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Leading by example

Facing a performance gap? Gerard Burke offers tips for turning underachievers into star players

Gerard Burke

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Entrepreneurs aren’t always the best managers and often shy away from putting in place effective management procedures. Gerard Burke, founder and MD of the Your Business Your Future programme, offers advice on how to turn underachievers into prized assets

I work with hundreds of owner managers every year, and they all know they can only grow their businesses if they have good people performing well. The problem is that putting effective performance management processes in place, and then using them in a disciplined way, is something many owner managers avoid.

The main aim of performance management is to ensure your company is on track to achieve your business strategy, goals and objectives. An effective performance management system will help keep staff motivated and enable you to identify any problems early on.

Performance management starts with being able to communicate your business vision and purpose, and to break this down into a handful of key strategic areas. Once you have decided what needs to be done and who will do it, you can define measures of performance. These should be easy to understand, unambiguous and objectively determined. For a salesperson, a measure of performance might be the number of new accounts opened.

“A performance management system allows you to filter your business plan from the top down through the managers to the shop floor,” says Keith Ellis, managing director of Kenard Engineering, which employs 135 people. “It’s important to make sure everyone knows what you want to achieve and what they have to do to help you achieve it.”

Get smart

The next step is to set targets. These should be SMART: specific, measurable, achievable, results-oriented and time-sensitive. If goals are too easy, they do not boost performance. So they need to be challenging and attainable only with considerable effort. Beware of setting too many or too few, don’t make them all financially driven, and ensure they relate to your long-term vision. “In a small company, things often get done on gut feeling or instinct,” says Ellis. “So it’s vital to set proper targets and aims, or performance is open to interpretation.”

It’s important to review performance regularly through individual one-to-ones, and team meetings and reviews. For new employees, you might want a one-to-one review every month, for example. They don’t need to last longer than half an hour, and should focus on performance gaps and how to fill them. Employees are often more keen than you think to get feedback on their performance. You will probably need weekly progress checks, perhaps in the form of management meetings, to keep tabs on team performances, as well as key individuals.

“We follow a structured performance management approach with regular reviews every three or six months, plus annual assessments,” says Richard Hackman, managing director of advertising company Emberton Dale, which employs 18 staff. “This means we can keep track of any performance issues and encourage openness.”

It is important to get the balance right between informal and formal reviews. At Kenard, for example, there is a monthly performance review on the whole business, which means managers talk to their people every month about how things are going. This provides lots of chances for informal communication.

Appraisal is the central pillar of performance management. If you have a sound system in place and frequent performance reviews, then the year-end appraisal should hold no surprises. Keep the discussion results-oriented and separate from a salary review. Use the appraisal to identify training needs and agree any actions that should result from it.]

Grasping the nettle

Setting up an appraisal system can be daunting. “It can easily be used as a chance for a moan,” Ellis remarks. “It took us several reiterations to get a form that all staff were comfortable with. Our appraisals are now based on constructive discussions that ask questions like: ‘How can someone contribute to the business and how can we help them perform better?’ Pay discussions are not included as this puts a completely different emphasis on the conversation.”

Appraisals are vital, agrees Hackman, particularly for small companies. “We can ensure that staff are progressing well and getting the most out of the company,” he says. “Meanwhile, employees feel valued and are given a sounding board if they need one.” Emberton Dale staff are given 360 degree appraisals, where they can also comment on managers and fellow employees. “Once the staff got used to it, it proved very popular and sometimes colleagues’ remarks can be very insightful and useful,” says Hackman.

If your performance management system works properly, it will allow you to identify, and deal with, an employee that consistently under-performs. In a growing business, an underachiever can have a big impact on the morale of others and the performance of the business. Spotting such people and managing them, perhaps eventually dismissing them without contravening any human resources legislation, is crucial.

In my experience, most owner-managers will avoid dealing with an under-performer. Yet grasping the nettle can lift a weight off their shoulders, is usually welcomed by the other hard-working, often resentful, staff, and nearly always results in better business performance.

Last year, for example, Hackman was faced with an under-performing employee who had worked for several years in a role requiring concentration, accuracy and diligence. “They were keen to make all the improvements we suggested in reviews, but these never seemed to happen,” he recalls. “The problem was a lack of focus rather than attitude.”

After providing plenty of opportunities to improve, Hackman decided to take the first step in the company’s formal disciplinary process. The staff member was invited in writing to a disciplinary hearing, and advised in writing of their poor performance. During the formal meeting, it was explained that they would have to show signs of improvement and a verbal warning was issued. It was agreed to review performance after a month.

“I’ve never seen such a turnaround,” says Hackman. “The employee is now a valued member of staff, and performing very well. But it took a formalised process to achieve this. I was not overly optimistic about the outcomes of the disciplinary process, but it turned out to have had a much more positive result – better for us and better for our employee. Now I understand why these procedures are in place.”

Get formal

Ellis has a similar story to tell. “One sales person was under-performing compared to his peers,” he says. “We had several informal conversations to get him to improve, but they didn’t work. So we arranged for a formal meeting. We prepared our facts about how he had been consistently missing targets, and he prepared explanations for why he wasn’t reaching them.”

The result was a lengthy conversation that touched on all kinds of issues, but had an amazingly positive outcome. The employee realised people were interested in his performance and were willing to help him improve.

“This would never have happened if we had not had a formal performance management system in place,” stresses Ellis. “If this system is friendly, flexible and robust, it should hopefully prevent under-performers damaging the business and reduce the number of unnecessary dismissals.”