Tag: performance management

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Business Strategy Human Resources

Common HR Issues For 2024 Small & Medium-Sized Businesses

Common HR Issues Work Environment

In the dynamic landscape of small and medium-sized businesses, HR issues can often be as varied and complex as those faced by larger corporations. As we move into 2024, it’s crucial for managers and employers to stay ahead of common challenges that can impact their workplace. This blog post explores several common HR issues at work that small and medium-sized businesses are likely to encounter in the coming year. We will delve into the nature of these problems, provide insights on how to identify them, and offer practical solutions to manage them effectively. Whether you’re dealing with performance dips, conflict resolution, toxic behaviors, or attendance issues, understanding these common hurdles can help you foster a more supportive and productive work environment. 

 

 

Performance Management

Performance issues rank among the most common hr issues at work that managers and employers encounter, especially within small and medium-sized businesses. Addressing these effectively is crucial for maintaining a productive work environment and ensuring organisational success.

 

Recognising Performance Issues

To effectively manage performance issues, it’s essential to first recognise them. Here are some scenarios that might resonate with managers trying to identify underperformance in their business:

  • Clear Underperformance: An employee who is not meeting the established job standards, which can be evident in the quality and quantity of their work.
  • Minimum Effort: Some employees do just enough to meet the bare minimum requirements, which can stymie growth and innovation within the team.

 

Common Managerial Responses

Managers often have instinctual responses to performance issues, which may not always be the most effective approach:

  • Ignoring Minor Issues: Small performance issues are sometimes overlooked or dismissed without feedback. This can lead to significant problems later, potentially requiring disciplinary actions.

 

Solutions 

Taking action to address current and future performance issues proactively can prevent them from escalating. Here are some strategies to implement:

  • Regular One-on-Ones: Schedule consistent one-on-one meetings to discuss progress, challenges, and feedback. Use these sessions to adjust goals and expectations as needed.
  • Performance Improvement Plans: Once any performance issues are identified, the manager and employee can develop an improvement plan together.
  • Training: Some performance issues could be due to lack of training for the role, or lack of knowledge in efficiencies like time management. Implementing on-the-job training or upskilling with an external provider can help employees improve performance.

Preventive Measures

Having strong systems in place can also help to prevent performance issues from arising Here are some measures to implement:

  • Frequent Feedback: Provide regular and constructive feedback to encourage employee development. Recognise achievements to motivate continued effort and improvement.
  • Structured Probation Management: Implement a structured 30, 60, and 90-day review process during the probation period to ensure continuous evaluation and support.
  • Hiring and Assessment: Conduct thorough screenings during the hiring process to identify potential underperformers. Utilise behavioral interviews and skills assessments to gauge candidate fit.
  • Effective Onboarding: Set clear expectations from the start during the induction phase. Ensure new hires understand their roles and the standards to which they are held.

 

Conflict 

Workplace conflict is inevitable, regardless of the size of the business. Effectively managing conflicts can prevent them from escalating and damaging team dynamics and productivity. Understanding the types of conflicts that can occur—both overt and covert—is crucial in addressing them appropriately.

 

Types of Conflict

  • Overt Conflict: These are clear, open disputes where disagreements or competitive tensions are expressed directly and visibly. Examples include arguments over resource allocation, disagreements about project direction, or open resentment over promotions.
  • Covert Conflict: These conflicts are not always visible but can be just as harmful. Examples include:
    • Passive Aggressiveness: This can manifest as indirect expressions of hostility, such as sarcastic comments, backhanded compliments, or purposeful delays in delivering work.
    • Withdrawal: An employee might become less communicative and withdraw from team interactions, which can be a sign of dissatisfaction or disagreement that they feel unable to express openly.
  • Sabotage: This includes subtle actions taken to undermine the efforts of others. While harder to detect, it can significantly impact team morale and project outcomes.

 

Strategies for Minimising Conflict

  • Establish Clear Communication Channels: Ensure that there are well-defined ways for employees to communicate their concerns and feedback. Regular team meetings and one-on-one sessions can provide platforms for open dialogue.
  • Set and Enforce Ground Rules: Develop clear rules regarding respectful behavior and conflict resolution. Make sure these guidelines are enforced consistently to maintain a healthy work environment.
  • Promote Team Building Activities: Regular team-building exercises can enhance understanding and cooperation among team members, reducing the chances of conflicts.

