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Managing Employee Performance

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Managing employee performance in the small business is comparatively easy as you have fewer employees to oversee. A key tool for monitoring the effectiveness of employee performance is through the appraisal process. Performance appraisal is important as this provides you critical information for a variety of purposes including promotion and salary decisions, and planning for training and developing employees.

Performance appraisal involves three steps. First, you set performance standards. Prior to the appraisal, you need to ensure that you communicate to your employees the performance expected of them and the corresponding rewards or consequences of such performance. In particular, you need to clarify the desired behavior employees need to exhibit at work and the results you expect. You usually share this information with your employees during the hiring process where you tell them their obligations and responsibilities on the job or at the commencement of the appraisal period.

Second, you need to measure employee performance and to compare them with standards. You use such tools as the graphic rating scale, ranking method, forced distribution method, behaviorally anchored rating scale (BARS), Management by Objectives (MBO) and the critical incident method. For the small business, your performance appraisal process can be informal. It can also sometimes be undocumented. Hence, you need to have sufficient information of your employees’ performance in order that your employees are able to view the appraisal process as fair and objective. You need to evaluate your employees’ performance frequently, making sure you are familiar with their performance, and that they are involved in determining how to eliminate performance weaknesses.

Finally, you provide feedback of their performance to your employees. When performance is unsatisfactory but may be corrected or remedied, you should come up with a joint plan for correcting the deviation. For employees whose performance is satisfactory, your objective is to maintain satisfactory performance. Finally if the performance is both satisfactory and becomes the basis for promotion, you need to discuss with your employee an action plan to enable him to effectively perform his new job.

Performance appraisals should be managed to bring about meaningful change in your employees performance. You must engage your employees during the appraisal process. This will enable you both to clarify job-related problems, set improvement goals and a timetable for achieving them.

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