Sunday, 5 December 2010

Managing Performance in Small Businesses - National Post

Any company whose fiscal year begins in January should already be thinking about their performance objectives for January. There are plenty of different ways to go about structuring organizational performance management. But for small businesses I most often suggest using a model which turns overall, company goals into specific and measurable ones for each and every employee. It’s not that this approach isn’t suitable for large organizations, it’s just that it’s much easier to institute on a smaller scale. 
In this cascading performance objectives model, the organization’s leader creates a set of goals that cover off all of the company’s goals, needs and targets for the upcoming year. It is best to separate these into sections such as: Profitability, Best Practices, Innovation, Market Share, Client Satisfaction and Employee Satisfaction.
The next step is for the leader to share these objectives with his or her direct reports. They in turn will review them and create their own goals to pursue in order to help meet those of the overall organization. These objectives need to be ones which are quantifiable, achievable and help to propel the company forward. For example, a goal such as “keep market share at 10%” is not as propelling as “increase market share to 12%”. Of course, these need to be time bound and, as such a reasonable due date needs to be specified for each objective. 
Once the leader and the direct report agree on these objectives they should be shared with the next layer of employees. This way, they create individual performance goals which directly enable their director achieve theirs. This method of cascading objectives is really a ‘no goal left behind’ approach. The leadership can’t possibly accomplish everything on their own and this way each individual owns pieces of the corporate objectives and is responsible for their attainment. 
This sounds like a lot of work but any effective performance management system is going to be labour intensive at the front end. Much of the art of making cascading objectives work is in getting internal buy-in. The way to do this is to explain the process in its entirety before overwhelming people with their personal homework of co-creating their objectives with their manager. It’s all about the kick-off and it’s all about tying it to a reward – monetary or otherwise. Companies who have historically given out rewards without having them based on achievement will have their work cut out for them. That said, it’s the organization’s prerogative to say “from now on we’re going to be doing this differently – everyone will benefit because we’re going to drive our performance together – the company’s success and your individual success are intertwined”. One non profit client of mine was won over to use this method of selling a new performance management model when I told him that not-for-profit need not equal not-for-performance! 
In order for this approach to be successful, employees and managers need to communicate throughout the year because goals will not likely be reached if they are only mentioned pre-fiscal and at the very end of the year. All objectives are organic and may change depending on a number of circumstances. Employees who are interested in attaining rewards and bonuses should keep a hard copy of their objectives on their desk. This way, they can track their achievement and alert their manager to amend any goals which may need to change over the course of the year. Similarly, managers who want to help steer company performance need to have monthly review meetings to ensure that goals are being met.  So as this year nears its end, it’s time to start planning for a successful New Year!

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