available opportunities, these businesses are able to develop a clear vision of where the company is heading. 

Having identified these goals and objectives, the next step is to implement this plan with the help of a performance management system. This helps to ensure the right people are guided towards the right decisions.

There are many different types of performance management system to choose from. Here are the key things you need to know when choosing a performance management system for a small business.

Understanding and articulating the company’s core mission and values

Make sure you can articulate the story and vision really clearly and succinctly; you’re going to need to repeat it a couple of hundred times each year.

Bill Collis, president of Foundry

When defining a company’s culture, business leaders need to consider a variety of factors.

  1. History and ownership. New organizations and small businesses looking to expand lean towards adaptability. A flexible approach allows for quick adjustments as the business continues to grow.
  2. Size. Larger organizations often run the risk of becoming impersonal. Small business owners have an advantage of being able to more easily create organizational cohesion.
  3. Organizational goals. Business goals are rarely as clear cut as “making a profit”. Employees need to identify with something which transcends the bottom line and connect with something more meaningful.
  4. The workforce. An organization is composed of a range of individuals with different talent stacks and levels of experience. Company culture should reflect this composition and amplify the positive traits which reflect the broader mission.

In his book Start With Why, Simon Sinek sums up the role culture plays within an organization:

“A company is a culture. It’s not products or services that bind a company together. It’s not size and might that makes a company strong; it’s the culture – the strong sense of beliefs and values that everyone, from the CEO to the receptionist, all share. So the logic follows, the goal is not to hire people who simply have the skill set you need, the goal is to hire people who believe what you believe.”

By setting in stone a clear and unifying culture, small business owners can ensure their growth and development aligns with the people their organization is composed of. When hiring and onboarding new members of staff, this culture can be clearly expressed to see if they are a good fit for the team. 

As an employee’s role develops over time, culture feedback mechanisms can be used to ensure the vision and culture is dynamic. Direct feedback from employees can enhance the company’s core values. Technical and professional competencies which encourage great performance can be amplified. By recognizing positive behaviours the company’s culture is strengthened and the bond between employee and employer is enhanced.

Establishing consistent communications throughout the workforce

Small businesses are not immune to the shift towards hybrid working. Most companies are entering the post-crisis landscape with a fractured workforce, split between returning to the office and continuing to work from home. This presents new challenges for small business owners seeking to maintain the integrity of their internal communications.

A performance management system for small business requirements should include a multi-channel communications platform. Such a platform allows business leaders to integrate their values throughout communications, for instance by embedding them in HR processes. 

Using a multi-channel communications platform

Multi-channel communications are useful for more than boosting culture. They can bring employees together in a variety of other ways to improve organizational integrity. These comms allow users to instantly contact one another across a range of platforms. Desktop and laptop devices can be used alongside mobile phones, with instant alerts hitting all channels. 

Performance management software allows users to access a range of useful tools. These include:

Newsfeeds

Newsfeeds allow managers and team leaders to circumnavigate the pitfalls of group emails and deliver information knowing it has been read and understood. Articles and other important documentation can be sent along with an alert, with employees able to sign off to confirm receipt.

A news feed has the additional advantage of being tailored to individuals, teams, departments and locations. The option for users to like and comment on items in the news feed allows these updates to stimulate important conversations about what matters the most.

Social intranet

Employees deliver their best work when they are able to communicate ideas with their colleagues clearly and effectively. A successful workforce is built upon collaboration, and a social intranet provides the foundation for productive interaction.

Staff updates, company news and other initiatives can be promoted by small business owners through the social intranet. Innovations within the company and updated practices can be articulated, with users contributing valuable feedback as part of ongoing conversations. 

Today Screen feature

One of the biggest obstacles to efficiency is a lack of organization of priorities. A Today Screen allows users to collate the most pertinent information in one place in real-time so they can focus on what matters the most. It also allows managers and HR leaders to gain a birds’ eye view of the organization and adopt a proactive stance on potential issues.

The Today Screen is fully customizable and can be tailored to display a range of information, including:

  • Upcoming scheduled meetings
  • Feedback sessions, for instance one2ones and check-ins
  • Crisis communications
  • Organizational charts
  • Current objectives and goals
  • Videos, articles and important training resources

Critical Alerts

When small businesses are faced with emergencies or need to quickly disseminate other crucial information, multi-channel communications can be used to send critical alerts. These high priority messages are instantly delivered across all platforms, including push notifications and SMS alerts to mobile devices. 

