Every year the Aberdeen Group (www.aberdeen.com) conducts a study of approaches and practices of over 900 business professionals around the topic of Employee Performance Management. The concept of Employee Performance Management can most broadly be defined as the activities pursued to ensure that organizational, departmental, and personal goals are being met in a consistent, effective, and efficient manner. In short - how well does the company respond to the pressures of the marketplace while still developing the technical, managerial, and leadership skills of employees.

The 2008 study differs sharply from the 2007 study in some key ways. The global shortage of talent and available trained labor has changed the focus on Employee Performance Management.

The overarching rationales for pursuing Employee Performance Management in 2007 were:

Improving overall company performance (57% of the respondents agreed)
Employee productivity (46% of the respondents selected this answer)

In 2008, the drivers behind the process were:

Insufficient talent pipeline (43% chose this answer)
Recovering from the loss of top talent to competitors (41% selected this answer)
Diverse workforce with varying needs and expectations (34%)
Workforce productivity fell from 46% in 2007, to 27% in 2008 and overall company performance did not register in the top 5.

Why It Is Necessary

Employee Performance Management is a vital initiative, whether

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or not it is labeled as such by the company, because it is the focused effort on retaining quality employees, developing further loyalty to the company, increasing the contribution of employees individually, and as working groups or teams to the organization. A company that does not involve employees in determining the strategic direction of the company, offer opportunities for employees to receive ongoing feedback on performance, and evaluate their contributions according to an objective and standard methodology that is clearly articulated, runs the risk of creating an environment that is sub-optimal. Employees capable of high caliber contributions will flee those situations and pursue other opportunities that will allow them that freedom.

How To Do It

The first thing to be done in the practice of Employee Performance Management is to incorporate the employees in their own development and goal planning responsibilities. For many entrepreneurs and small business owners, the notion of having to give up some of that responsibility is both a relief and a burden. By requiring employees to assume that role, or at least be a participant in their own developmental activities, the shackles are partially removed from the business owner for being solely responsible for employee development. On the other hand, it means giving up a portion of control over employee development to the employees themselves. On the continuum of responsibility it needs to be a shared one with neither having all the power to decide developmental needs and goals.

The next most crucial thing to do in creating an Employee Performance Management approach for the company is to communicate to the employee about their performance more than just the once a year at performance appraisal time. In fact, for many small businesses, there is not even the once a year scheduled review to discuss employee performance and short-term goal setting. For employees to feel valued, committed to the business, and for business owners to ensure that employees are aligned with expectations, standards, and organizational performance principles; it is essential that employees receive feedback and constant communication and reinforcement. If performance is not where it should be, then it needs to become a teaching moment to explain how to improve and to provide access/training/opportunity to use available resources to complete tasks more appropriately. If performance is at standard or above, it is crucial that it be recognized and addressed as well. Waiting until a yearly review to comment on mistakes made months earlier, or to compliment someone on a job done two quarters ago loses impact and is not going to sustain the level of commitment and dedication that highly talented employees offer.

The third vital component is to involve the entire organization in the process. The more employees have a stake in establishing their own goals and contributing to their own development, the more likely it will be that they will be more deeply invested in the results and will work to achieve them. With that said; the more feedback and reviewers that can be solicited on performance, the more comprehensive the view will be on which to make assessments. One of the dangers of relying on one's own perspective is that the business owner is now adopting the role of night watchman or police looking over employees waiting to catch them performing as expected, or not. The responsibility is all the owner's and employees are apt to perform differently when in the presence of the owner than when not. By sharing the responsibility with other employees for providing feedback on how well any individual employee performs the job, a more complete image may emerge.

Fears

Some entrepreneurs or business owners may become uneasy at the thought of relinquishing some of the responsibility for the company's direction in this way and may feel that the employees may hijack the process to their own betterment, and not necessarily that of the business. There are caveats that can me put in place to avoid that, though it rarely is the case where they are needed. Most employees, or at least the ones worth keeping, want the business to succeed, wish to participate and be involved in a business that is growing and that they are contributing to, and will eagerly share what insights they have about how to improve if they were asked and allowed to answer without repercussions.

For those business owners that still feel the need to manage the process more closely, some of the techniques that have been used successfully are:

Ask employees how to achieve goals that have been established by the owner. In this way, they can help determine the methods for achieving, but are not asked to choose what the goal is to be achieved.

Provide different incentive levels for different performance standards. Whether it is a bonus, extra vacation time, tuition assistance, a party, or any other incentive - ask the employees what would motivate them to perform and then allow them to achieve increasingly rewarding outcomes for having achieved results.

Automate as much as can be done electronically to remove the need for human intervention or oversight. Whether it is tracking who has completed training sessions, or scheduled e-mails reminding managers to conduct performance appraisal sessions - the less that the owner has to assume responsibility for overseeing those functions, the better off the organization will be and the more integrated the functions will become.

Employee Performance Management is becoming increasingly important for small businesses because employees are able to pick and choose where they work. The highest caliber employees will always be in high demand, and if they are allowed to flee to competition or elsewhere, the company will be left with employees that are unable to leave for greener pastures because they are not highly desirable. And that is no recipe for success.


David Zahn is a serial entrepreneur and consultant to Fortune 100 businesses (www.zahnconsulting.com) as well as entrepreneurial startups (www.startupbuilder.com). His books, "How To Succeed As An Independent Consultant, 4th Ed.," and "The Quintessential Guide To Using Consultants" are frequently cited by other authors and have been used as textbooks in college and MBA classes.

The opinions expressed are the author's and not necessarily those of connpost.com. Please direct comments to cdauber@ctpost.com.