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Performance Reviews: Are You Making These Mistakes?

Yearly reviews are commonplace in many organizations, but they are often dreaded by both the reviewers and the employees being reviewed. Managers feel uncomfortable giving out negative feedback, while those reporting to them stress while anticipating the feedback.

The main problem of annual reviews, aside from their negative connotation, is that they are largely ineffective. A study found that job appraisals negatively affected job performance more than one third of the time. As a result, many companies around the world, such as Microsoft and Gap, are phasing out traditional annual reviews altogether. However, performance reviews can be effective if the leaders correct mistakes they are making in this process! Read on to find out if you are making common mistakes during the evaluation meetings with your staff and how you can ensure yours is successful.

Not Timely

Another problem with the annual review is that it’s only given once a year. That is not nearly enough time for managers to be able to provide productive feedback and work together with their employees to make relevant changes.

When you sit down with a staff member in December and mention something that occurred in May, the individual may have no recollection of the incident. Therefore, leaders have to provide timely feedback instead of waiting a year to bring something up.

The most beneficial feedback is immediate, or at least timely, brought up within a few days of the occurrence; otherwise, it is just pointless. While a formal meeting to discuss the yearly performance may be helpful when discussing promotions or raises, feedback should be regularly provided during the course of the workweek.

Focusing on the Negative

Bosses often misunderstand the main point of the performance review, which is to help employees work more productively and efficiently. Instead, they consider this a time to air their grievances and dissatisfaction with the team member. Even if the individual is performing up to the standards most of the time, if the supervisor focuses solely on what needs to improve during the review, it may negatively impact the loyalty and job satisfaction of the person.

Even if you have an employee who is underperforming in many areas, it is helpful to first bring up something positive about their efforts before concentrating on the negative. Consider the small things that the person may be getting right, like the fact that they are always pleasant, to bring up before moving on to what they may need to improve.

Not Setting Benchmarks

The feedback given out during a performance review will likely not amount to anything unless measurable and realistic benchmarks are set and agreed upon by both the employer and the employee. It’s not enough to tell a subordinate that they need to work faster; to help them become more productive, set small goals that the individual can work towards.

For example, if you need a staff member to work faster, instead of telling them to do so, you should count how many tasks the person currently accomplishes in one week, and increase that by 5 percent per month to see if they can ultimately speed up by 15 percent. It’s important for managers to be involved in this process, observing current behaviors, setting goals and then measuring the employee performance to see if they are meeting those goals.

The reason performance reviews get a bad rap is because many managers are not doing them properly. Sitting down to provide feedback only once a year, focusing on the negative and not setting benchmarks makes the process ineffective; however, making small changes can positively impact both the person and your company.

 

Is Offering Unlimited Paid Time Off Right for Your Company? A Top 5 Pro and Con Review

Offering employees perks is no new concept. Many companies offer great benefits, 401k options, and discounts on everyday purchases through employee rewards programs. For many companies offering perks to employees has been a major selling point when they aim to recruit some of the best talent. But what about offering employees the perk of unlimited paid time off? While this may sound crazy to some, many companies are starting to offer this amazing benefit. But at what cost? In this post we will review 5 Pros and Cons of offering employees unlimited paid time off

1. Pro: Morale Boost

Boosting and maintaining morale is one challenge that every employer faces. Offering an incentive of essentially “unlimited” vacation time at an employee’s disposal is a major draw of talent who may be swayed by other companies offering great benefits packages. Offering and supplying unlimited paid time off is an instant morale boost.

  • Con: Employees may take advantage. While employees would “assume” people would follow the norm of 2-3 weeks off a year, plus a given day here or there, they must be ready to have practices in place if an employee decides unlimited time off means “unlimited.”

2. Pro: No Rush to Take Unused Time

We have all been there. End of year or end of cycle where paid time off is available to be used and we are rushed to use that time before it gets cashed out or blocked by accrual caps. By offering unlimited paid time off, employees are less likely to bank and dump that time. They may spread the time out, take smaller chunks of time off, and use the time when things come up, rather than use it at the worst time or because they were forced to.  

  • Con: No rush to come back. One downside is that once the employee’s foot is out the door, they may be no rush to get that foot back inside. One major risk is some employees may take advantage of this policy or skip out of the office for larger chunks of time. Some employees may come and go so often that it starts to impact their work and those who rely on them.

3. Pro: Monitoring Gets Easier

Human Resources (HR) costs and managing of employee’s time off can be daunting, tricky, and costly all in itself. Watching employees’ time so they don’t abuse it comes at a price. With unlimited time, HR doesn’t have keep track of  how much personal time, sick time, accrued time, etc. so closely.  Some numbers suggest that an unlimited vacation time policy saved companies over 50 hours a year in administrative time.