 

Strategies for Managing Conflict

  • Immediate Addressal: Address conflicts as soon as they are noticed, before they escalate. Delay can often make situations worse.
  • Neutral Mediation: In cases of significant disagreement, involve a neutral third party to mediate the discussion. This can help maintain objectivity and fairness.
  • Focus on Problem-Solving: Encourage employees to focus on the issue at hand rather than personal grievances. Structured problem-solving approaches can divert attention from emotional reactions to practical outcomes.
  • Training and Development: Provide conflict resolution training to managers and leaders. Equip them with the skills needed to handle difficult situations effectively and empathetically.

 

Key Takeaways

Recognising and understanding the various forms of conflict in the workplace is the first step in managing them effectively. By implementing proactive communication strategies and conflict resolution techniques, businesses can not only manage but minimise conflicts, fostering a more harmonious and productive work environment.

 

 

Toxic & Bad Behaviour

Toxic behavior in the workplace can undermine a company’s culture, employee morale, and overall productivity. Recognising and addressing these behaviors promptly and effectively is crucial for maintaining a healthy work environment.

 

Identifying Toxic Behaviors

Toxic behavior can manifest in various forms, ranging from subtle to overt actions. Common examples include:

  • Bullying: Intimidation or aggressive behaviors that can be verbal, physical, or psychological.
  • Gossip and Slander: Spreading rumors or making false allegations to tarnish another person’s reputation.
  • Manipulation: Deceiving or coercing others for personal gain or to disadvantage others.
  • Exclusion: Deliberately excluding certain employees from conversations, meetings, or workplace activities without a valid reason.
  • Undermining Work: Habitually criticising or sabotaging the work of others, or taking credit for others’ efforts.

 

Impact of Toxic Behavior

  • The consequences of allowing toxic behavior to fester in the workplace include:
  • Decreased Employee Morale: Continuous exposure to negative behaviors can lead to a decline in employee morale and job satisfaction.
  • Reduced Productivity: Toxic environments often result in decreased productivity as employees spend more time coping with stress or conflict than focusing on their work.
  • High Turnover Rates: Persistent toxicity can drive employees to leave the company, leading to higher turnover and associated costs.
  • Legal and Reputation Risks: In some cases, toxic behaviors can lead to legal challenges and damage to the company’s reputation.

 

Strategies for Addressing Toxic Behavior

Effectively managing toxic behavior involves several proactive and reactive measures:

  • Clear Policies: Establish clear policies that define acceptable and unacceptable behaviors. Ensure these policies are well communicated and understood by all employees.
  • Training Programs: Implement training programs that help employees and managers recognise toxic behaviours and understand how to address them.
  • Encourage Reporting: Create a safe environment for employees to report toxic behavior without fear of retaliation. Ensure there are multiple channels for reporting.
  • Prompt Response: Act promptly and decisively when toxic behavior is reported. Investigations should be thorough and confidential, with appropriate consequences for those found guilty.
  • Support Systems: Provide support systems for victims of toxic behavior, such as access to counseling or a workplace support group.

 

Key Takeaways

Toxic behaviors, if unchecked, can significantly damage the fabric of the workplace. By recognising the signs early, enforcing strong policies, and supporting affected employees, businesses can create a healthier, more inclusive work environment. Encouraging a culture of respect and accountability ensures that toxicity is minimised and that all employees can thrive.

 

 

Absenteeism and Attendance

Absenteeism can significantly impact the productivity and morale of a workplace. Understanding the reasons behind frequent absences and implementing effective strategies to manage attendance is crucial for maintaining operational efficiency.

 

Understanding Absenteeism

Absenteeism refers to the habitual non-presence of an employee at their job. Patterns of absenteeism can vary, but frequent unexplained or last-minute absences might indicate underlying issues. It’s important to distinguish between legitimate absenteeism (due to illness, family responsibilities, etc.) and problematic absenteeism, which can disrupt work processes.

 

Common Causes of Absenteeism

Several factors can contribute to high rates of absenteeism, including:

  • Health Issues: Both physical and mental health problems can lead to frequent absences.
  • Workplace Stress: High-stress environments can cause burnout, leading employees to take more sick days.
  • Low Job Satisfaction: Employees who are dissatisfied with their job or workplace environment may be more likely to skip work.
  • Poor Work-Life Balance: Inflexible schedules can lead to conflicts between personal obligations and work, resulting in absences.

