2.154 What Small Business Leaders Get Wrong About Performance Management

In this episode, Karen explores why so many small business leaders only think about performance management once something has already gone wrong.  

Instead of seeing it as just paperwork, warnings and formal conversations, she looks at what good performance management really involves: clear expectations, regular feedback, role clarity, support, accountability and stronger leadership. 

In today’s episode, you will learn about: 

• Why performance management should not start at the formal end 
• The accidental manager problem 
• Why role clarity matters more than many leaders realise 
• How regular feedback and check ins prevent bigger issues later 
• Why culture plays such an important role in accountability 

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Transcript

Welcome to episode 154 and today is all about performance management, and specifically what leaders and small business owners often get wrong about it, because this is one of those topics where people hear performance management and they go straight to the formal end of things. They think about difficult conversations, warning letters, performance plans, paperwork, and all the things that tend to happen once a situation has already become quite uncomfortable, and because of that, performance management can end up carrying a fairly negative feeling. It can sound like something that you only do when someone's not performing, or when a manager has reached the end of their patience, or when a situation has become serious enough that the business feels it and needs to formally step in. But the reality is that is not what good performance management is. Good performance management is not supposed to begin when things are already going badly. It's not just a formal process, and it's definitely not just paperwork. At its core, it's really about how do you create the conditions for people to do good work? So it's about things like clarity, consistency, feedback, recognition, support and accountability, and it's about helping people understand what's expected, how they're going, and what they need to do to be successful in their role. And this is where many leaders get stuck, and it's not because they don't care about their people. It's not because they don't want a strong team. What happens, though, is that the business has grown quickly, then the people side has evolved in a fairly reactive way, and so performance management really only shows up when there's a problem to solve. So what I want to do today is walk through some of the things that leaders you know often get wrong about performance management, but more importantly, what works better instead? Because when you get the foundations right, you will spend a lot less time firefighting and a lot more time building a team that knows what's expected, feels supported, and can genuinely contribute to the growth of the business. So let's start with one of the most common things that I see, and that is when leaders really think about performance management, when someone's underperforming and so they think, oh, you know, we've got to start some kind of formal process. So the conversation tends to begin at the end, you know, begins with the performance plan, the documentation, formal meetings, warnings, file notes, and yes, those things are needed. And there are absolutely times where we have to have that proper process, especially in an Australian workplace context. You know, we need to handle these things legally, but we also need to be fair and consistent. And the formal process is really only one part of performance management, and it's ideally not the part that we're relying on the most, because if the only time that we're talking about performance is when things have gone wrong, then performance management is always going to feel negative and heavy and it's going to feel like punishment. So what often gets missed is that performance management should be an ongoing cycle, so we start with clear expectations, include regular one on ones, involve feedback, both positive and constructive, and we should be including recognition, coaching, course correction, support. And then if that broader system hasn't worked, or there's a more serious issue, then the formal process is there as a safety net. And this might be a very way, very different way of looking at it than what you've worked with before, but when the foundations are in place, most performance issues will get picked up much earlier, so they get addressed where they're still manageable. They don't sit there for months building frustration. You know, managers aren't left feeling like the only options are either to ignore it or to go formal. So one of the biggest mindset shifts is that performance management is not the paperwork. Paperwork supports the process, but it's not the process itself. The real work is what happens day to day, week to week, through conversations, expectations, feedback and support. So another thing I see quite a lot is leaders being promoted into manager roles because they're strong performers, but there hasn't really been any thought as to whether they want to lead people or whether they have the skills to do it. And this is incredibly common. But, you know, I understand because leaders can't manage everyone directly, we always need someone to step. Up, and so we tend to look across the business and choose the person who's technically excellent, who gets results, maybe who's been there the longest, or someone who feels like an obvious next step. And sometimes that can work, but sometimes it doesn't, because the person may not be capable of leading other people. They just may not be committed to doing that. Not everybody likes to manage people. You know, just being good at your job and being good at managing people are two very different things, because managing people is about setting clear expectations for others, coaching, giving feedback, recognising effort, addressing issues, early, handling conflict, having difficult conversations and helping different personalities perform well. You know, all of those are leadership skills, and they don't just appear because we've been given the title of manager. But what happens is sometimes people feel like they need to move into a management role because it looks like progression, but actually they would much rather stay in their specialist role doing the work that they're great at. So you end up with these accidental managers who are uncomfortable leading other people, and they really struggle with the people side of the role. And of course, you know what happens? We've all seen it. The leader becomes frustrated because performance issues aren't being dealt with. And you know, the team get frustrated because the manager is not doing what they expect. So, you know, what works better is being much more explicit that managing people isn't a different job, you know? So it is a different job. It's not just a reward because you were great in what you were doing. It requires different capability, different support and ideally, genuine interest from the person stepping into that role, which sometimes means having honest conversations about, does that person want to manage others? Do they understand what that looks like? You know, are we being clear about what managing people involves, and that also means giving them some basic support, you know, training, coaching, practical tools or helping them build confidence in things like goal setting and feedback. But it also means creating alternative pathways for strong performers who don't want to lead people, because, believe me, not everyone should be a people manager, and that's not a bad thing. It's I love it when people say I am not a people manager. It's like, if you understand that about yourself, if that's not something you enjoy and that's not your strength, that's a good thing to own. So you know, in many cases, the best outcome might be keeping a technically brilliant person in a role where they can thrive, rather than pushing them into people management, because it feels like the only next step, the only the other one that I hear is that, you know, leaders just don't have the time or energy to performance manage. And, you know, I understand this. It's really exhausting for everybody involved. And we're all busy in a particularly small business owners and leaders. You know, we're carrying a lot. There's always something urgent happening. There's always another issue demanding our attention. So performance conversations can get easily pushed down the list because they don't feel as pressing as the customer issue or that vacancy over there that I need to hire for, or the cash flow challenge that we have at the moment, or whatever operational problem is sitting in front of you today. But what happens is that by not making the time to performance manage early, we create much bigger and far more time consuming issues later on. Because if managers aren't checking in regularly, frustrations build quietly, expectations get blurry, standards become inconsistent. One team member starts carrying more than they should because the other person's not pulling their weight. You know, something that could have been addressed in a five minute conversation gets left for three months and becomes a much bigger issue than it ever needed to be. And that's when performance management starts to feel messy, emotional and time consuming. So it's not really that performance management takes too much time. It's that not doing it properly creates problems that take more time. So what works better is locking in short, regular check ins. And I do mean short, you know, 20 to 30, minutes could be every fortnight, every month, with each direct report, and they make an enormous difference. If the conversation is focused on the right things, what's going well, whether they need support, are expectations clear, what's getting in their way, what they need to improve, and what development are they working on? And those conversations help to prevent issues from building up, but they also create space for recognition, which is just as important, because performance management is not only about dressing addressing poor performance, it's about helping good people stay engaged, feel valued, and keep growing, and when that rhythm is missing, both the positive and the difficult. Conversations tend to happen too late. 

