David Seall Blog

How do you implement performance management in an SME?

An issue that often isn’t grasped by organisations is the one of performance management. Too often, those in the organisation that fail to perform adequately, are seen to be seemingly ignored by management. Their poor performance is allowed to continue. They are often “carried” by the rest of their team, or worse, moved into roles that are undemanding or even specially organised for them. This can seriously affect the morale of a team, as “carrying” an individual usually means extra work for the rest of the team and generally, poisons the workplace. When working in unionised environments, I’ve been asked on occasion by union representatives, why a colleague (usually a union member), hasn’t been dealt with by weak middle management.

I’ve heard the performance management system in one large company described by the HR Director as the “bedrock” on which the company is built. In a large corporate structure there is usually an HR system that deals with staff performance which means that it’s difficult for poor performers to remain invisible for long. Moving leadership around so that appraisals are not always by the same person or individuals being placed in integrated project teams, usually shows up poor performance. A person who may be “flavour of the month” for one manager may not be seen as that by another.

A well run appraisal system, which is reviewed by HR and senior managers, gives an indication of something being amiss. If this happens there are well documented processes and procedures for managers to use that should produce the necessary corrective actions to improve performance. Sometimes managers are encouraged to discuss the results of their appraisals with their peers in the team so that ratings can be “challenged”. This certainly encourages consistency. In the end the performance management system is seen as a mechanism to recognise areas where staff may need some training or development, or even that that person may have skills that are best suited in another role, even one that is of lesser status. Sometimes this is evaluated using a “capability” policy where the skills suitability of the individual are evaluated against the job. It’s only when these options are exhausted that the process may move into a disciplinary scenario.

In the not for profit and perhaps more so in the public sector, there is a perception, probably an unfair one, that poor performance isn’t dealt with. This may be due to rigid procedures that stifle action being taken. Even worse, this can benefit those that are ” time served” and thus expensive to deal with if any decision is made that they have to leave.

However, in smaller organisations this can be compounded. There isn’t the flexibility to move people around and sometimes a weak leader has a poor performer in their team and is reluctant, doesn’t have the necessary training or is unprepared or unwilling to deal with it. They may also not have the backing of an HR professional in the company or retained HR expertise of any kind. The worry of the costs of confrontation or worse, an expensive employment tribunal, also weighs heavily in the minds of the business leaders. There is a fear that if the issue is addressed, something will go wrong, so in the end nothing is done.

In family businesses this can be exacerbated by the values exhibited by the owner. The spirit of patronage that so often benefits an owner managed business and is usually well meaning, can sometimes be misguided and protect those that really aren’t adding anything to the business. The poor performing employee being part of an extended “family” makes it all the more difficult.

To evaluate how a small to medium sized business can implement a performance management system I spoke to Jill Nieuwoudt, HR Director at Naim Audio in Salisbury, Wiltshire. Naim Audio is an advanced manufacturing business in the consumer electronics sector, employing around 180 staff designing and manufacturing high end audio equipment for a serious hi-fi clientele. www.naimaudio.com

When Jill first joined the business 2 ½ years ago her first task in the new role of HR Director was to create and establish the correct procedures and policies within the company to ensure compliance. She soon realised that in order to meet an ambitious five year growth plan there would have to be an HR strategy that encompassed a thorough implementation of performance management and a new HR system to make it happen.

Once the groundwork was done in creating the new HR system, all staff were given new contracts of employment and a staff handbook, essentially Naim were starting again from scratch. Alongside this there was a communication programme, which involved open workshops all held in a transparent and open way. Jill also met all of the then 120 staff individually to allay their fears but also to create an awareness of what was going to be required. She set out a stall that things would be very different but tried very hard to retain the culture of the organisation, recognising that as the reason way most of the staff worked there.

Once the policies and procedures were in place, Jill also then went through a process to get management and particularly middle management to begin to own the process. The aim was for it not to be an “HR project” rather the managers would be empowered to deliver it but with appropriate HR support when needed. Jill wanted to work on FOG, (Fact rather than Opinion or Guess) a key part of the management development was to get managers to see that HR issues were not personal but that they were a business process and needed to be managed accordingly. All staff are appraised at least yearly and new starters at the end of their 3 month probation period. HR now monitor all appraisals and sometimes sit in and support managers who are struggling.

Employees on the shop floor are measured according to outputs and “right first time” performance. Those having problems are monitored and given appropriate training and support to rectify the situation, this is monitored for a month. Supervisory staff receive SMART (Specific, Measurable, Achievable, Relevant, Timely) objectives and are measured against them.

One thing Jill is very keen to point out is that performance management is not the same as a disciplinary process and shouldn’t be confused as such. Disciplinary issues such as timekeeping and attendance should be dealt with through the disciplinary process.

It’s interesting to point out that of the 19 staff that have been through the performance management system process at Naim in the last 2 ½ years, only one has left the company. From this result one can see that although it takes time and effort to establish to do and provide the necessary management support and training to make it happen, the results in the end are surely worthwhile. The achievement of getting 18 people “back on track” is truly worthwhile and a very impressive result.