 

Strategies for Managing Absenteeism

Effectively managing absenteeism involves both preventive and reactive measures:

  • Clear Attendance Policies: Establish and communicate clear attendance policies. Make sure employees understand the expectations and consequences related to absences. This includes clear steps for what happens when paid sick leave is exhausted.
  • Monitoring Sick Leave Trends: Actively track sick leave, especially when taken on Mondays, Fridays, or adjacent to public holidays, as these patterns can sometimes indicate less genuine reasons for absence.
  • Flexible Work Arrangements: Offering flexible working hours or the option to work from home can help accommodate personal needs and reduce unscheduled absences, aiding in better work-life balance.
  • Extended Paid Sick Leave: Implement policies for extended paid sick leave for those facing longer-term health issues, and outline clear protocols for transitioning when sick leave is exhausted.
  • Employee Support Programs: Introduce support programs that promote employee health and well-being, such as wellness programs, counseling services, and health screenings.
  • Regular Check-Ins and Return-to-Work Interviews: Conduct regular one-on-one meetings and return-to-work interviews to discuss any issues faced during absences and assess the support needed for the employee.
  • Disciplinary Actions: If changes to attendance policies and support mechanisms do not lead to improvements, consider implementing disciplinary actions as necessary to address continuous absenteeism effectively.

 

Key Takeaways

Managing absenteeism effectively requires a proactive approach that includes understanding the causes, implementing supportive policies, and fostering a workplace culture that prioritises employee well-being. By addressing absenteeism head-on, businesses can improve attendance, enhance productivity, and maintain a happier, more engaged workforce.

 

 

 

Return to Office versus Remote Work and Flexibility 

As businesses navigate the post-pandemic world, the debate between returning to the office and continuing remote work remains a critical issue for small and medium-sized businesses (SMBs). Balancing operational needs with employee preferences for flexibility requires thoughtful strategy and clear communication.

 

Current Trends and Preferences

  • Employee Expectations: Many employees have come to prefer the flexibility that remote work offers, appreciating the better work-life balance it can provide.
  • Business Needs: On the other hand, certain business operations may benefit significantly from in-person collaboration, leading some employers to advocate for a return to the office.

 

Challenges and Considerations

  • Productivity Concerns: While some roles see increased productivity in remote settings, others might suffer due to less direct supervision and reduced team interaction.
  • Team Dynamics: Remote work can lead to feelings of isolation and disconnectedness, which can affect teamwork and company culture.
  • Technical and Security Issues: Managing remote work also involves logistical considerations, such as ensuring robust IT support and secure data access.

 

Strategies for Balancing Needs

  • Hybrid Models: Implementing a hybrid work model can be an effective compromise, allowing for part-time office attendance while still offering flexibility.
    • Fixed and Flexible Days: Some businesses establish fixed days for in-office work and flexible days for remote work, which helps in maintaining consistency while accommodating employee preferences.
  • Clear Policies and Expectations: Whether fully remote, in-office, or hybrid, it is crucial to have clear policies that outline expectations and responsibilities.
  • Regular Reviews and Feedback: Engage with employees through regular feedback sessions to assess the effectiveness of the current work arrangement and make adjustments as needed.

 

Key Takeaways

The decision between returning to the office and offering remote work flexibility isn’t just about individual preferences but about finding the best fit for the business’s and employees’ needs. By adopting flexible work arrangements and regularly revisiting these decisions, SMBs can ensure they remain dynamic and responsive to common hr issues at work that may arise. Effective communication and clear guidelines are essential to make any work model successful, enhancing both productivity and employee satisfaction.

 

 

Employee Retention & Attrition

Employee retention is a critical concern for small and medium-sized businesses (SMBs) as high attrition rates can significantly disrupt operations and incur substantial costs. Understanding the factors that contribute to common hr issues at work such as employee turnover and implementing effective strategies to enhance retention is crucial for business stability and growth.

 

Understanding Attrition in SMBs

  • Consequences of High Turnover: Frequent employee turnover can lead to lost productivity, increased hiring costs, and diminished morale among remaining staff.
  • Common Causes of Attrition: Attrition can often be attributed to factors such as inadequate compensation, limited career advancement opportunities, poor management practices, and lack of recognition.

