If your business seems to be staying stagnant month to month, if sales just won’t increase no matter what you try, the problem might lie with your performance management system.
With the help of Boxelder’s experienced consultants, you can fine tune your business for optimal success and maximum profitability. Our team will work with you to identify your key metrics, set performance goals for your team and employees, develop strategies to hit those goals, and track your progress along the way.
Through effective performance management, Boxelder can help you drive profits and get the best out of your team.
What are the Basic Components of Performance Management Systems?
Performance management is the continuous process of improving the performance of your team and your business as a whole. While every business measures performance differently, the general process always involves the following steps:
- Setting individual and team goals aligned with your organizational purpose,
- Making a plan to achieve those goals,
- Executing the plan,
- Tracking the results, and
- Evaluating the plan’s effectiveness.
The key word here is continuous. Without ongoing evaluation and action, your performance management cycle won’t be any more effective than the dreaded — and outdated — Annual Performance Review. If you only evaluate performance once a year, you’re already behind the ball, and you’re doing your team a disservice. A regular, continuous performance management process will keep your employees engaged, your assessments accurate, and your coaching relevant.
Using KPIs to Set SMART Goals and Make a Plan
The first step in any performance management system is establishing goals that are aligned with your company’s mission. Our business consultants can help you do that — but first, we need the right tools.
In order to track how effectively your business is achieving its objectives, you’ll need a set of Key Performance Indicators (KPIs). Essentially, KPIs are measurable indicators that tell us what’s working and what’s not.
Defining the right KPIs will make or break your performance management system. Effective KPIs aren’t just basic measurements like sales or new clients. Each should include specific metrics that not only reflect the company’s quantifiable goals, but that can be tracked on a regular basis.
So, if your primary objective is to increase sales, your KPI isn’t “sales.” Your KPI is “increase sales by 15 percent by the end of FY2021” or “sign eight new contracts per month.”
Keep in mind, then, that relevant KPIs will differ for every business. A newspaper may not care about subscription sales quite as much as customer satisfaction with their reporting. A website with ad-revenue may care more about overall traffic and engagement or perhaps about click and bounce rates for particular pages. By learning about your company’s history, culture, and mission, we can help you determine the right KPIs for your business.
Once you know your KPIs, you must break them down into smaller goals for each team and employee to tackle. Specifically, you need to develop what we call SMART objectives. A SMART objective is:
- S – Specific — Your objectives shouldn’t be general suggestions such as “improve web traffic.” Instead, SMART objectives spell out specific benchmarks (such as “increase daily landing page views by 10 percent”) that are easily understood and that challenge your organization and its employees to improve.
- M – Measurable — SMART objectives need to be measurable so that they’re easy to determine whether or not they’ve been achieved. The measure can be quantitative or qualitative, depending on the nature of the objective.
- A – Achievable — No SMART objective should fall outside the limitations of your business or team members. Goals should absolutely challenge your team members and encourage them, but if your goals are unreasonable or impossible, they’ll have the opposite effect.
- R – Relevant — A consumer packaged goods business may need to set sales benchmarks. A media company may need to measure online traffic. And a non-profit may have other areas of interest such as community impact. Your SMART objectives should always align with your organization’s objectives — and your KPIs. That way, your organization’s performance metrics improve when you meet your goals.
- T – Time-Bound — Employees and managers should agree on near-term target dates for their SMART objectives. What can your team do in the next three months to improve sales, productivity, or customer satisfaction? Keeping your goals in the near-term gives them a sense of urgency and attainability, keeping your team members engaged.
You should maintain the ability to adjust your SMART objectives in order to keep them relevant to your business and team members. Then, Boxelder can help you make a plan to achieve them.
Take Action & Communicate
Once the plan is in motion, it’s important to maintain a steady and honest line of communication with your team. Regularly provide your team members with feedback, motivation, support, and recognition, so that everyone remains on the same page with regard to your goals and progress. An open dialogue is essential to effective performance management.
Keeping this in mind, you shouldn’t be afraid to adjust your goals and strategies as time goes on. Your KPIs and SMART objectives should be flexible, and the process should be ongoing and constantly adapting.
After all, one of the major benefits of performance management is that it allows you to see what’s working and what’s not. So, if you observe that a particular strategy is not helping you reach your goals, work with your team to figure out a new plan. If you invite your team to be part of the process, the whole company will reap the rewards.
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Boxelder is ready to help you every step of the way. Our licensed professionals have decades of experience in business consulting and will provide the insights you need to maximize your profits. Reach out today to request a free consultation.