Performance management in a small business – what’s the point?

February 2, 2016 Geoffroy De Lestrange

Performance management is often – unfortunately – limited to the much hated tradition of yearly performance reviews, which consists of completing boring forms generally in Excel and having to explain why the employee got 3 out of 5 instead of 3.5… Almost worse is that this type of review is generally used to allocate compensation.

In addition, the performance review file is then stored somewhere on a server or in the manager’s outlook, which is, of course, unsafe and open to breaches in confidentiality and will also be forgotten until the next review a year later. Which explains why people feel so disenchanted when ticking the boxes of the review.

Does this mean that employees do not want to have this yearly discussion with their manager? Absolutely not. It is necessary to receive feedback on one’s work, to be able to express desire for development and to talk about compensation. The main issue is that these 3 topics should be addressed in 3 different conversations, not all together and not only once a year.

We all know that the main challenge for a manager in a small business is time. The fast paced, dynamic multitasking environment that makes SMBs so attractive to employees is also what prevents managers from  freeing some of their time,  in a busy schedule , to give regular feedback to their employees . Yet this is probably the most important aspect of performance reviews, as those ongoing discussions are what will have the strongest and most positive impact on your business.

At Cornerstone, we have found that more than half of employees felt that performance reviews weren’t motivating them to work better, yet those who received regular feedback outperformed their peers. So, it's clear that well planned and carefully processed performance discussions are highly efficient for both the employee and the company:

  • The employee gets positive feedback and strives to work better, while the company gets a clear view of existing competencies and potential
  • Teams are more engaged, attrition decreases
  • The global quality of work increases, which directly correlates to higher client satisfaction, and ultimately better results for the entire organisation

Therefore, it is clearly strategic for businesses of all sizes to plan for an efficient performance management, taking into account:

  • Communication around the company strategy, and how the employee’s role is part of its success
  • Regular feedback and longer term competency development planning
  • Transparency on evaluation criteria to enable positive discussions (looking at the GPS more than the rear window)
  • And at all times: ensuring your teams of your support to help them work better and develop their skills

To learn more on how to establish a business case, tailor Performance Management to your specific business needs, Implement effective staff reviews… Take a look at our new whitepaper Six steps to Performance Management best practice.

About the Author

Geoffroy De Lestrange

Product Marketing & Communication Director EMEA at Cornerstone OnDemand

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