As a busy business owner myself, I understand the challenge of doing effective performance reviews. I don't have the time, my employees already know how they are doing, I just don't see the value....all common excuses for not doing performance reviews in a consistent manner. The problem is, is that in many cases, we don't realize that for most businesses, roughly 80% of their assets are in their 'people' assets. We seem to find the time to look at all other areas of our business to ensure that we are getting the most bang for our buck, but we all to often overlook the 'people' assets.
In a study of over 200 organizations in 22 industries (over an 11 year span) that looked at organizations that 'lived' a performance management culure and those that did not, the results were alarming. The revenue growth for organizations with performance enhancing culture was 682%; for those without, these organizations grew by 166%. While you may be happy with 166% growth, the net income growth (the bottom line) of the performance enhancing organizations grew by 756% while their counterparts grew by a measly 1%!
Whether your organization is big or small, utlizing a performance management system can significantly impact your bottom line. This does not have to be a huge undertaking, but there has to be a desire to move your business forward and commit to analyzing your 'people' assets with the same diligence as your other investments.
Having a system in place serves many other purposes, like clarifying those ready for promotion, identifying training needs, serving as a documentation trail, and many more. Of course, implementing a system has its challenges too! It requires careful planning, training, and follow through.
If you are interested in energizing your performance management system, need some ideas on formats of review forms, or how to conduct review meetings, contact me!
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