By Key Business Advisors Business Improvement HR

By Colin Wilson, Director, Key Business Advisors

Dysfunction and lack of teamwork between departments often means trouble for the business. Therefore improving staff performance is crucial to a business’ competitive advantage and success. Performance management in the form of appraisals should be used to ensure performance doesn’t fall short of expectations and managing underperformance is required when the employee’s performance is not up to standards and need to be addressed.

The following steps outline the principles of Performance Management and Managing Underperformance.

Principles of Performance Management

Set the objectives

It is important to set out ‘what’ is to be achieved. This could be set out in categories such as financials, customer satisfaction, teamwork, business processes, personal development and expected behaviour. An example of a financial objective is setting an overall sales target of $X per month on specifics or overall.

Establish actions to achieve the objectives

The next step is  deciding what the staff member must do in order to achieve the objectives set out. For example, in relation to financials, this may be making X number of phone calls and scheduling X number of appointments per week.

Decide on how performance is to be measured

Performance can be measured in a variety of ways, therefore  the employer must be clear from the outset about the method the employees performance will be evaluated. In relation to the financials, the employer could measure the number of phone calls made or appointments scheduled per week by the number recorded in the company’s Customer Relationship Management System.

Review performance

Performance should be reviewed periodically and allow for a comprehensive discussion between the employee and manager based on performance against objectives and culminate in an assessment of the employee’s performance over the review period. There is no hard-and-fast rule about how often a review should take place. It may be appropriate to review a staff member’s performance monthly, quarterly, bi-annually, or more or less frequently depending on the role and circumstances.

Reward high performance

For an effective performance management system, there needs to be a link between performance and reward. The idea is to motivate and reinforce desired behaviour, with high performers receiving higher rewards and low performers receiving lower rewards. Rewards  can include monetary incentives (cash, holidays, gifts, vouchers) and non-monetary incentives (recognition programs like Employee of the Month).

Team performance

It is also important to stress that underperforming staff really let the team and company down on overall performance. The goal is to have all staff engaged and be part of a winning team and team incentives are a great way to motivate and drive results.

Principles of Managing Underperformance

Aim to improve performance to the required standard

The aim of managing the underperformance process should always be focused on improving a staff member’s performance to the required standard, not to ‘manage them out’. Whilst the outcome might be the staff member leaving the organisation (either through resignation or termination) it should not be the aim.

Notify staff member of performance deficiency

An important preliminary step is informing the staff member their performance is lacking and  making it clear the area in which they are lacking. It may be a difficult message to communicate but it is far fairer to let them know their performance is deficient than have them labour under the misapprehension that their performance is satisfactory.

Allow staff member an opportunity to respond

The employer should provide the employee an opportunity to respond to the alleged deficiencies. Addressing them with the employer may help find the real cause of the deficiencies (knowledge gaps, personal difficulties, organisational bottlenecks or system issues). Once identified, it may be possible to address the issues through suitable training, increased resources or by offering counselling services.

Allow staff member a reasonable opportunity to improve 

The next step is providing the staff member with a reasonable opportunity to improve. What constitutes a reasonable opportunity will depend on the circumstances. The period is often set at one month before the next comprehensive review and includes check-ins weekly or fortnightly. A monthly period may be appropriate, for example, in circumstances where the staff member has a monthly sales target.

If necessary, take disciplinary action

If performance remains unsatisfactory despite steps taken by the employer and employee to improve the employee’s performance, disciplinary action may be appropriate. Disciplinary action typically involves an escalated process consisting of a verbal warning (followed by a review), a written warning (followed by review), a final written warning (followed by a review) and lastly termination of employment.

The process and length of time this takes depends on the performance, situation and set expectations. If termination of employment is a real possibility, it is worthwhile discussing the issue with an experienced HR Advisor. Engaging a third party removes the emotion of the situation and can help you make more informed decisions. Key Business Advisors and our team of HR Advisors are experts in this field and would gladly assist you and your business.

*You are invited to register for our free Webinar on Tuesday 9th June 11am – 11:45am (AEST) to learn more on improving staff performance and increasing business profits 

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