Recipients are able to respond to these alerts via email or SMS directly within the performance management platform. These responses are then automatically sent to the manager who issued the alert. The ability to automate alerts offers managers and team leaders additional flexibility when communicating to individuals, teams and departments.

Integrating HR admin tools to clarify the organization’s structure and automation of core processes

Business leader and consultant Jim Collins once said, “Those who build great companies understand the ultimate throttle on growth for any great company is not markets, or technology, or competition, or products. It is one thing above all others: the ability to get and keep enough of the right people.”

Hiring and keeping the right people requires an understanding of the organization’s structure. From this overview, business leaders and HR managers are able to better understand which skills need introducing to the company. 

Digital tools offer business owners the means to create this organization overview. Yet a report from Deloitte highlighted just how few small businesses are taking advantage of these tools, despite clear evidence they increase revenue and improve growth. The report goes on to highlight how the main barrier to the implementation of digital tools is a lack of awareness:

“Amongst the least digitally engaged small businesses, 40% believe that digital tools are ‘not relevant for my business’, and 38% that ‘they are not effective for my business’. This indicates that less digitally engaged businesses may be unaware of the benefits associated with digital tools.”

By adopting digital tools as part of their organization’s performance management platform, business leaders and HR managers can:

  • Understand the company’s structure with department and organizational charts. These charts are particularly useful for small businesses as they provide clarity and guidance on resources and help to visualize the future of the organization.
  • Compile a people database which does away with the need for endless paperwork. Such a database can store all employee information such as contracts and other sensitive information in a secure location. 
  • Onboarding and offboarding worksheets and automated processes. Successful small businesses experience rapid growth, so the ability to use templates for onboarding helps streamline the process. Lateral promotions can also be automated to save HR leaders valuable time.
  • Employee analytics and reports to track key metrics across individuals, teams and departments. Such reports allow business leaders to identify and respond to potential problems before they negatively impact the organization.

Creating a continuous cycle of feedback to boost alignment and improve engagement

Winners are not afraid of losing. But losers are. Failure is part of the process of success. People who avoid failure also avoid success.

Robert T. Kiyosaki, founder of Rich Global LLC 

Strong company culture helps to unify the employee and the employer with shared values. In order to ensure these values reflect the changing face of a developing small business a continuous cycle of feedback is necessary. By engaging in ongoing discussions with members of staff, business leaders are best positioned to evolve the company to match emerging priorities.

A performance management system for small business needs includes a range of feedback mechanisms. By taking advantage of these tools, small business owners can ensure individual and company goals are aligned and employee engagement levels are maximized.

Performance management feedback mechanisms include:

One2one check-ins

One of the principal functions of ongoing feedback is providing real-time information which can be used to address performance issues. Regular one2one check-ins allow managers and team leaders to build trust with employees and improve performance with valuable insights.

By using dashboards as part of performance management tools, managers and employees are able to plan for and schedule regular meetings. With ongoing conversations a core element of the working schedule, participants can prepare relevant data to keep the discussions on point.

Monthly and quarterly reviews

Small businesses undergoing rapid growth are especially disadvantaged if they are still stuck with annual performance reviews. When reviewing performance on an annual basis, many factors surrounding behaviours and results can be overlooked.

By switching to quarterly or even monthly reviews, HR leaders and managers can keep track of the core dynamics affecting an employee’s performance. Performance management software allows users to automate reviews with customizable templates for ease of use. By structuring the review process, small businesses can help ensure they are regular and consistent.

Customizable 360 appraisals

If manager-to-peer feedback constitutes the bricks of an ongoing feedback process, peer-to-peer feedback provides the mortar. The additional information offered by colleagues gives managers a holistic overview of performance-related issues and provides much-needed context.

As with one2one check-ins, monthly and quarterly reviews, 360 appraisals can be scheduled and automated through performance management software.

Stimulating ongoing personal and professional development

Successful small business leaders provide employees with a fertile environment for growth. This growth should include developing skills and knowledge which align with the company’s broader goals and ambitions. Investment in training should take into account not only the requirements of their current role but also potential roles in the future.

As small businesses continue to grow, different approaches to training and development are required for different circumstances.

Required skills and knowledgeMethod of training to build skills
Knowledge of the company’s product or serviceTeam briefing from leadership or colleagues
Data analysis skillsCoaching
Relationship building skillsExternal training courses
Knowledge of marketingFormal education
Legal knowledgeTraining courses
Knowledge of complaints procedurePeer-to-peer briefing

HR leaders who have access to an organizational chart can conduct a thorough training needs analysis on the business. By mapping skills deficits and understanding where experienced employees are, the relevant training can be effectively delivered where it is needed.