If This Is How You Handle Employee Performance, You May Be Doing it Wrong

The Employee Performance Problem

Ask any well-meaning manager what an employee performance appraisal should accomplish, and you’ll usually hear answers along the lines of: “to categorize the organization, improve employee performance and boost motivation.”

While these are all critical aims for an organization if the answer to how they currently accomplish this is through an annual performance review—then there are problems with the system. Namely, those annual performance appraisals generally only serve one of the three purposes listed above—and it isn’t performance or motivation.

So, How Did We Get Here?

The long and short of employee performance reviews is that they are derived from military practice, were never designed to foster improvement, and have long been used as a tool to cull an organization of their bottom performers. According to the Harvard Business Review, they also serve to punish past behaviour at the expense of achieving the desired future performance that is critical for organizational survival.

So, the question begs: If employees hate them, managers don’t see their value and an organization isn’t benefiting from them—why not ditch them all together?

The Elimination Problem

Well, while I was going to title this post “The Stone Age Called and They Want Their Appraisal Back,” that wouldn’t be entirely accurate, as ditching the yearly recap isn’t always the best solution either. So many initiatives are tied to it, including, planning and compensation. However, the employment landscape over the last few decades has made it clear that the conversation needs to shift away from the metrical to the malleable.

Anyone familiar with the psychological principle of Maslow’s Hierarchy of Needs knows that motivation comes in various levels: from the basic (like food, shelter, and wages), to psychological (belonging, achievement, respect of others, etc.) and finally to self-actualization (morality, problem-solving, creativity, etc.)

Although this theory has its critics, the basic premise is that human beings are striving for self-worth and acknowledgment—and if you aren’t creating an environment where this (and the resulting performance growth) can occur—your employees are going to look to another organization to fill those needs.

The take-home is it’s no longer realistic to rank an employee with performance metrics once per year, give them either a raise or a performance improvement plan, and expect that the basic needs you do satisfy (like a regular paycheque) will be enough to sustain them and motivate them to perform to a level that will grow your organization.

So Where Do We Go from Here?

It’s no secret that supported, engaged employees do better—and when they do better, you do better. The goal of employee performance is to elicit behaviour that supports the organization’s bottom line while fulfilling some of those psychological needs your employees crave—and giving them the tools to do it effectively. There are several ways to get this done—and yes, you can keep your year-end appraisal—if you focus on its value as a recap of the year. A good rule of thumb is that there should never be anything in a performance appraisal that is a surprise for the employee. Other strategies could include:

  • Linking goals to key company objectives like the mission/vision (they “why you exist” stuff)
  • Tying goal achievement to collaboration and communication (not every task needs to be a group project, but increased collaboration and information sharing leads to increases across the board)
  • Training managers to check in consistently (this allows for accurate course corrections throughout the year while retaining employee autonomy. The key here is manager training)
  • Allowing the employee access to the tools, resources, and training to allow them to successfully fill any knowledge gaps they have.

Of course amended performance measures won’t solve all team issues (for an idea of what other issues employers regularly encounter and how to fix them, read this page) but it’s a good support system for overall team engagement. And of course, we’re more than happy to help with any issues you do have  in finding the system that’s right for your business.

 

How about you? How do you facilitate the employee performance process, and what challenges have you encountered along the way? What do you find helpful? Let us know in the comments!

 

 

3 Immediate Strategies to Boost Profits

If you are not profitable, your business has a death date. At the very least it is a long trudging journey of survival as you go day to day hoping to have enough money in the bank to pay your bills. That is no way to live, and I’m sure it’s not why you started your business.

It’s time to make healthy profits non-negotiable! Here are three strategies you can implement immediately to boost profits:

  1. Raise your prices – and if you’re like most business owners, your mind is already throwing up the objections “we won’t be competitive,” “Our customers are price-sensitive,” “We’ll lose our customers, ” and the list goes on. Before you spend too much time buying into your sabotaging beliefs, consider the actual impact of pricing through this example:

If your Gross Margin is currently 30% and you discount prices by 10% to win business, you need to make 50% more in sales to still make the same amount of profit. Versus if you raise your prices by 10%, your sales can decrease by 25% and you will still make the same amount.

