“Train people well enough so that they can leave but treat them well enough, so they don’t want to.” – Sir Richard Branson.
So far, our Small Business HR Benchmark Report webinar series has explored recruiting through onboarding and compliance, and now it’s time we tackle two absolutely critical HR fundamentals, Development and Performance Management.
The number one reason many employees don’t stay with a company or, perhaps worse, stay and don’t become engaged and bring quality, care, and results to an organization is training and development support. Providing employees with opportunities to gain new skills, support, coaching, and ongoing development training so they can grow in their careers is no longer a competitor differentiator. It’s a critical component in driving growth.
When it comes to the growth of small to medium-sized businesses, taking a people-centric approach to HR makes all the difference. Our report found that this element, when incorporated in each step of the employee lifecycle, not only leads to more engaged, happier, more productive employees but is also a cornerstone indicator of company growth.
Inversely, companies that view HR as merely an administrative check-box function of their business often suffer in areas like employee turnover and poor performance, which ultimately keep companies from achieving potential growth and profitability while also negatively affecting company morale and culture.
So, how do small and medium-sized businesses use these tools to their advantage? Let’s get into it.
Structured Employee Training
After surveying 2,065 companies, we found that fast-growth companies are 26% more likely to provide regular structured training for employees as compared to businesses that have suffered a down year.
You’ve worked hard to attract and hire great talent, but don’t get so comfortable. It’s not enough to say, “ok, you’re here – now get at it!” Now is the time to make sure your new talent is trained to become as effective as they possibly can as fully engaged employees. Taking a structured and consistent approach to employee training says everything about a company. It shows employees that a company is willing to invest in them, which, more often than not, leads to a happy and engaged employee and, often, company growth.
The thing about structured employee training is that it is not a one-and-done type of thing. Creating a continuum of training content is imperative to not only prepare employees to do their jobs well but also to serve as a reminder that their company is invested in them. This continuum of training can include things like in-person sessions, PowerPoint presentations, webinars, and even on-demand training materials.
Our Small Business HR Benchmark Report found that 83% of fast-growth companies provide on-demand training resources for employees, allowing employees to refresh themselves on best company practices on an as-needed basis while feeling a sense of continued support from the company.
Manager Leadership Training
Employees don’t leave a company; they leave a manager.
According to the Society of Human Resource Management (SHRM), 84% of US workers said a poorly trained manager creates a lot of unnecessary work and stress, negatively affecting their morale and company perception. To avoid this prevalent and preventable issue, manager training is an important area that should never be overlooked.
Our report states that 75% of fast-growth companies provide leadership training to managers. Starting with a job ad, a company stating that it provides ongoing training for managers is a major selling point to attract top talent.
From there, ensuring managers are knowledgeable on basic compliance standards is a top priority, as they are the first line of communication with employees and failure to communicate in a compliant manner can not only result in legal action but also lead to scenarios that negatively impact a company’s bottom line.
Stretch Assignments & Written Development Plans
According to our report, 75% of fast-growth companies frequently assign stretch assignments to their employees. Through this process, employers can empower and support employees to reach their full potential – a situation that often leads to greater employee retention.
Written development plans are often overlooked, but they are another strategic tool employers can use to support employees and help them meet their professional goals. Through our research, we found that 73% of fast-growth companies create written development plans for each employee. While this may seem like a no-brainer, writing down a development plan helps crystallize goals, objectives, and key areas to focus upon and addresses employee frustrations that often arise with lip service and no action.
Crafting a written plan that identifies employee strengths along with gaps or areas that need improvement gives employees transparency that is invaluable and allows them to feel like they are active participants in their professional growth at a company. Written development plans also foster a constructive discourse between employee and employer, creating a collaborative environment based on thoughtful feedback that often translates to a stronger, more positive company culture.
Expectation Setting & Formal Reviews
Yet another key area in the employee lifecycle is performance management. Success for small to medium-sized businesses in this space is rooted in clear expectation setting, communication, and a formal review process.
Our research found that fast-growth businesses are 23% more likely to regularly communicate expectations for job performance compared to businesses that are shrinking.
This expectation setting is equally important for employees who are performing well as it is for those whose performance is less than satisfactory. By providing clear expectations for all employees, companies show that job performance is tied to personal, departmental, and organizational growth. And when done well, companies can create a culture where employees feel that they are being seen and contributing to the company’s collective success, which almost always benefits both employers and employees in the long run.
An extension of regular, clear communication and expectation setting is the formal review process, and we found that fast-growth companies are 22% more likely to have a formal review process compared to companies that are shrinking.
While this again might seem like a no-brainer, a formal review process is one of the most useful tools in a manager’s toolbox, as it not only benefits the employee on their career journey, but it helps make managers better. Paired with clear communication and expectation setting, the formal review process must be consistent across departments and employees in order to have the most impact – this means similar processes, forms, and questions, as well as ensuring that top-performing employees go through the exact same process as those who are underperforming.
Whether it is a standardized form paired with a one-on-one meeting or a 360 review, an approach to reviews that is growing in popularity, a formal review is another tool that helps employers support employees, keep a pulse on employee satisfaction, and ultimately support their company’s growth.
Performance Improvement Plans
Sometimes even after implementing best practices and providing ongoing support and training for employees, companies need to take another approach to work with underperforming employees by putting them on a performance improvement plan (PIP).
A PIP serves as a guided written document with clear expectations over a period to meet the expectations of the role. And yes, sometimes it serves as a warning and last resort in trying to help an employee get up to speed.
Fast-growth companies are 23% more likely to document a PIP for underperforming employees as opposed to companies that reported a down year. While a PIP can often be a tough practice to implement, it is absolutely critical, and not doing so can have detrimental effects on company morale and employee satisfaction amongst peers. For instance, when an employee is slipping, and it is not clearly addressed by leadership, it can breed resentment and unrest among that employee’s peers that are showing up every day, committed and taking ownership of their work and performing well. The key thing to remember when it comes to a PIP is that it is a last resort to ensure compliance and avoid litigation. It’s critical to keep written documentation of the employee in question’s performance and subsequent performance-related conversations. And lastly, if a company works hard to implement all of the best practices detailed above, a PIP should never come as a surprise.
As we’ve said, an employee-centric approach to HR is what sets fast-growth companies apart, and this statement is further validated by the Employee Management and Performance Management best practices outlined above and in the third installation of our webinar series.
To learn more about these topics and other HR best practices, check out our Small Business HR Benchmark Report webinar series here: Webinar Registration for: Retention and Post-Employment Tips: Our Small Business Survey Results Are In. Compare Your Business to Others (asuresoftware.com)