Staff Performance Management for Small Businesses

Managing the performance of staff can be a challenge, but if you have a performance management framework or process in place, you may save yourself a lot of money down the track. And it can be applied to a business that employs one staff member or more.

With a performance management process, you can do two things; manage the performance of poor performers, and provide productive employees with positive feedback and encouragement.
It is important to create structure early so you are prepared for when the business grows.
So how do you set up a simple performance management system?

Firstly, ensure that you have job descriptions that outline the purpose of each role and they key duties expected of this role. To performance manage your employee, decide together on 3-6 key objectives of the role, and specific Key Performance Indicators (KPIs) to measure how these objectives will be measured. For example, an objective for a Receptionist role is to be responsible for reception duties. A KPI for this objective is for the Receptionist to ensure that all messages are clearly communicated in a timely manner. Write these objectives and KPIs in a word document to ensure they are recorded.
If you are big enough to have worked out strategic objectives, these should be intertwined into the KPIs.

These objectives should be reviewed at the 6 month mark to make sure that they still reflect the employee’s role, and then a more formal review at 12 months.

I always recommend that employers have regular developmental conversations to manage staff expectations and performance. These conversations may be about learning and development opportunities, how to improve processes and procedures, and how they are enjoying their role, what could be improved etc

Regular conversations generate the following benefits:

• A better understanding of employees;
• Instant feedback and no surprises when the performance and development reviews are conducted;
• A more thorough understanding of your business’s challenges, opportunities and strengths; 
• Regular opportunities to provide feedback will reduce the fear associated with feedback in a performance related discussion;
• A practice-run in the lead up to the formal performance and development reviews.

When there are performance management concerns
The performance management process can also uncover employees who are not performing in their role. If an employee’s performance is consistently poor, the employee must be warned in writing that their performance needs to improve. The employee must be provided with guidance on how they can improve their performance and given a reasonable amount of time to improve their performance. The employee’s performance can be monitored against their KPIs.

Employers that employ fewer than 15 employees are covered by special dismissal arrangements which are different to those that apply to larger businesses. The special arrangements that apply to employers with fewer than 15 employees are:

‘Employees will need to have worked for the business for 12 months in order to be eligible to make a claim for unfair dismissal, and if a small business employer strictly follows the Small Business Fair Dismissal Code and the dismissal of their employee is not harsh, unjust or unreasonable, then the dismissal will be deemed to be fair. It is best practice to follow the code and fill out the Small Business Fair Dismissal Code Checklist at the time an employee is dismissed and you should keep the Checklist with your records as it will assist you if an employee makes an unfair dismissal claim.’

Small businesses don’t need to invest a lot of money to develop a performance management system. The more simple and user-friendly, the better. It is worth the effort because a feedback process helps to instil loyalty, longevity, and continued performance.