Performance management is often perceived as a daunting task, especially in small to medium-sized businesses (SMBs). The annual performance review, in particular, has gained a reputation for being a cumbersome and often ineffective process. However, when performance management is approached as a continuous process rather than a one-time event, it can become a powerful tool for driving employee growth and organizational success.
The Problem with Traditional Performance Reviews
Traditional performance reviews, typically conducted once a year, often leave employees and leaders dreading the process. These reviews are seen as ineffective because they tend to focus on past performance without providing actionable insights for future improvement. Moreover, they fail to engage employees in a meaningful way, often resulting in frustration rather than motivation.
For SMBs, where every team member’s contribution is critical to success, this outdated approach to performance management can be particularly limiting. People-related challenges consistently rank as the number one issue holding back the growth of these businesses. To overcome this, a shift towards a more dynamic and responsive performance management system is essential.
A Simple Yet Effective Approach
Over 25 years of working with SMBs, I have seen various approaches to performance management. The most effective systems are those that are simple to use, focused on relevant priorities, and designed to foster continuous improvement. The most effective performance review management process I seen and now use in our businesses includes two simple components:
- Performance on Key Accountabilities of Their Position
- Start, Stop & Continue Exercise
Here’s a look at a talent performance management system that has proven to be highly effective in SMBs.
1. Performance on Key Accountabilities
At the core of this system is the concept of Key Accountabilities Performance. This involves identifying the 3 to 6 most important responsibilities of each role within the organization. These key accountabilities are determined by those who know the role best, including incumbents, peers, and leaders.
Once identified, these key accountabilities are ranked by importance and assigned a percentage of time that the employee should dedicate to each one weekly or monthly. This ensures that the employees’ efforts are aligned with the organization’s priorities.
The process of defining key accountabilities includes:
- Step 1: Brainstorm reasons the job exists.
- Step 2: Group these reasons into categories.
- Step 3: Write a key accountability statement for each group.
- Step 4: Rank these key accountabilities in order of importance.
- Step 5: Assign a percentage of time for each key accountability totaling 100%.
Regular reviews (recommended quarterly) of these accountabilities allow both the employee and the leader to discuss performance, identify areas for improvement, and align expectations.
During the review the employee and leader discuss and agree on how they are doing on each key accountability using the following rating scale:
5 = Exceeds expectations
4= Above expectations
3= Meets expectations
2 = Below expectations
1 = Well below expectations
The employee and supervisor talk through and agree on the rating for each key accountability. Then they create development action plans focused on increasing the ratings on select or all key accountabilities. Incentive-based compensation can also be tied to their performance on the key accountabilities. By focusing on the priorities of the role, this approach ensures that employees are working on what matters most to the organization.
2. Start, Stop & Continue Exercise
The second and final step is to use another powerful performance management tool which is the “Start, Stop & Continue” exercise. Which is used in conjunction with the key accountabilities during performance reviews. This exercise is designed to facilitate two-way constructive conversations between employees and their supervisors.
Both the employee and the supervisor complete a simple template before their meeting, answering the following questions:
- What should the supervisor/company start doing, stop doing and continue doing to help the employee improve performance, job and life satisfaction?
- What should the employee start doing, stop doing and continue doing to improve performance, job and life satisfaction?
The supervisor goes first and discusses what he/she is going to start, stop and continue doing. Followed by the employee sharing what they want their supervisor to start, stop and continue doing. The conversation ends on a positive note as you discuss what they are doing well and should continue doing. The two gain agreement on what the supervisor is going to do and then the same exercise is completed for the employee.
This is the most impactful two-way performance conversation a supervisor and employee will ever have as they work together to help the employee succeed.
The key to any performance management system is consistency. The SMBs that I have seen have the greatest success with this system review the key accountabilities and complete start, stop and continue on a quarterly basis. Quarterly has been very effective for our businesses.
3. The Benefits of a Simple System
The simplicity of this performance management system is its greatest strength. Having consistent two-way conversations focused on the key accountabilities of the position create a performance management process that is easy to implement and highly effective.
This approach has several benefits:
- Clarity: Employees have a clear understanding of what is expected of them and how their performance will be evaluated.
- Engagement: Regular check-ins and open communication foster a culture of continuous improvement and mutual respect.
- Actionable Feedback: The focus on specific key accountabilities and behaviors ensures that feedback is relevant and actionable.
- Two-Way: This employee performance management system is effective because it includes not only what the employee needs to do to increase performance, but also what the leader/company needs to do as well.
It is recommended to use software to prep for and record all performance management and development conversations and plans. Having the key accountabilities and start, stop and continue exercise all in one place makes these consistent conversations easier and more effective.
Performance management doesn’t have to be a dreaded task. For SMBs looking to maximize the potential of their employees, a simple, continuous performance management system can be a game-changer. Having all team members focused on getting better at their key accountabilities leads to a high-performance team and organization.
