Five Steps to Mastering Performance Management for SMEs in 2022

Manager and employee looking at performance and taking notes

By Employment Hero CPO Alex Hattingh

Performance management is a vital part of business success. It can often be neglected by hard-working, high-paced, multi-tasking business owners, but it is a key part of employment for any business and mastering it will help your employees to work at their best to grow your business.

Employment Hero‘s latest research revealed that over half (55%) of the UK’s workforce at every level are currently searching for a new role, with 31% citing a lack of appreciation or recognition and 17% naming lack of training opportunities. This can be remedied by a few simple steps that businesses can take to help their employees progress, and hold on to valuable staff well into January.

So, here are our five steps that SMEs can take to master performance management, get the very best out of your employees and set your business up for success in 2022.

Step One: Plan Performance by setting objectives and goals

The first step that you need to take is to identify the current practices and objectives that are most relevant to your business and think about how your employees can work at their best to help your business achieve them. Whether it be time-management (productivity and/or efficiency), sales growth or the development of new products, identifying the priorities for your business is a vital part of adequately planning the level of performance that will be needed from your employees, both individually and collectively.

Setting SMART objectives (specific, measurable, achievable, relevant and time-bound) are a great way of doing this as they can help to guide employees through the process of their tasks in an effective and productive manner.

Step Two: Assess performance continuously and honestly

The second step is to have open and honest communications with your employees. Good performance management relies on strong communication between managers and employees and should always aim to be informal in the first instances. Try to always facilitate an open and honest two-way conversation where each party feels comfortable to express what they feel the other could do to support them to perform at the best of their ability.

Step Three: Support your employees to enhance their performance

To help employees enhance their performance, focus on how your employees can improve the problems that have been flagged in earlier stages of this process. Perhaps providing further training could help to enhance their skills, or even encouraging them to focus on positive traits and experiences could help, rather than dwelling on past mistakes that they have made in their role previously. Adopting a Personal Improvement Plans (PIP) should help to track and evaluate the progress of employees with performance related issues.

Step Four: Assess how you ‘assess’ performance

Another vital step for mastering performance management is ensuring regular review of the effectiveness of your performance management framework. Having the correct systems and policies in place to track performance and keep up to date records of conversations is crucial to mastering performance management.

This includes consulting regularly with stakeholders in your business, including your employees, on how performance is assessed. By doing so, you can better visualise the levels of performance that your employees and your business are currently at and adapt your performance management framework to suit the needs of the day.

Step Five: Reward improving performance and watch employee wellbeing follow suit

Finally, whilst all the above steps are vital for managing the performance of your employees and supporting them to improve, it is also vital that you recognise and reward improving performance when it happens. By rewarding exceptional and improving performance regularly, you signal directly to your employees that you both notice and appreciate their efforts to take on feedback and improve their work. Instilling a positive trait of reward and recognition within your business will help to encourage good performance, improve your company culture, boost employee wellbeing and guard against staff turnover.

Rebecca Grewcock
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