  • Con: Implementation is tricky. For those employees who have been with a company before an unlimited time off policy goes into effect may be impacted by the banked hours they were able to keep. For many “old timers” who leave they may want to cash out their hours for cash. Those folks would need to be considered if “paid time off” became non-monetized in value.

4. Pro: Less Employee Overhead

Consider all the overhead of housing employees throughout the year and the cost associated with each employee being in the office each and every day. By offering unlimited paid time off, employees may become more efficient, happier, and do not waste as much time in the office because they are tied to a “schedule.” By allowing employees to go when they need, they reduce wasted time, energy, and overall overhead costs.

  • Con: Lack of face time. Employees that are out of the office tend to not be as visible. Therefore, offering unlimited paid time may be a dip in important face time with their colleagues and business partners. If companies rely on face time and presence, this option may put a damper on the party.

5. It Sounds & Looks Good

How good does “unlimited paid time off” sound? It sounds like a perk nobody could pass up, like  freedom for employees, and like it is almost too good to be true. Bragging about this option would make a company sound great to work for and seem very forward thinking.

  • Con: Performance can be bad. One downside with giving employees complete freedom is that for those that may take advantage, could leave a company in worse shape. Performance could go down, which may ultimately impact the overall strength of the company. Having one bad apple may ruin it for the whole barrel.

While there are many pros to offering unlimited paid time off for employees, companies must also think of the other side of the coin. By offering employees such an amazing perk, a company could be positioned to increase productivity, morale, and overall appearances. However that can also be the exact opposite if not implemented correctly. By understanding the above 5 pros and cons, companies can now consider if this is a right move to make at the current time.  By going in this direction, the innovative approach to employee benefits could also impact the company’s interests.

Empowering Entry-Level Employees and Staff to Succeed

There is a difference between supervisors and real leaders. Supervisors simply manage their employees, making sure they accomplish their daily tasks and follow the organization’s rules and regulations. A business leader, while being responsible for the workload, also makes it a priority to empower employees to advance in their careers. Entry-level staff members greatly benefit from an invested manager who promotes their strengths, helps them work on their weaknesses, and provides them with career-related advice. There are specific ways a manager can empower entry-level employees to succeed.

 

Setting Objectives and Giving Feedback

In order for your employees to thrive, they need to clearly understand what is expected of them. Instead of just delineating daily tasks, include your staff in the entire scope of the projects. Sit down and create concise and measurable objectives so that you and your subordinates are on the same page about what needs to get accomplished. Goals are important for four reasons:

  1. They provide guidance and direction.
  2. They aid in planning.
  3. They boost employee motivation.
  4. They help managers provide feedback.

Once clear goals have been established, managers must provide regular feedback so that employees know whether they are on track to meeting their goals or not. The only way your staff can grow in their positions is if you point out areas in which they need to improve, tell them what must be done to enhance their performance, and then explain whether they are meeting the previously set benchmarks or need to improve their skills.

 

Mentorship Programs

Mentorships usually pair an entry-level and a senior-level employee together so that the more experienced professional can provide advice, training and other resources to the newcomer so he or she can succeed not just in their current role, but in their career. An employee who is just starting out can greatly benefit from guidance from someone who has succeeded in the same industry, can share their network of contacts and can provide support.

Inc.com believes mentorship programs are “low-cost, yet high-quality, solutions” that show staff that management cares about them, result in better trained and engaged employees, and promote employee job satisfaction and loyalty.

 

Additional Education/ Training

When business leaders are truly invested in empowering their team to succeed, they should help staff advance their knowledge and skills so they can constantly grow in their positions and prepare for more senior roles. Offering paid education to your employees can be advantageous for both the organization and staff. Your business will benefit because employees will become more proficient in their industry and become better assets for the company by being more productive and efficient. In turn, the employees will be more loyal and satisfied with their job.

 

While larger companies can often finance their staff’s education at a college or university, smaller businesses may not be able to afford this. However, it may be possible to provide staff with other trainings or online courses that can advance their professional abilities, such as typing classes or communication workshops.

 

These are three of the ways that leaders can empower their team members to succeed instead of just overseeing their workload. When managers are invested in helping their employees grow, they’re in a better position to accomplish their goals and retain their staff.

 

Looking for more management tips? Check out the Management section of our blog.

Top 4 Things to Do When Your Staff Size Doubles

It’s official: your small business is a true success. You have the leading edge against your competition, your business is growing and you’ve jumped from a couple employees to more than you imagined. While this is exciting it is also scary if you don’t know what steps to take. What to do next? Managing new employees while continually growing your business is hard work.  In this post you can learn the top things to implement right away when you double your staff size.

 

  1. Adopt a Policy and Procedures Guidebook

Each company should have a document available for all their employees outlining company expectations.  Think of this as a rule book that has clear and concise guidelines of what you will and will not tolerate as a business. This is a vehicle for you to ensure commitment from employees as well as create a standard to follow. Have employees sign a document of understanding after they read it. This will benefit you and the employee in the long run.