 

Strategies for Enhancing Employee Retention

  • Defining EVP: Your Employee Value Proposition should clearly articulate what employees can expect from working at your company in terms of compensation, benefits, career development, culture, and work environment
  • Competitive Compensation and Benefits: Offer fair and competitive salaries along with benefits that could include health insurance, retirement plans, and performance bonuses.
  • Career Development Opportunities: Provide clear career paths and promote from within whenever possible. Offer training and development programs to help employees advance their skills and careers.
  • Positive Workplace Culture: Foster an inclusive and supportive workplace culture. Encourage open communication, recognise employee achievements, and promote work-life balance.
  • Employee Engagement: Regularly engage with employees through surveys, town hall meetings, and one-on-one sessions to gather feedback and address concerns.
  • Flexible Work Arrangements: Continue to offer flexible working conditions where possible, such as remote work options or flexible hours, to meet the diverse needs of your workforce.

 

Key Takeaways

To mitigate attrition and enhance retention, SMBs need to adopt a holistic approach that addresses both the professional and personal needs of their employees. By investing in a supportive and engaging work environment, businesses can not only retain top talent but also attract high-quality candidates, thereby securing their operational capabilities and competitive advantage in the market.

 

 

 

Get in Touch with Inject

As 2024 presents its unique set of HR challenges—from managing complex employee relations issues to navigating the intricacies of workforce flexibility—it’s clear that small and medium-sized businesses need robust support to maintain a healthy and productive workplace. Implementing comprehensive HR strategies is essential but can be daunting without the right expertise.

 

If you are noticing any of the issues discussed here in your workplace, it’s crucial to address them with precision and insight. This is where Inject can make a significant difference. Our team of seasoned HR advisers and experts specialises in identifying and resolving the common hr issues at work that SMBs face. We provide tailored, actionable solutions that are integrated directly into your business operations.

 

By partnering with Inject, you gain access to a team that is committed to understanding the nuances of your business and implementing effective strategies that foster a vibrant, high-performing work environment.

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Human Resources Performance Management

When Productivity Isn’t Enough: Firing Toxic Employees

Toxic Employees Toxic Workplace Behaviour

High productivity can often mask the detrimental impact of toxic workers within a company. In Melbourne’s small to medium businesses, where corporate culture significantly influences success, toxic employees can erode the very fabric of a productive team. Identifying and addressing toxic behaviour becomes essential, even when the employee in question contributes positively to output. Inject’s HR consulting services offer the expertise needed to navigate these complex situations, ensuring that business values and team harmony are preserved.

 

The Hidden Cost of Keeping Toxic Employees

While toxic employees may meet or exceed their performance targets, their toxic behaviour can have a profound negative impact on team dynamics, employee morale, and the overall corporate culture. The cost of retaining such an individual often outweighs their productivity benefits, leading to decreased overall team performance, higher turnover rates, and potential damage to the company’s reputation.

 

Identifying Toxic Workers

Recognising toxic employees involves looking beyond their productivity metrics to their interactions with colleagues, their influence on team morale, and their overall fit with the company culture. Signs of toxic behaviour include consistent negativity, undermining of colleagues, resistance to feedback, and a lack of cooperation or respect for team norms.

 

The Role of HR in Managing Toxic Employees

HR professionals play a pivotal role in managing toxic employees. Through HR outsourcing, businesses can gain access to experienced HR consultants and advisers who specialise in handling such complex situations. They can provide objective assessments, mediate conflicts, and recommend the best course of action, which sometimes involves terminating the employee.

 

Making the Decision to Terminate

The decision to fire a toxic employee should not be taken lightly. It requires a careful evaluation of the individual’s impact on the team and the overall corporate culture. Documentation of toxic behaviour attempts at intervention, and the employee’s response to feedback should all be considered. Ultimately, if the toxic behaviour persists and continues to harm the workplace environment, termination may be the necessary course of action.

 

Navigating the Termination Process

Terminating an employee for toxic behaviour requires a thoughtful approach to minimise legal risks and potential fallout. Clear communication, proper documentation, and adherence to legal and ethical standards are essential. HR consultants can guide businesses through this process, ensuring it is handled professionally and compassionately.

