Performance Management For Small Businesses

Performance management refers to steps that are taken to ensure that employees, departments, and the entire organization is working efficiently and effectively towards achieving goals. Performance management is not a once-in-a-while evaluation but a continuous effort to improve the quality of work in the most efficient and effective manner possible.

For small businesses, performance management is a necessity for adequate growth and productivity because, by working with your employees to raise performance standards, or even evaluating yourself and raising your own performance standards, you are able to influence the productivity of your business organization and by so doing, control your income.

Performance management in business organizations can involve activities such as:

#1. Performance standard

Performance standard is important in performance management because you can only know if performance is satisfactory or unsatisfactory if you have a standard. This means each task that is assigned to an employee has an expected standard which could be based on quantity, quality, timeliness or use of resources. Performance standard is important in performance management and is usually expressed in either writing or verbally and sets the baseline for measuring performance.

#2. Coaching

Coaching is also known as observation and feedback. After setting a standard of performance, coaching observes the performance of the employee and provides feedback on it. This enables managers or employers to shape the performance of the employee by recognizing and reinforcing the desired performance and encouraging improvement where it might be needed.

Coaching enables employer-employee communication which helps the employee perform at the level required by the employer and helps the employer receive the performance that meets their expectations. In addition, it builds a platform on which management and staff are able to synchronize their efforts towards meeting the organization’s goals.

#3. Performance appraisal

Although performance management is a continuous event, performance appraisal usually takes place during a specific period. It involves evaluating the performance of employees over a period of time (usually one (1) year in most business organizations but could be less than that). It is a time for both parties to discuss employee’s performance over that period of time, discuss extenuating factors, job satisfaction, and possible solutions to any problems.


Performance management is a continuous process that helps mangers or owners of small businesses work with their employees to ensure that goals are met and performance remains at its best.


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