Q: Do you feel like you know where you want to go, but you can’t get everyone else in your company on the same page to get there?
Another Q: Do you feel like you have to watch over your staff to make sure they are doing what you want them to?
A: If you said “yes” to the above, then do this: Set specific Goals for each employee, measure them, and discuss them regularly!
Hiring employees is the biggest risk many small business owners ever take. It stands to reason that if we are going to willingly take on the cost, compliance requirements, interpersonal issues, and everything else (the good stuff too!) that comes with hiring employees, we should try whatever we can to get the result we are looking for from each one of them.
Ideally, every employee that you have should be adding more value to your company than they cost you to employ. Most small businesses have no problem determining the cost of their employees (it’s right there in front of you every payroll cycle), but they do have trouble quantifying the value.
At my company, Precision Property Measurements (PPM), we still don’t have this nailed down as much as we should, even though we have been in business for almost 15 years. From time to time we have given some focus to setting and tracking employee goals, but then we allowed it to fade into the background as other priorities have taken our attention away.
The last four years, in particular, we have grown fairly rapidly, both in terms of revenues and employees, and with everything going on to achieve that growth, it was easy for me to simply ignore this aspect of the business. Then when we hit 25 employees, I saw our progress hit a wall. People were not on the same page. I didn’t even know what some employees were doing.
We have now made it a high priority at PPM to get this right so that once again our whole can be greater than the sum of our parts. Here is what we are doing to set employee goals that are aligned with where we want to go as a company.
It all starts with this. You have to be crystal clear on what your vision is for your company. Write it down. Paint a picture of what you want your company to look and feel like at some specified future date. Your employees won’t know which way to go if you don’t tell them, repeatedly, what the destination is. If you are looking for help with setting a vision for your company, Infusionsoft by Keap has lots of helpful content to take you through this part. Once that is done, the trick is to take that down to the department and position level so that each individual in your company is working in alignment with your vision.
The importance of the “Big 3”
Many of our employees already had performance metrics, but as previously mentioned, we weren’t consistent in their application and tracking. More importantly, there was not a clear link between how the goals of the position linked to the goals of the company. To answer this challenge, we have recently adopted the “Big 3” concept (which we learned from Infusionsoft by Keap) to establish this link.
The idea of Big 3 is that you boil each position down to its essence, asking, “What are the top three ways that this position helps your company to achieve its vision?”
In our case, our Purpose is to help create a “worry free” renovation experience for our clients. Therefore, the position of project manager at PPM has a Big 3 that looks like this:
- Manage production schedules to ensure that projects are delivered on-time
- Cultivate strong, loyal relationships with clients, vendors, and employees
- Help keep PPM financially secure by keeping projects within budget
Each of these has a direct connection to our company goals, which are in turn defined by our Vision:
- On-Time project delivery is a critical factor for our clients. Since our part of the project comes at the beginning, if we are late with our service, the entire project schedule gets thrown off—definitely not a worry-free experience for our clients.
- Just as our clients rely on us for their success, we rely on our subcontractors and employees for our success. As the coordinator that communicates with everyone and puts all the pieces together, the project manager occupies a critical position in keeping everyone happy and making it all work.
- Our Vision, and the vision of any small business, requires financial success to achieve. Labor costs are our biggest expense, and the project manager is in a position to keep these where they need to be.
How to create employee goals
We have found that determining goals works best if it’s done with the employee. For one, they ultimately have to own them—so they are much more likely to feel that ownership if they played a part in creating the goals in the first place. Plus, it’s likely that the employee has a perspective and some ideas that you didn’t even consider since they are the one that is actually in that role and see what goes on every day.
You have to set a couple basic guidelines, though:
- Must tie to company goals (as discussed previously)
- Must be measurable (more on that below)
We like to have each manager and employee discuss the concept and brainstorm a bit, and then take a few days to think and work independently. Finally, they get back to together to review each other’s ideas and agree on the final goals. Senior management will review and confirm them just to make sure they are indeed in alignment with the company vision.
How to measure employee goals
This is where it can all fall apart, as we have sadly seen firsthand at PPM too many times. You take all the time and effort to establish a company vision and set employee goals that align to that vision, and then you pat yourself on the back and move onto something else.
When the employee’s next performance review comes along a year a later, you find that you actually are no closer to being able to truly assess their value, and worse you can’t give them actionable feedback to help them improve.
What went wrong?
You forgot to measure their goals! Here’s how we set this up:
- There must be at least one measurable metric for each goal. Here’s an example for each of the project manager “Big 3” goals listed above:
- Percentage of projects that are delivered “on-time” (on or before promised date)
- “Satisfaction” scores on surveys that are taken regularly for clients, vendors, and employees
- Labor cost as percentage of project revenues
A target must be set for each metric (what’s the goal for this metric?)
Hopefully, you have some historical data to start with. If not then don’t worry, just pick something and start tracking it now. You can always change it later
You must have tracking systems in place to get the info you need for each metric
- Are you capturing the necessary data?
- It is easy to use that data to calculate the metric that you need?
- In many cases, a basic Excel spreadsheet will work. We use a platform called grow.com to create custom charts and graphs that are updated live through various data sources, including Infusionsoft by Keap.
The data must be reviewed regularly by the employee and their manager
- At least once a month but preferably weekly
- It’s best if the employee calculates the metric themselves and reports it to their manager. This will increase the employee’s ownership of that goal.
Like just about everything else in small business, this process takes commitment, hard work, and consistency to see it all the way through and start reaping the benefits. The more employees you have, the more benefit you should see from getting this right. But don’t wait until you have a lot of employees to do something about it! If you can start implementing this process with even your very first employee, you’ll make your life a lot easier as you continue to grow and add more people.
Andy McFarland is the President and owner of Precision Property Measurements, a 20 person nationwide building measuring firm based in Long Beach, CA. PPM was recently honored to be named a 2016 Inc. 5000 honoree, as one of the fastest growing small businesses in America. Andy is married with 2 kids, and in addition to running his business he is an active soccer coach, Cub Scout leader, and Rotarian.