Balancing financial objectives with human needs is important

When a company becomes financially distressed, there is often a conflict between what the company needs and what employees need to achieve specific objectives.

This can be caused by emotional turmoil caused by the uncertain position facing the company. It then becomes the task of the new leadership, or existing leadership with renewed vision, to motivate employees to find renewed purpose.

I recently read an article on entrepreneur.com which discusses this in more detail.

Reevaluating performance management

The Entrepreneur article points out that one of the most important components of sustaining business growth while keeping employee fulfilment at the forefront is reevaluating how to handle performance management. Recent data from Willis Towers Watson’s 2022 Performance Reset Survey reveals that only 16% of North American organisations reported being effective when it comes to managing and paying for performance, and a Gallup survey from last year revealed that an overwhelming 95% of managers are dissatisfied with their organisation’s review system.

To do so effectively, leaders must set clear expectations from the start. This could be for employees new to the organisation but also for seasoned employees who may be starting in a more senior role or an entirely different department. Engaging employees in the planning process from the get-go will give them better insight into how their goals and contributions provide value to the overarching strategy of the organisation. Clearly outlining the roles and responsibilities of each employee and tying those expectations back to the overall goals of the business will give employees a sense of purpose, which helps to lay a foundation for optimal performance.

The article adds that, once the foundation is set, it’s important to continue to revisit how an individual’s role ties into the broader business plan by regularly communicating with employees and assessing how they are tracking toward these goals. By having one-on-one check-ins and hosting formal reviews regularly, supervisors will have a clear opportunity to assess progress, provide feedback and level-set expectations.

Take the time to sit down with each employee at the organisation and assess the specific expectations and goals for their role. As an example, goals could include increasing Q2 revenue by 20% or closing $500,000 worth of sales by the end of the year. It’s critical to back these meetings by assessing both Objectives and Key Results (OKRs) and Key Performance Indicators (KPIs), for example, quarterly sales goals, customer retention rates, etc., for the company. In initial meetings with new team members or during formal performance reviews, it’s important to reference OKRs and utilise this as a goal-setting framework to connect individual goals with the overall strategy of the company. By setting this framework, the company will be able to better measure how they are tracking against KPIs, which will help with individual progress assessments on a more regular basis.

The article points out that recent data reveals that 27% of workers rarely or never receive feedback, which can be detrimental to the overall performance of both the individual and the company. Believe it or not, data reveals that 75% of employees appreciate candid feedback and believe that it is incredibly valuable to their work. Feedback can help employees better understand where they stand, how they are tracking against broader goals and what they can be doing differently to improve. Not only will this help to strengthen the skill sets and contributions of each employee, but it’ll also showcase a genuine care for their development and wellbeing within the organisation.

Assessing performance should not only be targeted toward underperformers but should focus on lifting employees across all levels to their highest potential. As a leader, it’s important to be actively involved in these initiatives in order to provide the support needed to help employees bridge potential gaps where they may be falling short. It’s essential to view performance management as a positive exercise to help provide additional clarity and guidance to help employees grow rather than viewing it solely as an exit mechanism. While it’s crucial to address underperformance, it’s equally as important to acknowledge that poor performance management can adversely impact generally high-performing employees. Throughout the pandemic, many organisations did not properly attend to performance-related issues due to revenue reductions and in an effort to keep underperforming employees when there were labour shortages. The reality of today’s workforce is there is a much larger talent pool, which further underscores the need to optimise performance management across all levels of talent and performance.

Prioritising employee benefits and wellbeing

The Entrepreneur article points out that a study by the Saïd Business School titled “Does Employee Happiness have an Impact on Productivity” revealed that happier workers were 12% more productive than their unhappy counterparts and that happier workers tend to make fewer mistakes, demonstrating that investing in new and old talent through added benefits can have positive impacts for both employee wellbeing and an organisation’s bottom line.

As we learned through the pandemic, offering a wide range of employee-focused benefits such as flexible work schedules, parental and family leave and wellness programs like gym memberships can help to attract new talent, but it’s imperative to recognise that this alone will not be enough to retain top talent. Eighty percent of employees want benefits or perks more than they want a pay raise but seek out companies that foster a culture that encourages them to actually utilise them.

The article adds that, in many cases, benefits such as paid time off and wellness initiatives are available, but employees may be cautious about actively taking advantage of them, given a prevailing culture that doesn’t back their usage. Studies show that taking time off can help refocus and recharge the brain and body, leading to reduced feelings of burnout, improved morale and increased productivity. Encouraging employees to take breaks and recharge without repercussions or concerns is critical. For example, offering flexible working arrangements and encouraging longer vacations or mental health days can help employees feel more comfortable leaning into these benefits. It’s often perceived that lower-performing workers will take advantage of these benefits, which could cause companies to be hesitant about offering these sorts of offerings. But in order for high-performing workers to continue to operate at a successful calibre, these benefits should exist within an organisation’s offerings. Rather, leaders should utilise that thinking as an opportunity to refine performance management for lower-performing workers, as opposed to avoiding offering extended wellness benefits and flexibility.

Organisation leaders must lead by example in order for this to be effective – as recharging and taking time off is equally as important across all levels. Leading by example and taking advantage of company benefits as a leader can help foster a more comfortable environment for more junior employees where all benefits are utilised to their full potential.

Not an easy undertaking

This can be a problematic undertaking as emotional turmoil is not easily resolved.

However, the new leadership of a distressed company must balance the human needs of its employees with the financial objectives and KPI’s of shareholders. In that case, many more companies will exit business rescue instead of rushing headlong towards liquidation.