 

Inject: Supporting Melbourne’s Businesses Through Difficult Decisions

At Inject, we understand the complexities involved in fostering a positive workplace culture, especially for small to medium businesses in Melbourne. Our team of HR outsourcing experts offers comprehensive support, from identifying toxic employees to navigating the termination process. We believe in building strong corporate cultures that support the growth and well-being of all employees, recognising that sometimes tough decisions must be made for the greater good.

 

Conclusion

While productivity is important, it cannot be the sole measure of an employee’s value to a company. The presence of toxic workers can undermine team morale, corporate culture, and overall business success. With Inject’s HR consulting services, businesses can navigate the challenging process of managing and, if necessary, firing toxic employees, ensuring a healthier, more productive workplace for everyone.

 

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Human Resources Performance Management

Toxic Employees: Does One Bad Apple Spoil a Company?

Toxic Work Environment Toxic Employees HR Consulting

The answer is yes. Toxic employees pose a significant challenge in any work setting, undermining productivity, employee morale, and the overall bottom line. Their presence creates a pervasive atmosphere that can demoralise team members and disrupt the essential harmony for successful collaboration. In Melbourne’s competitive landscape, small to medium businesses must address this issue head-on to maintain a high-performing and harmonious work environment and safeguard business success. Inject, leveraging strategic HR consulting services, is at the forefront of identifying, managing, and mitigating the effects of toxic behaviours, ensuring the preservation of your company’s culture and performance.

 

 

Understanding the Ripple Effects

Toxic behaviours in the workplace, ranging from subtle undermining to overt negativity, severely impact team cohesion and individual performance. The consequences of allowing such behaviours to fester extend beyond immediate team disruptions, affecting overall productivity levels and potentially leading to the loss of top performers who may seek more affirming environments. Importantly, you’re sending your team the message that this person’s behaviour is okay. The question is whether this is truly representative of you and what you want in your business.

The erosion of work environment quality can stifle innovation and reduce the effectiveness of teams, making it imperative for businesses to take decisive action.

 

Counteract Toxic Employees

Hiring: Relying solely on a candidate’s resume and how they present themselves can be misleading. The best way to tackle toxicity in the workplace is to avoid hiring such individuals altogether. By implementing a thorough assessment process that focuses on alignment with the role’s requirements and company values, organisations can actively prevent toxic behaviours from infiltrating their teams, creating a more positive work environment focused on productivity.

 

Early Detection and Intervention: Implementing robust mechanisms for regular performance reviews and feedback can help in identifying toxic behaviours early on. Creating channels for anonymous reporting can also encourage team members to voice concerns without fear of reprisal.

 

Cultivating a Supportive and Positive Culture: Building a workplace culture that values open communication, mutual respect, and team engagement is vital. Activities that foster team spirit and a sense of belonging can help dilute the impact of negative behaviours and reinforce a positive work environment.

 

Leveraging Expert HR Intervention: For businesses without the bandwidth to tackle complex HR challenges internally, HR outsourcing to specialised consultants can provide a lifeline. These experts bring objective perspectives and proven strategies for dealing with toxic employees, from mediation and conflict resolution to strategic exits if necessary.

 

Empowering Leaders with Essential Skills: Equipping managers and leaders with the skills to handle difficult conversations, manage conflict, and motivate teams is critical. Through targeted training and HR consulting, leaders can become adept at navigating the challenges presented by toxic employees and fostering an environment where all team members can thrive.

 

Implementing Clear Policies and Consequences: Establishing clear policies that outline acceptable behaviours and the consequences for violations can deter toxicity. Regular training sessions on these policies ensure that all employees understand the standards expected of them and the seriousness with which the company approaches these issues.

 

Performance Reviews & Feedback: By conducting periodic reviews, managers not only evaluate employees’ performance against key performance indicators (KPIs) but also assess their behaviour and overall contributions to the team. Providing consistent, timely feedback allows for course corrections and improvements along the way, preventing major issues from arising. This proactive approach fosters a culture of continuous growth and development, enabling both employees and organisations to achieve their goals effectively.

 

 

Partnering with Inject for a High-Performing & Harmonious Workplace

Inject’s commitment to Melbourne’s small to medium business community extends beyond consultancy. We offer bespoke HR solutions that address the unique dynamics of your workplace, ensuring strategies that not only mitigate the impact of toxic employees but also proactively enhance team well-being and drive business performance.

