How do I get the most out of my people without spending a cent?
In the current business environment, we all struggle to “do more with less,” to gain greater productivity from the same—or more limited—resources. This imperative translates into the need to increase what we are expecting of our employees and to be able to have the tools to know how to increase individual employee performance.
People Profit Formula
The People Profit Formula (see Figure 1) comes from years of experience and expertise working alongside business owners and their managers to identify, protect and maximise the value within the business.The reality is that the numbers are a result of everything else that is going on in your business. Therefore, if you want to change your profit or your numbers, you need to change what your people are working on and how they go about it.
Performance Improvement = Same Workforce + Better Performance
Effective people management can create, protect and drive value within your business. Every interaction that occurs in your business, whether it is customers, employees, leaders or suppliers, involves people. Therefore, our view is to look at strategies that drive performance improvement rather than waiting for that “super employee” to come along and fix everything.
There’s a better, and cheaper, way to motivate your employees….
Have you ever had a case where you asked the same people to do the same job, on the same pay and got different results? This is the power of internal motivation. Rather than focus on paying more or giving bonuses, we focus on internal motivation as it provides long-term benefits such as improved morale, increased job satisfaction and better retention of key people.
For example, in one study, which looked at the effectiveness of over 106 different performance management strategies, showed that although a bonus will increase an employee’s intention to stay by 19.1%, it only improved performance by only 2%.
What is it? Internal motivation is about giving your employees the tools to create a meaningful purpose, make sure they have the skills to perform their job properly and that they know what good looks like. There are numerous studies that demonstrates how internal motivation is much more effective at driving performance long-term than external reward. For example, in one study, which looked at the effectiveness of over 106 different performance management strategies, showed that although a bonus will increase an employee’s intention to stay by 19.1%, it only improved performance by only 2%.
Our Top Three Performance Improvement Strategies
Here are the top three performance improvement strategies that you can implement today.
- Connect the dots. Does your team know where your business is going? Either define or talk about the big picture for your business. Talk about how their role connects to helping the business achieve its goals?
- Set Clear Performance Expectations. This is in the top five most effective improvement strategies. However, wherever there is poor performance it is usually because the “line in the sand” hasn’t been drawn. For our clients, we get them to develop simple and meaningful job descriptions. Make sure you cover not just what they need to do (the tasks) but how they do it (expected behaviours.)
- Regular Performance Feedback. The number one improvement strategy is fair and accurate feedback on how you are performing. Look at what you are communicating to your employees on their performance – you can share reports, weekly emails or as simple as a 1:1 conversations.
There is no doubt that performance is complex issue. The describing “what good looks like” or your performance expectations is easy. The complexity is getting people to follow it. By the time you overlay that with individual relationships, emotions and loyalty, the obvious solution is not always the easiest in a small business.
If you are a business owner that shudders at the thought of firing, hiring and training a replacement, then investing time in effective people management strategies will guarantee to save you time and money in the future.
Related Article Links
- Boosting Business Performance Part 1: The Strategy
- Boosting Business Performance Part 2: The Sales Goals
- Boosting Business Performance Part 3: The Pipeline
- Boosting Business Performance Part 4: The Products
About the Author
Tim has vast experience in the strategic and financial management of businesses with a particular focus on cash flow and profit improvement, strategic thinking and performance reporting. He has extensive knowledge of business start-ups and acquisitions as well as exit and succession planning. Tim is an adviser with Supertrac, a corporate advisory firm specialising in business divestments, mergers and acquisitions.
Tim is a Fellow of the Institute of Chartered Accountants (FCA), Graduate of the Australian Institute of Company Directors (GAICD) and a Certified Exit Planning Advisor (CEPA) with the Exit Planning Institute (EPI).
If you have any specific questions or would like to suggest future blog topics, please do not hesitate to contact Tim on email@example.com.
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