And which customers do you think you might lose when you increase your prices? Yes, the pain-in-the-ass customers. And in our experience, most of the time minimal loss in incurred. What you really end up with is more profit.

As a small business, you want to be premium and expensive. And be sure your product or service matches your price point through quality and differentiation. If you are the same or worse than your competition, then forget about pricing, work on making your offering better first.

  1. Build a profit-first budget. What this means is you develop a conservative business model that sets you up for success in being profitable. Most people plow ahead with rose coloured glasses and ‘hope it will all work ‘ That is not a good strategy.

Here are your four steps to creating a profit-first budget.

  1. Make a conservative forecast for your sales for the next 12 months
  2. Decide what level of profits you want. (i.e. 15%)
  3. Build in your Gross Margin. You should know this. Make it conservative
  4. Make your overhead fit in the amount left over.

E.G. Sales of $1,000,000, profit of 15%, Gross Margin of 30% = Overhead allowance of $150,000.

This methodology will make you take a hard look at expenses. Click here to view a short video that dives a bit deeper into this point

  1. Negotiate – all business arrangements should be set up with the intention of win/win. That doesn’t mean you should take the first price someone gives you. There are always ways to find a better deal. Perhaps negotiating payment terms or buying in larger Or of course shopping around.

The underlying principle behind boosting profits and making this strategy work is your own negotiating skills. Most people are inherently bad negotiators. It invokes fear in people to ask for a better deal. To help you with this read “Never Split The Difference” by Chris Voss. It’s a game changer.

 

4 Tips For Hiring Great People

Business Owners often say: It’s so hard to find good people…

Good People say: “It’s so hard to find good jobs”. So, where’s the disconnect coming from?

Just like your ideal customers are looking for companies that can help them solve their problems, your ideal job candidates are looking for the same thing. Only their problem is not about buying it’s about finding a great company to work for.

When thinking about hiring, always think in ideals. And I don’t say this because I live in fairy tale land but because thinking about ideals helps you to dream about what is possible. For something to be created, first, you have to be able to see it in your mind. In the case of hiring, get clear on the ideal candidate. Who is the absolutely perfect person for the role you want to fill?

Once you are clear on that person, now ask yourself – “what sort of company would that person be drawn to work for”. This can be hard to do because you need to put yourself in their shoes, not yours. There are going to be logical things like good pay, job security, close by etc – but I want you to think of the less tangible things such as the four below.

What is the quality of: Your Business, Your Vision, Your Culture, Your Leadership?

By quality of business I mean is there some level of professionalism and organisation or are you in chaos. Do you have some good customers and clarity on how you want to get more or are you dealing with deadbeats and whiners? Do you have some systems that ensure consistency or are you and your team winging it?

The quality of your vision is – do you know where you (the business) is going. Can you see it, does it excite and inspire you. If you are not excited and inspired, you can’t expect others to be.

The quality of your culture might be self-explanatory but it is about what it’s like to work in your business. How does your team interact and behave? Is it positive, challenging and supportive – or are complaining and gossip present … or perhaps somewhere in between.

Lastly, the quality of your leadership refers to how you view your people. How much do you care about them? How much do you invest in helping them grow? Leadership is a massive topic so we won’t aspire to cover it here, but essentially ‘what’s it like to work for you?’

With all these things, you don’t need to be perfect but you do need to recognise that you will only get the quality of people that you’re ready for. You will attract a quality of person that matches the identity of your business. And the identity of your business is largely made up from the four categories outlined.

Attracting great people is a journey. See the quality of the people you are attracting as a marker of your progress toward building a great business. Keep at it and have fun.

The Shortest Path to More Sales

The shortest path to more sales is already sitting dormant in your business right now.