 

Our approach integrates deep HR expertise with a keen understanding of the nuances of Melbourne’s business environment. Whether through direct intervention, strategic planning, or comprehensive training programs, Inject empowers businesses to transform their work environments into spaces where positivity, productivity, and performance flourish.

 

 

Forge Ahead with Inject’s HR Solutions

The presence of toxic employees need not be a foregone conclusion to your business’s culture or success. With Inject’s HR consulting and outsourcing solutions, you have a partner ready to tackle the complexities of workplace dynamics head-on. We provide the tools, expertise, and support necessary to navigate these challenges, transforming them into opportunities for growth, innovation, and sustained success.

Embrace the potential for a dynamic, engaged, and productive workplace. With Inject’s support, navigate the complexities of human resources management with confidence and strategic insight. Contact us today to discover how our tailored HR solutions can help your business rise above the impact of toxic employees and pave the way for a healthier, more productive work environment.

 

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Human Resources Performance Management

5 Types of Toxic Behaviours & Signs to Look for

Employee Toxic Behaviours HR Company HR Consulting

Toxic behaviours can critically impact the success and harmony of any workplace, especially in Melbourne’s competitive business environment. Small to medium businesses, in particular, face the challenge of ensuring their company culture remains positive despite the presence of toxic individuals. Such behaviours not only undermine employee morale but also threaten the overall work-life balance, leading to a toxic work environment. Addressing these issues promptly and effectively is crucial to maintaining a productive and cohesive team. This post delves into the common toxic behaviours within the workplace, their signs, and how businesses can tackle these challenges through HR outsourcing and HR consulting.

 

1. The Gossiper: Communication That Harms Company Culture

Effective communication is the cornerstone of a thriving company culture. However, toxic communication habits can significantly damage this foundation.

Signs to Look for:

  • Persistent sharing of rumours or negative gossip.
  • Disclosure of sensitive information that undermines trust.

 

2.The Drainer: Persistent Negativity and Its Impact on Work-Life Balance

An employee’s continuous negative outlook can affect the entire team’s work-life balance, creating a pervasive atmosphere of pessimism.

Signs to Look for:

  • Regular complaints about tasks, policies, or the work environment.
  • A demeanour that consistently demotivates and disengages colleagues.

 

3. The Excuse-Maker: Behaviours Undermining Team Member Efforts

The success of any project relies on the collaborative effort of all team members. Toxic behaviours that sabotage this collaboration can be particularly detrimental.

Signs to Look for:

  • Failure to meet deadlines or achieve project standards is often accompanied by blame-shifting.
  • Actions that incite conflict or disrupt team unity.

 

4. The Solo Performer: A Challenge to Team Dynamics

While independence is valued, refusal to collaborate can hinder not only the individual’s growth but also the team’s success.

Signs to Look for:

  • Reluctance or refusal to engage in team activities or share insights.
  • Poor or minimal communication with team members and leadership.

 

5. The Manipulator: Manipulative Conduct and Employee Morale

Manipulative behaviours can create an environment of distrust and unease, significantly impacting employee morale.

Signs to Look for:

  • Changing narratives to suit personal agendas.
  • Strategic relationships are aimed at personal gain rather than team enhancement.

 

Crafting Solutions with HR Outsourcing and HR Consulting

To navigate the complexities of toxic behaviours in the workplace, HR outsourcing and HR consulting emerge as valuable resources. HR professionals specialise in diagnosing and addressing such issues, fostering a positive work environment that supports both individual and business success.

 

Inject: Your HR Adviser for Melbourne’s Small to Medium Businesses

Inject is dedicated to providing expert HR consulting services tailored to the unique needs of Melbourne’s small to medium businesses. We understand the nuances of managing a toxic work environment and the importance of maintaining a high-performing and harmonious company culture. Our team of HR experts offers solutions that not only address current challenges but also proactively enhance employee morale and work-life balance. By partnering with Inject, you gain access to HR strategies and solutions designed to transform your workplace and drive business success.

Contact us today to learn how our HR outsourcing services can benefit your business, helping you navigate the challenges of toxic behaviours and fostering a culture of positivity and productivity.

