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Why small firms should manage performance

Some small firms might be daunted by the thought of setting up an appraisal system from scratch - and may wonder if doing so is really necessary for them. Many may be surprised to find that they probably already have most aspects of a system in place informally, if line managers meet employees and discuss how projects have gone and what's coming on the horizon. Setting up an appraisal system is often just a question of clarifying and formalising these processes.

Having things set out more clearly often helps to establish an open channel of communication between an employee and a manager. Regular meetings, whether informal or formal, can be motivational and enhance the sense that everyone is working towards the same goal. The advantage of being able to review objectives and discuss future aims in an unpressured environment strengthens relationships. The reverse tends to be true if meetings happen only when there's a problem.

Once the objectives of a job have been agreed, the next step would be to set measurable standards or deadlines for that job. It helps employees to be specific about objectives, and spell out exactly what needs to be achieved. Perhaps more difficult is finding an objective that presents a challenge, but is achievable, measurable and relevant to the business. The way objectives are achieved - the behaviours used or 'competencies' - can also be agreed, measured and reviewed. And if employees need further training to achieve either, this can be more easily identified and noted as part of a personal development plan.

An appraisal system provides a mechanism for small businesses to get their vision across to staff, helping them to align their activities. With a recognised structure in place, employees will be more relaxed about providing and receiving feedback, raising concerns and coming forward with ideas and innovations. A coherent approach makes it more likely that small businesses achieve the results they want to achieve, keeping their employees on-side in the process.

There are a number of ways that Acas can help small businesses meet their performance management needs. The Advice leaflet - Managing performance for small firms outlines the basics and summarises how to create an effective appraisal system, set objectives, carry out appraisals and deal with poor performance. Acas also offers a number of training courses and events on Performance management in locations across the UK.

Visit the Acas Training and Business Solutions area for more information.

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