 

  1. Hire a Human Resource Manager

If you are adding more staff, make sure to set aside a position for HR. Every small business should have that one person to filter employee concerns, challenges and daily requests. Having an HR representative is a vital piece of employee satisfaction in the workplace. HR can mediate and act as your conduit to more effective communications with your employees. If you’re on a budget and can’t hire a full time, in-person staff member, you can find plenty of virtual HR companies who can work with you to help support your new, growing staff.

 

  1. Offer benefits

The costs of healthcare and other employee benefits are skyrocketing, but offering employee benefits can help you attract new talent and retain existing staff. Employees that have medical benefits often find that perk too valuable to lose, so they stay longer in the job. In addition to healthcare, consider offering 401k matching and/or profit sharing. 3%, 4%, or even 6% company matching helps and goes a long way. It keeps people working as they see their retirement grow. It is a win-win situation when you have employees that are appreciated.

 

  1. Conduct Training

New staff want to know how to do their jobs well. Empower your employees to be their best by training them on their specific roles and minimize overload. It’s also important for new employees to learn about the history, mission, goals and future forecast of the company they work for, so training is a great time to share your business’s story. Remember, these folks are new, but they have value to add to your growing business right away.

By taking these steps you are setting up for success as you task out the next move for your growing business. Employee satisfaction, consistency and communication are vital in expanding, and it is important to remind yourself why you are growing and why you are where you are today. Ultimately, success will continue if you hire the right people for your team and treat them well.

Need to get your ducks in a row before your business’ busy season? Let IOU Financial help you secure additional capital so you can hire during your slow season, get employees trained, and serve more customers when demand is high!

5 Examples of Incredibly Helpful Small Business Advisors

5 EXAMPLES OF INCREDIBLY HELPFUL SMALL BUSINESS ADVISORS

Ask nearly any successful business owner about whether they achieved their growth alone, and you’re likely to hear the same answer: they had some help and guidance along the way. As a small business owner, it doesn’t take long to realize that you can’t be an expert in every single facet of business: sales, HR, marketing, partnerships, finance, etc. Realizing this sooner than later can have a significant impact on your business. Seeking out the right advisors to fill your knowledge gaps can accelerate growth, reduce your stress, and help you solve problems you may be struggling with.

Strengthening the areas of your small business that you may not have experience with can be done through helpful consultation from an advisor. This can be done informally through friends and family or formally by paying a professional firm in a specific area. It’s a matter of finding the right people that can offer you expertise in your area of need, along with determining what is crucial to your business’ success. When thinking about who to collaborate with, consider these five types of advisors.

  1. Financial Advisor – Managing your company funds is not as simple as balancing your personal checkbook, but it is imperative to a successful business. In order to get the most out of your day-to-day cash flow while building for the future, it’s important to have a trusted financial advisor or accountant familiar with small businesses. Keeping thorough records, maintaining a regular budget, and planning accordingly for future opportunities or investments are all areas that a financial advisor will focus on in order to steer you towards success.
  2. Industry Expert – While you may know a lot about your specific industry, if you are the only one within your business you consider an “industry expert,” and you are not consistently engrossed in the latest topics, this could be a problem. Seeking out additional perspectives on important matters can be imperative for business development. Arming yourself with information from an industry expert, whether it’s a direct contact, knowledge from books or websites where they share information, or a peer group focused on your industry, you can gain additional insight you may not have originally considered. Knowledge equals power, so why not consult with those that have the most knowledge?
  3. Marketing/Branding Expert – Many small business owners achieve their early success from hard work and hustle, but to continue that growth, marketing and branding are crucial. Spreading the word about your company and clearly defining messaging that communicates what your company does is paramount for building a customer base. This is where a marketing/branding expert is especially helpful because there are many channels to consider, and nuances associated with each that could determine the difference between a positive or negative ROI on your business efforts.
  4. Another Entrepreneur – If you network with other entrepreneurs (if you don’t get started now!) you can get invaluable tips. In this case, it doesn’t matter if this person is in your industry or not. Another entrepreneur in a different industry can offer impartial insight and offer advice about struggles and opportunities that they have been through as a fellow small business owner. You never know what you can learn from listening to another business owner’s challenges and how they are overcoming them.
  5. Human Resources Professional – You might not think you’re ready for an HR expert yet, but as your business grows, it’s important to understand the ins and outs of human resources. When you are hiring, firing, handling payroll taxes and more, it’s imperative that you know the legalities for each area and the best ways to address specific circumstances. Just a few hours with an HR professional can give you the information you need to take care of these various areas in the best way possible, and most importantly, to avoid any legal situations that could negatively impact you and your business.

Running a business can sometimes feel lonely, but you should never feel like you need to stand alone. The key is to find the right people that can offer you exceptional advice to help bring your company to the next level.

Keep tabs on the IOU Financial blog for more advice for small business owners.