Whether you’re a new start-up looking to make it to next year or an established corporation looking to satisfy shareholders, profitability is the goal for every business. Those that only look at what they’re providing and how much they’re making or how much they’re spending are missing out on the real key to profitability: The performance review process.
While a company’s initial make or break moment may come down to the product or service and the condition of the market, ongoing profitability predominantly relies on productivity. That includes the quality, quantity and speed of work across all departments, which means profitability essentially relies almost entirely on the performance of your workforce. Monitoring this performance for individuals, teams and departments is therefore essential if your business is going to be able make the right decisions to drive profitability.
So how exactly does a successful performance review process drive profitability?
While it may seem like a huge goal for what appears to be a small part of HR and an even smaller part of the whole business, performance reviews have several benefits that all impact profitability.
Everyone needs a goal whether it’s in life or at work; without one, we tend to lose focus and productivity suffers.
A successful performance review process not only gives employees a clear understanding of their goals, but it should also give them a completely transparent view of their progress towards each goal at any point. Seeing how close we are to reaching our goal can often give us that extra motivation we need to cross the line, while acknowledging how much more work we still have to do helps us manage our time accordingly and keep on track.
As well as being highly motivational a clear and concise goal and review process avoids any misunderstanding between managers and employees about what is required of them. Miscommunication wastes everyone’s time and energy. With goals set out clearly from the beginning the entire workforce can spend their time working towards the right goals.
The more frequently you track and review performance the earlier you can catch any potentially struggling employees.
These underperformers often just need a robust development plan or a little motivation to turn them into rising stars. While it may take a little more time, nurturing this talent internally is still a lot more cost effective than the costs of a bad hire.
Performance reviews are more than just making sure everyone stays on track; they also provide opportunities to recognise your top performers.
Rather than just sitting on this data why not put it to good use and compensate the employees that meet and even exceed their goals.
Not only does this keep your top performers happy but it can also motivate other employees who may be slipping behind, both of which are great for retention and overall productivity.
Planning your workforce of the future is a lot easier with a wealth of performance data to refer to.
Use your current performance across individuals, teams and departments to inspire better decision making, whether its helping to forecast the future productivity or filling skills gaps with succession from within the company. With all the data at your fingertips you’ll know who has the right skills for the job and where you could be missing out.
No one enjoys paperwork, but a robust performance review process helps to keep a record of all the performance highs and lows of everyone in the company.
This can be invaluable when it comes to potential legal problems such as terminating an employee due to unsatisfactory work. With everything on file, you can be sure you have everything you need to evidence the performance of any employee.
The secret to a successful performance review process is simply technology.
Today the only way to manage the whole performance process successfully and efficiently, from setting goals to tracking performance and storing documentation, is with the right performance review solution.
Today there is a growing choice of these innovative solutions and many are now affordable to businesses of all sizes. Thanks in part to cloud technology there are several web-based solutions that eliminate the cost of pricy hardware and IT requirements. In fact, most of them can be set-up and ready to use in hours rather than days or even weeks.
There are, however, a number of things that make up a successful performance review process that you should make sure your new technology solution can provide.
As well as looking for a solution that ensures consistency across all your goal and review process plus standard automations such as feedback email reminders, look out for the following and be sure to implement them in your process.
Line managers will usually be the ones that set goals with employees in their team or department as well as provide ongoing feedback.
Studies have shown that employees respond better to concise and professionally worded goals and feedback, yet many line managers will have little to no training in providing this in their reviews.
A good performance review solution should provide goal setting and writing tools to aid managers and help them convey their thoughts and opinions more effectively. Look out for writing assistants and legal scan wizards to make sure feedback follows best practices. You can also find solutions with special goal setting; particularly look out for those that come with pre-loaded SMART goals to make sure managers can follow best practice for goal setting.
Choosing a cloud-based solution should give you easy to use dashboards that are accessible by everyone across devices so that feedback and communication between employees and managers is more efficient and convenient, as well as recorded digitally for legal purposes.
As well as communication between managers and employees during the goal setting and ongoing feedback process, there may be several other stakeholders involved in the review process. Depending on the regulations in your company there may be managers in other departments and elsewhere in the company that need to observe and even sign off on each review.
If this is the case, you’ll need a solution that allows for digital review documents to be uploaded, accessed, viewed and signed online from any location. Today some of the best solutions use DocuSign technology so businesses no longer have to rely on the long process of emails and printing documents.
Tracking performance is more than just helping each employee improve; together this data can be used to make important company wide decisions.
Probably the biggest benefit of an automated digital solution is being able to collect all your performance data in one place to compare and analyse, something that simply isn’t possible with paper systems. That being said, you’ll want to look out for a solution that gives you handy tools to make the most out of this data.
Today’s solutions should be able to transform all your data into easy-to read graphs and tables for quick and accurate analysis. This should help you identify skills gaps and spot opportunities to invest in new skills. With SWOT analysis and a company wide look you can also forecast a range of metrics based on performance trends including expected productivity, future skills gaps and much more to make sure your workforce is working towards your business goals for the best overall cost.
With 95% of workers unaware of their employer’s specific business objectives and what they can do to help achieve them it’s clear that there is a serious problem with goal planning in many workplaces.
While setting individual goals is vital for motivation and focus, this task is almost ineffectual if the individual goals don’t align with the business goals.
Automated solutions can help overcome this by making it easier to create and record SMART goals for individuals, teams, departments and the business. It’s then much easier to ensure that goals are aligned with each other across the company and monitor the effectiveness of the goal plan moving forward. Managers and employees can refer to the business goals while setting their own and employees are left with a much better understanding of their role and purpose in the company.
There’s no question than an automated solution provides legal consistency that a paper based one simply can’t achieve.
With legal scan functions and writing assistance businesses can now avoid inappropriate wording and rating inconsistencies that can become a huge problem in sticky legal situations.
These features can help managers identify potentially problematic wording and even make alternative suggestions.
As a performance review process solution SuccessFactors is virtually unparalleled. With SuccessFactors Performance & Goals you get all the basic handy automations you should expect from your more efficient system alongside superior tools and features.
Designed to handle everything from SMART goal setting to mobile feedback, contact us today to find out how this industry leading solution could help you boost productivity in your company.