Another big issue is lack of clear expectations or role clarity, and this is probably one of the biggest hidden reasons why performance issues arise in the first place. A leader or manager says this person's underperforming. But when you look more closely, what becomes obvious is that the expectations weren't really that clear to begin with. Maybe the role has changed several times. Maybe the business is growing quickly and priorities are shifting, but no one has stopped to reset the expectations. Maybe the employee has been told to take initiative, but each time they do it, they're corrected, because not how the leader would have done it. You know, maybe there are goals in someone's head, but they've never actually been made clear and measurable, and this happens all the time in growing businesses, because roles evolve organically. People wear multiple hats. Things move quickly, and while that can be completely normal, it also means clarity becomes even more important. It's very hard for someone to perform consistently well in a role that is vague, moving or open to interpretation. So before we label something as under performance, it's worth asking whether the role is actually clear enough. Does the person understand the purpose of the role, the clear priorities, the standards expected of them, and what success really looks like. And if you gave that role description to someone outside your business or even outside your industry, would they understand the main point of the role and what good performance looks like, and if not, that's often the first place to start. So what works better is having up to date role descriptions written in plain English and not jargon, and it means having simple and measurable goals where possible. It's about being clear, not just about tasks and outputs, but also about the behaviours that matter in your business. And importantly, that means reinforcing clarity over time through onboarding, probation, regular check ins and shifting business priorities, because when expectations are clear, performance conversations become easier and much fairer. You're not managing based on assumptions or frustrations. You're managing against something concrete. So another very common challenge is feedback. A lot of managers are uncomfortable giving feedback, especially in smaller businesses where relationships are close and people naturally want to keep things friendly and positive. So what happens is feedback gets delayed. It gets softened too much, or it gets avoided altogether, or the opposite happens, which is that feedback only appears when something has gone wrong, and neither of those is particularly helpful. So if feedback is avoided, people stay unclear, and issues grow quietly. If feedback only happens in negative moments, in it starts to feel like punishment. It becomes something people dread rather than something that helps them improve. And that is often when managers say, you know, I don't want to upset that person, or I don't want to make it awkward, or I thought it would just sort itself out. But in reality, what gets left unsaid usually doesn't just disappear. It grows. So what we need to do is create a culture where feedback is normal, it's not dramatic or overly formal, and that means recognising good work often, and addressing issues early, using simple, respectful human language, so clear communication, you know, acknowledge how well someone handled a client issue, thanking someone for stepping up and taking ownership. It could be say, I can see you've really improved in this area and I want to acknowledge it, or you could say that this part actually isn't where it needs to be yet. So let's talk about what good looks like from here. Because people need both. They need recognition and they need course correction. And if we all we ever hear is what's wrong, then performance management will always feel negative, but if good work is noticed consistently, and improvement conversations happen early, then performance management starts to feel much more balanced and much more useful. And regular feedback also makes formal reviews much easier, because there are no big surprises. So the review becomes a summary of the conversations that have already been happening. And it's not the first time that someone's hearing something important. So an important point here is that not every dip in performance is a performance problem. Sometimes an employee's performance drops, and the immediate assumption is that as a capability problem, an attitude problem, a motivation problem, but sometimes someone who's been performing well has a temporary dip because they've just got a lot happening in their personal life. Maybe they're dealing with stress or family pressures or health issues or burnout, or it's simply a period where they're just not coping in the way that they normally would. So if, as a manager, we jump straight to judging the behaviour first, without understanding what's behind it, then we can miss what's really needed. So, you know, as leaders, we need to get curious first. We need to have conversations, try and understand what's happening before deciding what the right response should be. So, you know, asking how the person's going, what they might need, is there something affecting them at the moment at work? Because, you know, I've