Note: This is the fourth article in a series on decreasing turnover and increasing profits. In the previous three articles Terry discussed turnover (High Turnover Is NOT Just Part of the Business), who to hire (What It Takes to Attract and Hire Recruiting Winners), and setting expectations and training (Your Onboarding Should Not Be Like A Box of Chocolates).
Fast-Paced! Volatile! High Risk! High Return! Competitive! Sophisticated! Pressurized! Stressful! Demanding! Exhilarating!
These are some of the terms used by managers to describe our business. However, as with most adjectives, these terms are subjective and can mean different things to different people. That is where performance standards come into the picture.
Realistic performance standards require objectivity!
Realistic performance standards provide both management and employees with a critically important measuring tool. Without this tool, managers cannot effectively direct and support the efforts of their employees and the employees cannot effectively manage their time and resources. However, the real challenge is knowing how to establish and properly utilize realistic performance standards.
Standards for Quality
Performance standards should be established for both activity and results, and in both instances should include criteria for quality, i.e., quality of the call, quality of the assignment, quality of the client, quality of the candidate, etc. The quality criteria are necessary to prevent the “numbers for numbers sake” phenomenon from developing. Once the standards are established they serve a variety of purposes:
- Performance standards allow you to present a more accurate picture of the position during the hiring process and demonstrate to the candidate the requirements for remaining part of the team. This can be a selling point in attracting top performers.
- Performance standards allow your employees to monitor themselves. With standards in place, they should always know where they stand, both quantitatively and qualitatively. The advantages of objective self-measurement are evident.
- Properly utilized, performance standards bring a level of objectivity to the management function and facilitate the decision making process. They allow you and your employees to evaluate both effort and effectiveness.
- By properly utilizing realistic performance standards, you eliminate mutual mystification, increase your staff’s effectiveness, identify areas for further skills development, better manage your time and overall decrease the stress level normally associated with the management function.
Standards for Newer Employees
With newer employees, performance standards tend to focus primarily on the activity that is necessary in order to achieve a specific result (production). These standards are established by taking a historical look at the initial activity levels of your successful people. Obviously, this requires good recordkeeping. Determine from your records the key identifiable ratios. With some adjustment, these same ratios apply to temp/contract. However, with temp/contract you also have to factor in response time, gross margins, billable hours, length of the assignments and skills required on the job.
Permanent Placement / Search Ratios
|Marketing calls attempted versus marketing calls completed.||Marketing calls completed versus job order / assignments received.|
|Job order / assignments received versus job order / assignments filled.||Candidate update calls completed versus candidates actually updated.|
|Recruiting calls completed versus recruits actually brought in.||Candidates presented to employers versus candidates receiving a first interview.|
|Reference checks completed versus job order / assignments received.||Length of average interview versus the average for your successful people.|
Average amount of daily phone time versus the average for your successful people.
Whether you monitor them or not, activity ratios exist for every aspect of your business, therefore, you can only benefit from knowing and using them. However, without including criteria for quality, the usefulness of these ratios is limited.
Monitor these activities, gather statistics and establish realistic performance standards based on a historical view of your business and ratios. With newer companies, you may wish to rely on industry averages for you specialty area. Additionally, you must consider the skills development timeline. Remember, the standards were established from an analysis of the activity ratios of your successful people, during their first year on the job. As the person’s skills improve, their ratios should compress.
Once the employee has established himself or herself through consistently producing results at or above your company standard, new objective tools should be created by which performance can be measured. These new tools are the individual’s objectives and goals. The objectives define the necessary activity (ratios) while the goals definite the desired results (production). Together, they serve as realistic performance standards.
Article Continues Below
Explore the Role of Incentives in Performance Management
Ultimately, you should establish realistic performance standards at three levels.
Level One: Minimum performance standards for new employees with less than one year in the business.
Level Two: Minimum performance standards for experienced employees with more than one year in the business.
Level Three: Individual performance standards for experienced employees based on your mutually agreed upon objectives and goals.
The overall objective is to build your organization to the point where your management focus is on goal achievement. This is a self-directed environment in which the employees are motivated to achieve and are measured against their individual objectives and goals. This is the point at which, you as a manager, have proven your true effectiveness. However, all of this is meaningless unless you require strict adherence to these performance standards.
Beware the Exception Trap
Always remember that the true measure of performance is results. On rare occasions, you may have an employee who consistently achieves superior results without meeting the activity standards for your group. However, these people are exceptions. Do not allow yourself to expect superior results for employees who are not meeting or surpassing the activity standards. You can delude yourself into thinking they may be that rare exception. This is the “exception trap.”
Manage your group through the use of realistic performance standards and not by exception. Performance standards bring objectivity to your management function and serve as a roadmap to success for your employees.
In our next article we will focus on skills development through performance based training. Meanwhile, if you have questions or comments about this article or wish to receive my input on any other topic related to this business, just let me know. Your calls and e-mails are most welcome.