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Why SMEs Are Wary of Performance Management

Why SMEs Reject Performance Management

A lot of small businesses feel no need for any sort of performance management system. In fact, if they give it a thought at all, many of them actively shy away from it. It involves a lot of conversations with staff, it creates expectations, it means identifying in concrete terms  what each job should contribute to the success of the business at the end of the day this can be a lot of extra work. You've got to be sure that you're going to get a significant return before you embark on such an investment of time and effort.

Not Always A Good Experience

And then there are those businesses that do have a performance management system but aren't enjoying the experience: dissatisfied employees now have a voice and a route for complaints, issues such as favouritism and unequal treatment have been laid bare, and shortcomings such as cut corners, poor working practices or even (shhh!) management incompetence have been exposed. It's easy not to see the long-term benefits of unearthing these issues when you're in the middle of having to address them.

SMEs Concentrate on Survival not Startegic Growth

The main difficulty is that most SMEs - particularly during times of recession, are focussed on survival rather than strategic growth. Under such circumstances, the burning issue is whether you can deliver the next job/client/product and get the last invoice paid rather than where you want to be in five years time and how can you build your performance towards achieving that.

So Why do It?

Why put the effort into formal performance management? What could it do for you?

  • It ties everything together business goals, job descriptions, individual performance, training & development, future success a simple system can be used to align your whole business.
  • It prompts you to plan more strategically and gives you a way to engage the workforce in that planning.
  • It gives you a more motivated workforce staff feel their efforts are acknowledged and, where necessary, supported.
  • It improves efficiency which ultimately makes your business more profitable.

The key is to success is engaging your people in the process of introducing performance management. Impose a system at your peril. Listen to concerns, take them into account. The more you talk about what it is and why it will benefit both the business and the staff, the better. If you already have a system but think it could be doing more for you, it’s not too late to go back to basics and with your staff turn it into a system that works for the business rather than detracts from it.

For staff, there are five main elements of performance management:

  1. targets that actually mean something;
  2. consideration of both what is achieved, and how;
  3. a focus on supporting success rather than punishing failure;
  4. regular and helpful feedback;
  5. relevant training & development needs are met;
  6. (optional) the assessment of performance is fairly linked to reward.

Time spent getting these right for people is never wasted and a simple system can be used as a framework to all work towards the common goal. We may still be struggling through a recession but some simple and effective performance can ensure that you do more than survive.

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