noticed that you're not really. At your usual level, and from there, there might be some practical short term adjustments that could help, like temporary changes to workload, clearer priorities, more flexibility around hours, extra check ins or referring them to some support services that they may not have thought about that might help them. The goal is not to remove accountability. It's just to respond in a human way while supporting them to get back on track. And this matters, particularly if someone's usually a solid contributor, and then you're seeing that there's a shift. So that can help us to understand, well, what can we do to get them back to where they were before? And that's all still performance management. And you know, it's often the most effective kind, because it deals with the real issue, rather than just the visible symptom. And the final piece I want to touch on is culture, because performance management doesn't happen in isolation, the broader culture in your business needs to support accountability for managers to be able to do this effectively. So for example, if poor behaviour is tolerated because someone gets results, that sends a message, if managers are expected to deal with performance issues but are not backed when they do it, that also sends a message. If top performers are rarely recognised but poor behaviour gets excused or overlooked, then that also shapes your culture. So leaders have a huge impact here, whether they mean to or not. Everyone pays attention to what leaders do, not just what they say. So if you say your culture matters but the standards are inconsistent, then people will notice. If you say we need to be accountable, but then you avoid dealing with certain behaviours because the conversation feels awkward. People notice that too, and if managers try to performance manage fairly and respectfully, but then get undermined, that can do a lot of damage. So we need to create a culture where both results and behaviour matter, where expectations are clear, good work is noticed, and managers are back to have fair and respectful conversations, and that also means making sure your policies and practices support accountability rather than quietly undermining it, because if your systems say one thing and your leadership behaviour says another, then the behaviours are always going to win. So particularly smaller businesses, this matters even more, because culture is felt so directly, there's less room to hide. Everyone sees what's tolerated, what's rewarded, what gets ignored. So performance management feels hard in your business. It's worth looking not just at individual employees or individual managers, but at the broader environment around them. And if we step back from all of that, what does good performance management actually look like for us, because it's usually a lot more simple than people think about so start with those clear expectations. Make sure that people know what their role is, what good looks like, what standards they're being held to have regular check ins, not just when something goes wrong. Provide feedback that is timely, specific and balanced, so people know what they're doing well and where to improve and support your managers, rather than just assuming that they know how to lead people because they were good in their previous role. And of course, we want to stay human. You know, when performance drops, don't jump straight into what our next step is. Seek to understand what's going on and where appropriate, make sensible, short term adjustments. And finally, looking honestly at the culture of your business, are you really reinforcing accountability? Are good people recognised as standards consistent and managers backed to lead fairly when those pieces are in place? Performance management comes much less about firefighting and much more about creating a team environment, where people know what's expected, feel supported and can perform at a higher level. And if you're listening to this and thinking that your business is probably a bit more reactive than proactive when it comes to performance management, then you're definitely not alone. It's very common, especially in businesses that have grown quickly and where the people side has not quite kept pace with the commercial side. But the answer is not to suddenly create big corporate processes that no one's going to use properly. You know? It's just to get those basics right. So, you know, we really want to set people up to succeed in our business and make sure that our culture supports that, because then everything becomes easier. So if this is something you're seeing in your business where performance management mostly only happens when there's already a frustration or a real problem, it might be a sign that it's time to change. So we need better foundations. So if you have received value from this episode, I'd love it if you could leave a rating or a review over Apple podcasts or Spotify, so someone else can also find the episodes to help with their business. Episodes are released on Monday, so click subscribe, and you'll be notified of when that's available. Thanks so much for joining me. If you have any feedback, questions or ideas of future episodes, head on over to amplifyhr.com.au, or connect with me on LinkedIn and we can have a conversation.