“Culture eats strategy for breakfast”, Peter Drucker
It is more important than ever to run a lean business. Costs need to be kept in check and the new normal is to be thrifty, productive, and efficient. Unfortunately, this philosophy has to extend to payroll and headcount, every position needs to be justified and add value.
It is critical to regularly assess your employees and ensure that they are performing and growing, i.e. they are a contributing factor to a healthy work culture. One that runs as a meritocracy in which “good” employees are recognized, promoted, or empowered and “bad” employees are quickly discovered and removed from the environment. This is a foundational factor for a company that wants to stay lean and effective.
The most common way to evaluate employee output are Key Performance Indicators or KPIs. A KPI puts a number to reflect how well that individual is achieving their stated goals and objectives. For example, if a goal is to provide above average customer service, you could use a KPI that targets the number of unsatisfied customer support requests at the end of each week. This measures progress towards an objective.
While KPIs are extremely important, managers may overestimate their value as some jobs are difficult to quantify. Looking back at the previous example, perhaps the customers the employee did serve were very satisfied and will return because of the staff’s attention, patience, and care.
There are several other ways to evaluate an employee’s performance, such as:
- Quality of Output
- Creativity of Output
- Improvement over time
- Team and customer feedback
- Percentage of tasks completed
Owners and HR managers must decide on a holistic approach that combines KPIs with the individual behind the numbers. Further, they must also agree to apply the same methodology across the board to all employees. This requires an honest look at the worker and is usually backed by the numbers.
It is important to maintain a regular schedule when assessing employees. While quarterly evaluations are ideal, they are time consuming and deflect attention from the core business. One should aim for assessing employees twice a year and seeing changes and improvements in the employee’s KPIs, attitude, and engagement.
Conducting assessments and analyzing the results is the first step. Taking concrete and constructive action is the next one. If an employee is consistently underperforming it is imperative to understand the root cause. Perhaps the KPIs were not communicated to them or they do not feel challenged enough, maybe the company has not offered them the right training. Similarly, single out exceptional staff members and understand the factors helping them succeed. Do they have a cheery disposition? Are they extra hard working? Are they working on commission? You may be able to apply some of this learning towards your other employees and turn their collective frown upside down!