Performance Management in Small and Medium Businesses

Nick Braban was a publican for 20 years before joining Tanda as partnerships manager. He shares his practical performance management tips below.

If you scroll through LinkedIn, you’ll often find discussions about culture and performance management. Typically, the posts will include some fluffy tips about creating a great culture at work and getting the best out of your employees.

The reality is that while some of these tips and tricks are great, they don’t always apply to small and medium-sized businesses that have shift and hourly-based staff. It’s the old white-collar, blue-collar divide.

This doesn’t mean culture isn’t important. It’s just that what sets the culture varies for different businesses.

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Positive and Negative

From management’s perspective, I like to think of performance management and culture as a ledger with positive and negative things you need to do to flourish. On the positive side sit all the typical things like a team lunch or giving a good employee a pay rise. Everyone likes to talk about these things.

However, in my experience, enforcing the negative side of the ledger is more important. These are things like setting expectations, dealing with struggling employees, and even letting people go.

The dark side side of culture and performance management is the one that will make the biggest difference. Your ability to make the tough decisions that don’t always please people is key here.

Based on my experience, I’ve created some steps to creating a performance-orientated environment, that is also a positive one. I’ve listed them below.

1. Evaluate what’s good and what’s bad

Step one is to take a good look at what your teams and employees do, work out what’s working, and what’s not. This is a pretty broad question, and you should think of it that way.

What’s working might include anything from how two employees get along at work, to the technical elements of your hiring process. I like to write it all down.

2. Reinforce the positive things

Don’t forget the positive side of the ledger. Every business has some positive things going on and you want to encourage and reinforce it. It might be that the staff have great camaraderie or that everyone holds themselves to high standards of service.

You’ll know your individual circumstances better than I do – reinforce the good stuff, and let the employees know about it.

3. Manage out the bad stuff

This is where you make the biggest impact. Junking bad practices and managing underperforming employees is the best thing you can do for the bottom line.

The issue is that it needs to be done the right way – and this is where many businesses stuff up. Often, people will let the issues pile up with an employee or a practice, then suddenly snap, and try to let someone go.

This can lead to tension, have bad effects on team dynamics, or worse, a lawsuit. Instead, I’ve found the best way to deal with performance issues is to set the expectations early, and instantly let an employee know when they’re out of line.

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Removing bad team practices

Some performance issues are team, rather than individual-based. You might call them a cultural issue. These need to be removed, but it’s often easier said than done when a lot of people in the team are doing it.

It’s always easier to stop things before they start, but sometimes you won’t have that luxury. If you’re suddenly clamping down on something, I like to respectfully discuss the decision with staff, explain why the business wants to remove it, and then be firm on what the expectations are.

If staff understand the businesses’ perspective, and know it won’t be tolerated, they’ll often accept the change. Communicating and setting the new standard is key.

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Performance Management

I spoke earlier about letting employee’s know when they’re out of line. The reality is that some employees won’t toe the line.

If this is the case, there’s a few things you can do. Firstly, you want to make sure that all employees have a probation period. This is your time to weed out staff that simply aren’t up to the task.

You don’t need to give a reason if staff don’t pass their probation, and it’s a great insurance policy. If the employee has already passed their probation, then you need to do some performance management.

Fixing underperformance

If someone’s underperforming, you can’t just let them go. You need to have honest discussions and let them know they’re not meeting expectations. These expectations have to be reasonable, and you need to make the comments in a formal setting that can be referred back to should discussions break down..

Explain exactly what the employee is doing wrong, and what they need to do to fix it, and do it in a respectful way. Keep a record of the conversation.

Letting staff go

Some staff unfortunately need to be let go. If this is the route you go down, it’s very important you follow the rulebook. Unfair dismissal claims can end up costing your business tens of thousands of dollars.

The first thing is to give the employee a written warning. This should make it absolutely clear that they’re not performing, and if it continues they will have to be moved on.

We’ve prepared a templated written warning for a common issue – tardiness – that we encourage our customers to use.