Creating a framework for managing employee performance requires a small business owner’s mindset. Now you may be saying that you work for a large multi-national corporation, and this doesn’t apply to you…but I think it does.

Setting employee performance goals starts with reflecting on the following questions:

  • Why is this position necessary for our small business, team, company, division?
  • What value do we gain from this position performing effectively?
  • What are the consequences of not having the position perform effectively?
  • Why do we pay this person to do this work?

Small business owners are often very clear on the value of each position added to the payroll, as the addition represents a significant expense and opportunity to add revenue, customer or operational value.

The answers to the questions above also highlight the linkage between the employee’s goals and the business goals. If you can’t link your employee’s goals to some part of your business strategy, then either your strategy needs updating or you don’t need the position.

GET CLEAR – it will help you and your employees.

Setting Performance Goals

We nearly all know the acronym for goal-setting – SMART Goals are Specific, Measurable, Attainable, Relevant and Time bound. It seems to me that “Measurable” is the toughest characteristic of effective goals. Let’s look at an example:

As a retail manager, you may be clear on the fact that you pay sales associates for responding to customer questions, selling merchandise, ringing up sales, and processing any refunds or returns.

  • You can establish goals and measure the percentage of accurate transactions for sales and refunds/returns. Your computer system will assist you with this measurement.

But how about responding to customer questions and selling merchandise – this is tougher to measure, right? We suggest defining the behaviors that you want to see – those that really represent who you are as a retailer, and completing a monthly evaluation of sales associates against those behaviors.

Your list doesn’t have to be long – maybe three skill areas. For example, under the Customer Service heading – you might see the following behaviors:

Customer Service

  • Greets the customers with a smile
  • Asks “how can I help you today?”
  • Suggests alternative products for items that are out of stock
  • Shares expertise and product knowledge with the customer

Observation Date, Time

Your monthly measurable observations roll up into the annual performance evaluation – eliminating a lot of the subjectivity and guess work from the process.

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