As a business owner, you may face many challenges, from operating with limited resources to managing growth and building brand awareness. One of the most stressful challenges, however, is dealing with issues related to employee turnover.
You can improve the employee experience at your company to reduce turnover and increase retention in many ways, like taking steps to improve your internal culture, ensuring your employees have the right tools necessary to do their jobs, or working with a compensation consultant to improve your pay strategy.
But one of the most effective ways to ensure employees stay satisfied and engaged in their work (and want to stick with your business for the long term) is to engage in effective performance management practices.
How Performance Management Relates to Retention
Performance management refers to how you think about and discuss performance, productivity, and professional growth with your employees. It involves formal performance reviews but also the training, coaching, and communication you do with your employees every day.
A strong performance management system can:
Create open and honest two-way communication between you and your employees
Help employees pursue opportunities to grow in their careers
Motivate employees to perform to the best of their abilities
Align your internal team with larger organizational goals and priorities
In other words, performance management can directly and positively impact your efforts to retain your employees.
Let’s look at a few performance management strategies to focus on that can empower you to pave the way for long-term employee retention, satisfaction, and loyalty:
Set Clear Expectations
To succeed in their roles and feel satisfied with their employment experience, employees need to know what you expect from them.
This will require you to create thorough job descriptions that clearly outline employees’ duties and responsibilities in their specific roles. These documents will play an important role in an employee’s career even after they’ve been hired—the job description should be revisited frequently and used to objectively measure an employee’s success in their role and ensure that specific performance targets are being met.
In addition to leveraging your job descriptions, you’ll also need to be clear and communicative with your employees about tasks and assignments. This means giving instructions for tasks upfront and being open to questions and discussions about those tasks.
Provide Ongoing Feedback and Coaching
Your employees also need to know what is going well in their roles and what could be improved. Ensure you’re frequently giving both positive and constructive feedback so that employees can clearly understand how to learn to do their jobs better.
Here are a few processes you can use to provide feedback and coaching:
One-on-one meetings between managers and direct reports: These meetings should be a regular touchpoint for direct reports and managers to align on what is on the direct report’s plate and how the manager can support them in those responsibilities. These are also great opportunities for managers to provide specific feedback to employees.
Formal performance reviews: Typically, performance reviews are conducted on an annual or biannual basis, and most involve both your employees and their managers evaluating the employee’s performance, discussing goals and targets for the foreseeable future, and touching base on career pathing plans.
Frequent employee surveys. Communication should always be a two-way street. Send out surveys to get your employees’ perspectives and feedback on how things are going at your business. Empower them to make suggestions for improvements, and assure them you’ll take their comments seriously.
Recognize and Award Achievements
Research shows that employees who work at organizations that prioritize employee appreciation are 56% less likely to look for a new job. This is because thanking employees for all they do and awarding them for their achievements helps them feel seen and valued by your organization, which is extremely motivating.
To create your own employee recognition program, implement the following best practices:
Identify a few effective recognition strategies for your workplace, like starting an Employee of the Month program or rewarding major accomplishments with gift cards.
Ask employees how they prefer to be recognized—some may like more public forms of recognition like a social media shoutout while others may prefer quieter forms of thanks.
Encourage employees to recognize their peers for their contributions.
A robust performance management system can help you hold on to your top talent for the long term as you optimize the employee experience and empower your team members to succeed in their roles. Use the strategies above to improve your performance management process, and if you want to take your efforts to the next level, consider partnering with an HR consultant who can assist you in making long-lasting improvements.
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