Are your employees working really hard, but not on the things that actually move your business forward? That's the silent killer of growth in small businesses. And the root cause of that is inefficient performance management processes. And today, I'm going to give you a few ideas on how you might be able to fix it. Welcome back to the HR Connection, the podcast for anyone managing HR in a small business. Not sure if your HR is where it should be? Grab our free HR readiness assessment to find out what's working, what's missing, and what to fix first. That link is in the show notes. Welcome back to the HR Connection. I'm Sabrina Baker, and for this episode today, I am going to be assuming that you already have some form of performance management process in place. Whether that is annual reviews, quarterly check-ins, or some other process, this episode will talk about how to make sure that it really drives business goals while developing employees. You have a process, but you want to make it stronger. That's who I'm talking to today. If you're looking for something more granular, um, like just implementing a performance management process or how to ask better feedback questions to new hires, we have those resources for you as well. I'm going to talk about those in the end, but if you just can't wait, they are linked in the show notes. Last week, in episode two, I introduced the skills framework as a tool to bring clarity to hiring. Today, we're taking that same tool and applying it to performance management. Here's how I think about this. Hopefully, you agree that performance isn't just about goals. It's about skills, ones they have, and need to develop, and behaviors as well. When you put those two together, you get the what of what gets accomplished, that's the goals, and the how it gets accomplished, that's those skills and behaviors. I think we can definitely all agree that having a high performer, meeting all goals, but with a toxic and non-collaborative demeanor can wreak havoc on a small business. So it's important we look at both the what and the how. So in this episode, I'll show you how to first align employee goals with business results, through a cascading system. And then use the skills framework to track and develop the hard skills and the soft skills employees need to succeed. When you put these two pieces together, goals and skills, you get performance management that actually drives both business and employee growth. And oh, by the way, driving employee growth is how you keep employees engaged, but that's really a whole other episode. I always like to share stories of our experience with clients because I feel like it lends credibility to what I'm saying. We aren't just consultants giving you things we think you could do. We are doing this exact work inside of client businesses every single day. So here's my story. I once worked with a small manufacturer around 65 employees, and they had a really big goal to expand into two new markets. Fantastic goal. When I took a look at their employee goals, they were all working toward goals like respond to customer emails within 24 hours, or reduce supply errors by 5%. Now, those goals aren't bad. They're good goals, but here's the issue. No employee had a goal tied back to expansion. Six months later, the company hadn't entered a single new market. Employees were working really hard, but they weren't working together on what mattered most. And that's the danger in small businesses. This misalignment. Everybody's hustling, everybody's stressed, but not always towards the same finish line. The first fix is cascading goals. Goals tell us what to achieve, and those goals should tie back to the overarching goals of the organization. An exercise we tried to do with clients at the end of every year when they set their next year's business goals is to work through a goal alignment cascade. The idea is simple in theory, but does take time and work in practice. Let's talk about how it works. You're going to start with your business goals, this likely comes from your leaders, but if you are in an org where you get to be a part of that conversation, that's amazing. Leaders likely set three to five big priorities for the year, not twelve, not twenty, just a few. Then you cascade those goals down all the way through the organization. The first cascade is department goals. So you take those goals that you have, your big overarching goals, and translate them into functional outcomes that each department can influence. From there, we move to team goals, where you take the departmental goals and break those down into goals for each team inside the department. Quick little sidebar here, businesses are small, we get that, and they may not have teams within departments, or if you are super small, you may not even have departments, and that's okay, you can still do this. You can skip steps if the department or the team doesn't exist. But if you skip steps when they do exist, it likely means that goals are going to be missed. So make sure that if you have the departments and the teams, you cascade them down. You can probably guess where we're going from here, from teams, we go into individual goals, and this is where alignment really shows up. Each employee has a goal tied directly to their team's outcome. If you have done this right, then when you look at individual goals, you should be able to tie them exactly back to a larger goal. You should be able to see how the employee hitting that goal helps the team hit theirs and the department hit theirs, and of course then the business hit theirs. This feels so good to employees because now they know how they contribute. Let's do a practical example. A business goal for the year is to increase revenue by 20%. Pretty standard goal. If you cascade that down to departments, let's say marketing, then their goal may be to generate 500 new qualified leads this year to support sales. Now we cascade that down to the digital marketing team inside the marketing department, and their goal may be to launch four targeted campaigns this year that generate at least 125 qualified leads. See how we took the larger 500 leads goal and broke it down further? Finally, a marketing specialist on the digital marketing team may have a goal to manage the Q1 campaign that actually delivers those 125 leads. This goal is directly tied to the larger goal of business revenue, and the marketing specialist can easily discern what tasks go with that. Build landing pages, write copy, run ads, everything they are doing ties back to a goal. Here's a piece of pushback I often get about goals. Sabrina, this is great, but our goals change. Now, if you are in a startup or super small firm, I can see that as you're changing to market conditions. But