Performance management isn't just part of doing business—it's a critical and valuable component in cementing your success. While 98% of organizations cite performance management as important, it's even more critical in manufacturing sectors, where lack of compliance becomes dangerous and poor performance management can have catastrophic consequences.
However, only 5% of managers like conventional performance management processes – and there can be a lot to dislike about these processes. They can be unclear, uncomfortable, not lead to meaningful change, and clutter up daily work schedules.
But that doesn't need to be the case. Your manufacturing organization can bridge the gap between the vast majority of stakeholders who value the concept and the vast majority of participants who don't like the process by creating a better way of conducting performance management for manufacturers.
Consider these five steps for more valuable, effective, and positive performance management.
1. Set Clear Goals and Performance Indicators
Performance management and evaluation processes should start with clear goals that are communicated to your staff from the start. While you can start with business objectives, it's better to start with specific, measurable goals with key performance indicators (KPIs) that measure progress toward them. Some primary goals you might set for your manufacturing teams include:
- Increasing production (with KPIs like units per day or work hour, minimal downtimes, etc.)
- Improving quality standards (by measuring the number of daily inspections passed)
- Lowering costs (tracking reduced amounts of excess material waste, decreases in material costs, etc.)
- Improved employee relations (through increased employee retention, positive feedback scores, etc.)
2. Collect and Analyze Data
Once you have established KPIs and goals, you can move on to the next step. Now, it's time to gather objective data about progress toward each goal. The KPIs you set will determine what sort of metrics and data (dollars saved, increases in feedback scores, more units of production, and so on) you will need to collect.
As you gather this data, you can identify improvement areas in the trend lines, set milestones when you can measure progress, and start to refine approaches. For example, if your goal is to reduce costs, you can measure utilities and electricity costs across your facility to establish a baseline. Then, if you implement a change such as LED bulbs, you can start to measure the decrease in electricity costs. Similarly, you can gather feedback scores from employees about engagement and satisfaction as a baseline. Then you can implement a change, such as a wellness plan, and measure the results.
3. Establish Performance Benchmarks
While your goals may have specific thresholds built in, such as raising net promoter scores to an 8 or 9, you can also set milestones or benchmarks that can break down progress into more discrete goals at shorter intervals.
These performance benchmarks can encourage individual employees, managers, and teams to continue making progress toward the big-picture objectives. If you occasionally fall short of a benchmark, that's a cue that it's time to reevaluate your approach or your timeline.
4. Provide Feedback and Coaching
Even the best processes won't provide ongoing change without buy-in from everyone in the company. At this stage, you can share your data trends, goals, and progress toward those goals with relevant stakeholders. Discuss what's happening, what improvements still need to be made, what individuals can do to help, and why they should.
You can even personalize this step by having individualized performance reviews that assess individual employees' performance in regard to specific goals or benchmarks. Along with gauging their progress, this is an excellent opportunity to ask for feedback, suggestions, and opinions.
5. Create Continuous Improvement Initiatives
Now that you've invested all this hard work in building performance management processes and measurable goals continue building that foundation. Use current benchmarks to set future benchmarks. Establish new goals to drive more profitability or employee retention initiatives as you achieve goals to ensure you're continuously improving. Also, once you iron out this fundamental process, you can have all employees contribute by providing ideas, suggesting new goals, and providing feedback about what might be lacking in the organization that you can't see.
As a result of this continuous improvement approach, you can improve your organization and the performance management process. As your business changes, new products are onboarded, and the industry continues to change, you'll have a solid framework for cultivating change and progress.
Work With a PEO to Streamline Your Performance Management Processes
A PEO, or professional employer organization, can help with your performance management processes. The right PEO can provide manufacturers with ready-made and personalizable frameworks for performance reviews, employee evaluations, and performance management tools that structure the entire process. This support can make it easy to get the ball rolling. PEOs also provide support through HR functions, managing administrative tasks, and more.
Contact us today to learn more about how manufacturers can benefit from partnering with a professional employer organization.
