Don’t Take Good Performance for Granted

Good help is hard to find, especially these days when employees expect more out of their jobs than ever before. As a small business owner, you want to create a work environment in which employees feel respected, valued and motivated to do their best work. Treating everyone fairly is not always enough. You must be attuned to what your employees are thinking, and make sure they have the proper incentives to both excel and correct deficiencies.

Let’s begin with performance reviews and merit raises. Once you hire employees, it is your responsibility to train and motivate them, routinely review their performance and offer merit increases as appropriate. Reward excellent performance, so you can retain trained and qualified employees. It is generally less costly to keep a good employee, than to regularly hire, train and hire again if good employees leave because of low compensation.

Often, a personal regard and camaraderie develops between the small business owner and his or her employees. Such personal relationships can result in subjective decisions, when it comes to promotions and pay raises. To safeguard your decision, maintain clear guidelines for employee performance. Measure employees against standards that are fair, objective and clearly understood by employees. A performance review provides a forum for you to review an employee’s performance and share your observations with the employee. The employee should be able to share his or her perspective and feedback as well.

Be sure you have clear job descriptions in place. More often than not, performance problems can be traced back to unclear expectations or expectations. A written job description provides a clear description of the skills and abilities required to effectively complete the job you need done at your company. The description should be written for the position and work to be performed, not to accommodate someone who may currently be filling the position. The more objective the standards, the more effective you can be in matching performance and skill to the job, rather than focusing on personality and people you may like to a greater or lesser degree.

A merit rating system, with grades or levels for positions within the company, can help you establish a reasonable pay scale for each job. Merit ratings determine what salary within a salary range an employee should be paid. Your industry’s trade association will often have a listing of average and median salaries for positions within companies like yours. This will help you avoid setting salary ranges too high or too low for a given position.

A part of your merit system may be specific percentage raises for specific performance levels. An employee who performs his or her duties at the level of “excellent” would receive a larger increase than someone who performs “good” or “average.” Factors beyond fulfillment of job duties are often considered as part of merit and performance reviews. Dependability, initiative and teamwork are common areas for employee evaluation.

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