Typically when we think about growing our sales, we put on our marketing hats on and think of all those prospects out there who are currently not buying from us. We think about all the marketing channels, advertising, social media, flyers and mailers and phone calls. And while some of these may be relevant, they are rarely the shortest path.
You already have people buying from you, who trust you and are happy with your business. Or at least I hope you do. How can you leverage this further? Here are three keys ways:
  1. Referrals – before you spend any money on marketing for new customers, evaluate how well you are doing at servicing the heck out of your existing customers. If you are doing an outstanding job and they love you, you are well within your rights to ask for a referral. Make the ask appropriate for the relationship and make it easy for them to give. Be specific and grateful. If people ever feel pressured to give a referral, it will generally leave a bad taste. Be tactful and most important – make sure you are worthy!
  2. Testimonials – as per the above point, when your customers love your business, capture that in the form of a testimonial. Many testimonials provide marketing leverage and it also solidify for your customer, how they feel about your business. There is something about committing to a written statement that makes a feeling real. Following up with a referral request after a testimonial is given can work well.
  3. Add on sales – What else do they need? If you are in tune with your customers needs, odds are there are other things they need that you could be helping them with. This may be a natural extension of your existing offerings or it could be something outside your current scope of expertise. If you can offer the service directly, great. And if not then you can partner with someone who can. An example of this was a client of ours who did waterproofing. He’d had a couple of people ask him if he could recommend a window supplier. So he starting asking any customers who had old windows if they had thought about replacing them. If they said yes, he referred his ‘partner’ business to come and quote. Once the sales was made, our client received a commission on the sale.

Thinking time.

Think about this … if you and your team made a habit of looking for these three opportunities in your existing customer base, what could be possible? I’m not saying you should never pay for advertising but I believe if you can’t get these three working for you first, there may be a problem in your business model.

How to Shift Your Beliefs Around Sales … and Shift Sales Results.

When it comes to the word ‘sales’ everyone’s got their thoughts around it. Most commonly the initial thought reflex when someone here’s the word is a negative one. Most people have had that experience with the pushy sales person whether it was the classic used car scenario, or the door to door energy broker or even the fundraiser who’s working hard to hit target. And of course when we have a negative experience with anything, we tend to guide our behaviour to not be like that. So we tend to hear people say things like “I don’t have what it takes to be good at sales. I’m too nice” or “I just couldn’t sleep at night if I was in sales knowing I’ve manipulated someone”.

Any kind of thinking or believe that is along these lines, to put it bluntly, is misinformed. The truth is if you’ve ever worked to influence someone in anyway (ask someone out on a date, ask someone to be on your team, convince friends to go restaurant A vs B etc, bring a new idea into your workplace) you are in sales. Sales is the transference of an idea.

The trick is that bad sales is pushy transference of an idea and those who do it are simply untrained. End of story. Perhaps their ethics are questionable … maybe. I’m not saying those people aren’t out there but the vast majority of bad sales experiences simply come from a lack of training.

In this realisation there could be massive opportunity for you and your business. Here are a couple of things to think about

  1. What are your beliefs around sales (positive or negative) and how does that affect your performance and ability to grow your business?
  2. What are your teams beliefs around sales? Where could they be more assertive in spotting opportunities to help your customers?
  3. What would the affect be on your business if everyone on your team had a healthy and positive view of sales AND had the skills to spot and nurture opportunities?

Assuming there is some opportunity there for you and your team, here are five tips you can use to change the way you and your team think about sales

