Employee Performance Management System for Small Businesses

An employee performance management system cannot be absent in business activities. Even if the company is still small and has only a few employees, you also need to apply good management to monitor their performance. Good employee performance management not only makes your employees’ careers successful but also your business.

Let’s learn more about employee performance management systems and their application in small businesses in this article.

What is a Performance Management System?

Performance management is an activity that aims to enable employees to achieve goals efficiently and consistently. This activity is done so that your small business can continuously achieve goals or objectives. Like any other management, performance management involves planning, executing, and evaluating.

You need to have a goal or vision when you are building a business. Your employees also need to perform well to make this business a reality. Even small businesses need performance management so that the working employees can give the best performance and achieve the set goals.

3 Purposes and Functions of Performance Management System

There are three purposes and functions of a performance management system in your small business. Any of them?

1. Synergistic Goals

Synergistic goals prioritize cooperation and mutual relationships among employees in your small business. Each employee can work together and behave in an orderly manner to achieve synergy in their work.

2. Administrative Purposes

Administrative goals include information about employee performance over some time. This administrative information can be used each month as a basis for making decisions about promotions, layoffs, or employee evaluation materials.

3. Development Goals

This objective includes the development of employee capabilities (skills). This performance management system is tasked with providing training and placing employees in job descriptions or assignments that match their expertise.

6 Components of a Performance Management System

The performance management system consists of several components that must be carried out in a company. These components range from job planning to career development to the evaluation phase. What is included in the performance management component?

1. Position Planning

In this phase, you create a description or list of tasks to be performed. Each job description is divided into several positions to make them more specialized, and each employee can fill them fully.

2. Recruitment and Selection

Next, start recruiting and searching for employees according to the required qualifications. After finding the right candidate, start the selection phase by interviewing them. You also need to ask about the candidate’s ability to achieve business goals.

3. Introduction or Orientation

Employees who pass the selection will then sign a cooperation agreement that regulates salary, bonus, vacation, and so on. Once an agreement is reached, start training new employees to get them used to the work.

4. Employee Development

This component involves setting performance standards that employees must meet. This performance standard becomes the benchmark for employees to achieve their goals at work. They also provide training opportunities to make employee performance even better.

5. Awarding of Prizes

Employees who meet established performance standards receive an award. You can also offer a promotion or salary increase to make them more enthusiastic about their best performance.

6. Evaluation

Evaluation to assess employee performance and management as a whole. If there are employees who quit, you can consider their reasons for small business human resource management development.

The six components above are not essential and must be in place. You can adapt these components to the circumstances of the managed small business.

4 Phases of Employee Performance Management for Small Businesses

The performance management process goes through four phases based on management principles. There are four phases you need to apply when managing employee performance in small businesses. Below are systematic steps you need to take for employee performance management in small businesses.

1. Planning Phase

In this phase, you plan work standards and performance assessments, or key performance indicators (KPIs), according to the business goals and business plans you have created. Next, create work objectives that include: Task lists, goals, and employee performance standards based on the business plan created. Employees need to know these work objectives so they understand their role in your small business.

2. Running and Monitoring Phase

Next, execute the business plan that was created in the planning phase. This implementation phase involves monitoring to ensure that each task meets the established goals and objectives of the organization. You also need to provide feedback to employees so that they can correct deficiencies, improve performance, and help their team members.

3. Review and Review Phase

The review and assessment phase involves a regular evaluation process. The evaluation aims to assess several plans and goals that have been achieved, understand the obstacles, and find solutions. They also assess the performance of employees to identify the goals achieved and understand the new lessons learned. Employees also communicate their obstacles at work so that you can find solutions to their problems.

4. Reward Phase

This last phase is providing rewards or awards to employees according to their performance evaluation results. The form of award can be in the form of bonus money, salary increases, additional vacation, or gifts. Once you reach this stage, you should return to the initial stage and schedule new jobs for other employees.

The performance management system is a cycle that never stops. You need to continuously perform the four steps above until the business goals are achieved.

Even small businesses like online stores or stores need to implement a performance management system if they have an employee. All employees play an important role, especially in digital marketing, as they can make your small business marketing plan a success.

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