the larger you are, the more concrete your annual goals at a business level really should be. Because the business should be more stable. Constantly changing goals and even like a 50 plus firm may mean that leadership is not effectively planning to begin with, but I don't think we're ready for that conversation. Nonetheless, I know there are times when goals must change which is why regular check-ins not just once a year are important. Alignment only works if it's alive. At a minimum, and what we practice in this business is quarterly check-ins. That keeps the focus fresh and allows for adjustments. I'm not going to dive too deep into the actual process on this episode, but if you are still only doing annual reviews in a small org, you are really missing a chance to drive growth differently. Now, I imagine this as a waterfall. At the top of the business goals and as the water flows down, each layer cascades into the next: department, team, individual. If one layer is missed, the water will not reach the bottom. And, as I said earlier, goals are the what. So we still have to figure out the how. This is where the skills framework comes back in. If you didn't grab that last time, no worries, it's linked again for you in the show notes. You might want to grab episode two to understand how we use it in hiring, but today let's talk about how we use it in performance management. If goals measure results, skills and behaviors measure growth. At Acacia, we use the skills framework to map out both hard and soft skills across time. Here's how it works. We set up several grids based on timeframes, such as upon hire, first 30, etc. Upon hire is your baseline skills expected on day one. The skills they should come in with, this is where you build your hiring process. It's important to think about both hard and soft skills. For example, an accountant should know gap accounting and also be able to explain financial principles. A recruiter should know how to screen resumes and how to communicate with hiring managers. So both of those hard and soft skills that everybody needs to have. In the 30 to 90 day timeframe, the grid shows the foundational skills they should be developing with training and coaching. So this is system knowledge, product familiarity, or for us, client interaction. At the six month mark, that's where you start to see some independent ownership. They're not just doing tasks, they're managing outcomes, and solving problems. And then by the 12 month mark, we should bring a much broader influence. At this stage, they're contributing strategically, maybe coaching others, or improving processes on their own. I want to say it again because it's crucial. Remember, soft skills are important. When you are filling out this framework, you should think about how they collaborate, how they communicate, how they interact with people inside and outside your business. Are they taking ownership of their tasks? Do they adapt when things change? Whatever fits your business. If these things are important, put them on the framework. Anything beyond the upon hire section is things you will train or expect to see them develop. It is okay to be exhaustive here. This matters so strongly because in a small business, behaviors make or break growth. You can't afford a technically strong employee who undermines the team. And you can't afford a great teammate who never grows their skills or meets a goal. So when you sit down for a performance conversation, you need both. The goals cascade, did they achieve what we needed as a business? And the skills framework. Did they grow in the skills and behaviors we expect based on their tenure? You will notice on our skills framework that it only goes to one year, so you may wonder what happens after one year. We find that after a year, it gets a bit harder to standardize this by role. And find the need to customize it by individual. But if you have done the first year right and they are still there, then continual improvement and the chance for job enlargement or development as it comes up will be a priority. So how do you make this sustainable? First, you have to establish a rhythm for this. Once a year, won't cut it if you want to do this well. Quarterly check-ins is what we recommend at a minimum. We recommend monthly if they are a new hire or newly promoted, at least for those first 90 days. You can keep them short, but consistent. This then turns your annual review, which you can still have, you just can't have only that, into a summary of a year's worth of alignment and development conversations rather than a check-the-box activity with surprises about performance. Second, you have to reinforce alignment. You have to curate a set of steps that leaders go through to make sure they are having good conversations with their employees. They likely need training on this, don't assume that they know how to do this, how to give feedback, or how to talk about performance. None of this has to be complicated. The goal portion is a quick check-in with, do the goals still make sense? How are we doing against them? What roadblocks can I remove for you to meet your goal? And then the how portion, using the skills framework, becomes a conversation around what skills have you strengthened or developed, what behaviors are you focused on next, and what do you need from me to do this? That can be your entirely quarterly check-in. When you do this, performance management stops being a box-checking exercise and becomes a true growth strategy. Performance management in a small business can't just be about forms or ratings. It's about two things: aligned goals through a cascade and then skills and behaviors through the framework and together those give you the clearest picture of whether an employee is driving business results and growing in the way the business and the employee wants to. As I mentioned, we have two other resources for you if you're wondering how to modernize your performance system, uh, check out our companion blog post which is titled "Performance Reviews Are Not Enough." It gives you a really quick start guide if you haven't really nothing in place. This would be a great place for you if you're looking to move beyond annual reviews. And if you want to really practical tool to help, grab our 30-60-90-day feedback framework. This is the exact questions we ask new hires in their first 30, 60, and 90 days. Both of those are linked in the show notes. If today's episode was helpful, please like, subscribe, and follow. That helps us get this content into the hands of more practitioners managing HR in a small environment who might be thinking they are all alone. That's it for today's episode. Thanks so much for being here on the HR Connection. I'll see you next time.