  1. Be a proactive helper – move from selling to helping. Think about it this way, what problem does your company solve? And if you were to come across a person or company with that problem, would you let them suffer or would you want to help? People who care about others always want to help. When you are feeling salesy it is most often because you are thinking about yourself and your commission, not how you can help someone. And remember, helping someone does not always mean you have to sell something. What do they truely need?
  2. Become great at asking questions – when you can ask thought provoking questions, it is easier to engage people and find out what they need. Asking great questions also communicates that you are interested in them and you care. Great questions get to the emotion behind the problem or need. When you can help people achieve the feeling they are after, you make their life better.
  3. Become an expert – to be able to help at the highest level, you need to be as good as you can be at what you do. When you are great at your craft, you have more ability to help others, ask better questions and you will naturally instil confidence in the person you are seeking to help. Deep knowledge builds confidence and confidence is crucial when it comes to influencing others.
  4. Have a network – your customers have more problems than you have the ability to solve. To improve the value you can bring to others, have people in your network that can solve some of the other common problems your customers have. This puts you in a different league to your competitors, and ensure you are truely focused on helping vs making a sale. When people know your true intention, they feel good about you. When people feel good about you, trust goes up. When trust and likability go up, you make sales. And even if that person doesn’t buy from you (because they don’t have a true need), they may refer someone who will.
  5. Play the long game – there are times when you should make a sale right here and now. There are other times when the timing is just not right. Have enough experience and objectivity to know the difference. The sales not made today can often become a much bigger sale down the track. My only caveat to this is don’t allow this to become an excuse for letting someone not make a decision when they really should. Influencing people in way that will benefit them can mean helping them to make a decision. Deference of decisions rarely helps.

Creating Your Perfect Week

It’s one thing to create a 90-day plan (yes we’ve got a video on that) but translating that into an ideal week needs to be intentional.

 

Big Goals Don’t Work…But Here’s What Does

Ever set yourself a big goal … only to be disappointed in not achieving it. There is a reason why this happens, and people rarely speak about it.

We are conditioned (particularly in the business world) to believe you need to think big (and you do) but what we don’t learn is how to make big thinking translate to real goals that you achieve.

Check out this short video to learn more.

 

All About Brain Dump…And Why You Need it in Your Day

I define a successful day as one where I get a lot of stuff done, I don’t feel overwhelmed by it, and I have fun doing it. Simple in theory, very difficult in execution, right?

There is a great way I start my day which helps me clear my head and begin the day with a concrete idea of where I’m going. I’m talking about Brain Dump.

What is brain dump? Well, it’s simply this. Taking 5-10 minutes every morning (wherever is convenient for you) and writing down everything that’s in your head. Get it all out on paper and then have a good look at it. If you look at the list and aren’t overcome with a tightening in your chest, then this list is a good indicator of your to-do list for the day. If you get it all out and panic sets in, then this enables you to see things in a concrete way and allows you to break down your items one-by-one so you can decide which items can be put off, passed on or delegated to achieve success.

Try it for a week. You won’t be disappointed. And – if you need some help with planning in the long-term – check out our free 90-Day Planning tool to help get you started. Make it a great day 🙂

Business Lessons From the Bike Trail #1 – Knowing Where to Focus

There’s a basic object to enjoying a safe ride on a mountain bike: Look where your going.

While the same can be said for business, it’s amazing how many people focus on the obstacles in front of them instead of focusing on the track, but when you fixate on the obstacles which are in your way – they tend to magnify – which makes your changes of hitting one fairly high.

The same goes for them you start riding faster on the trail. The faster you go (ie: the more you grow) the further down the track you need to look. Just don’t look so far down the track that you get blindsided from something you didn’t see just up ahead.

Have a think about your business. How far down the track are you looking? What obstacles do you face that you could find the answer to if you just ventured to look a little beyond them? Are you getting blindsided by other things that are stopping you from making progress?

The Secret to Managing Attitudes at Work

The number one stressors in business are (and may always be) money, and people. In fact, you likely know first hand how much emotional energy and loss of team synergy is wasted on a member of your team that just doesn’t fit the bill.

It turns out – the key to managing attitudes in the workplace is as simple as communication and follow-up. Sounds easy, right? Well it can be more difficult that you expect to implement, but once the expectations are set, it can become remarkably easy to keep momentum in your team.

The tools we need start with creating our core value and culture. You see, if expectations for every member of your organization aren’t clear, and we don’t hold people accountable, you will always have an organizational culture that is driven by the quality of people within it.

A good starting point is to check out “The Advantage: Why Organizational Health Trumps Everything Else in Business“, by Patrick Lencioni it is a fantastic read about the concrete advantage that can be gained by having a healthy organization.