A New Business Leader’s Guide to the 3 Phases of Performance Management
Perhaps you have been a solo, self-employed worker for years, quietly building your business to productivity and profitability. Yet, now that your company has found success, you need to be able to rely on a few employees to keep your operations running smoothly.
An often-overlooked element of successful business leadership is performance management, which is a set of tools and processes for monitoring employees’ work. While different organizations set up different performance management processes, it is important to understand that performance management always involves three phases: coaching, corrective action, and termination.
Coaching
Coaching is the process of helping another person reach their potential. In business, leaders often conflate coaching and managing because they seem to have similar goals and procedures. However, it is important to recognize that managing is merely overseeing your staff and their projects whereas coaching is working closely with your workers to help them improve their knowledge and skills for the betterment of the organization
Ideally, you will devote most of your energy to this phase of the performance management system as it is coaching that allows you to set the tone for the performance and productivity you expect from your workforce. Through proper coaching, employees can learn individual and organizational goals and develop the drive to meet or exceed them.
The most important phase of coaching occurs when a worker is newly hired, which should happen frequently as your small business begins to grow. Your onboarding and the orienting process should set worker expectations regarding performance, clarify goals and provide another context that allows new employees to fully understand their roles and responsibilities.
Training should not stop as an employee settles into their position. You should continue coaching your workforce, providing opportunities to develop skills and acquire resources, to ensure that your workers feel supported and capable of performing to their highest ability. Then, if you notice that a worker is not reaching expectations — or meeting their own potential — you can move on to the next phase of performance management.
Corrective Action
If you have the right performance management processes in place, it should be easy to recognize when an employee is not performing to the standards you set. When this occurs, you need to step in and supply corrective action — or else the employee is likely to continue with costly low performance that puts your business in jeopardy.
Corrective action is warranted only after a worker has been fully onboarded and is capable of functioning properly within their role. During this phase, you need to uncover reasons for a team member’s poor performance, inform the worker of the problem and work together to create a plan for improving the situation.
Though corrective action sounds threatening, it usually requires no more than an informal, one-on-one meeting with the low-performing individual. During this meeting, you should provide a verbal warning about ongoing performance issues and discuss why they are occurring and how a worker should proceed going forward.
It is important that you listen to your worker, especially if many members of your team are failing performance standards in the same way or at the same time. It is possible that you are failing to support your staff in some crucial way, which would mean that you need to correct your own behavior or actions.
If the first informal meeting does not change an employee’s behavior in a meaningful way, you might need to engage them with additional corrective action. A written warning can feel weightier to an employee, and a formal meeting with documented evidence of poor performance can make it clear to a worker that their behavior must change. If a second corrective action is not enough to alter employee performance, you have little choice but to move on to the third and final phase of performance management.
Termination
When coaching and corrective action fail to help an employee perform to the standards you set, you must be willing and able to discharge that employee. Many business leaders try to avoid termination as much as possible, but the truth is that neglecting to discharge workers who consistently fail your organization puts your business at serious risk of failure. Every dollar you spend should contribute to success, and if a worker proves time and again that their wages are not supporting your goals and mission, you need to commit to letting them go.
Performance management does not have to be incredibly complex. While your startup remains small, you can oversee each of the three critical phases of performance management yourself — but it is imperative that you understand the processes you use, so you can adapt them as your organization grows.