 

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Key Performance Indicators Performance Management Small Business Recruitment

Why are companies moving from KPIs to OKR and whether you should too

KPIs vs OKR
Small businesses are increasingly turning to OKRs instead of using KPIs. What's the difference? We talk all about it here.

First off…what’s wrong with KPIs?

When you mention the term “KPIs” (Key Performance Indicators) in most companies, you get a mix of reactions.  Managers feel a sense of energy because the certainty that having hard measures in place helps them to reduce the debate about performance.  Staff feel a sense of dread and anxiety, eye-balls rolling into the backs of heads in sequence like falling dominoes.   

Why does this seemingly ever-present dynamic continue to exist in so many companies?  Well, the thing is that KPI has become a swear word in many people’s worlds. It’s not that there is anything inherently wrong with KPIs.  It’s like the word Kit-Kat – this is generally a positive thing, right? But if I poked you in the eye with one over and over again, eventually you will start to want to break my fingers.

The problem with KPIs is that they are fraught with danger.
Below are the many traps managers fall into when developing and implementing KPIs:

  • They measure what is easy to measure, resulting in trivial matters being measured whilst more important areas are not tracked
  • They don’t involve their team in developing them, so staff feel that they KPIs are a punitive and controlling mechanism
  • They lose interest in them, so their lack of follow up proves them to be mostly useless
  • They are not aligned to the strategic and operational priorities, therefore not supporting the business objectives
  • They are not measurable, therefore resulting in a vague representation of performance
  • They have too many KPIs, therefore making the system too difficult to track and manage
  • They believe that the KPIs will do their job for them, so their discussions with staff are at best a waste of time, and at worst are highly demotivating

The end result is that a lot of KPI programs are abandoned, because they are too hard.  An alternative concept that is gaining more exposure lately is to use OKRs instead of KPIs.  OKRs stands for Objectives and Key Results. Now let me tell you, changing the acronym doesn’t mean people will make the same mistakes as in the past.  However, this model has a few differences to KPIs that might just give it a fighting chance. Also, sometimes bringing in something new that doesn’t have the same baggage from the past may help both staff and managers approach performance measurement with a positive mindset. 

What’s the difference between KPIs and OKRs?

What are KPIs?

KPI are measures that are tracked on an ongoing basis.  KPIs can be measured at a company level, divisional level, team level or for an individual employee.  In theory, there should only be a small number of KPIs:
Examples of KPIs are:

  • Cost per acquisition – how much it costs in search engine marketing to achieve one acquisition (whether a lead or sale depending on the goal) 
  • Delivery in Full and on Time (DIFOT) – manufacturing measure of producing goods within agreed timeframes and the order is complete
  • Net Promoter Score % – a customer advocacy measure that shows the comparison of promoters versus detractors
  • Employee engagement score % – an employee score of what proportion of staff in a business are considered “engaged”
  • Lost Time Injuries – the proportion of time lost due to injuries to employees out of the total time available
  • Average call handling time – the average amount of time a person speaks on the phone to a customer for.
  • Cost per ticket – the amount of cost required to close a ticket in IT helpdesk work

You might be looking at this list and think that they could be very useful in certain contexts.  If you are thinking this, then you would be right. They can also be very damaging in the wrong context.  I see many of these used in the wrong way or in the wrong situation and be more damaging than not having them at all.  Conversely, I have also seen them work very well. So my warning is to not simply take something from the guy over the fence and think it is going to work for you in the same way.  

What are OKRs?



OKR stands for Objectives and Key Results.

OKRs have actually been around since the 1950s, but have become significantly more popular since it was revealed that Google used OKRs during a rapid phase of growth.  How much of a part OKRs played in the ultimate success of Google is up for debate, however, what is reasonably clear is that their adoption was assisted by this famous association.  

Let’s look at the Objective part first.  This is a high-level outcome that the business is wanting to achieve.  It relates closely to the organisation or divisions overall success. Below are some example Objectives:

  1. Increase profitability of sales
  2. Build leadership capability
  3. Deliver on the customer promise
  4. Grow a national presence

None of the above statements are measurable as they are not SMART objectives (Specific, Measurable, Actionable, Realistic and Time-based).  This is deliberately the case, because they are designed to be simple and therefore easily relatable back to the company’s overall goals.
Now let’s look at Key Results.  They can be a combination of KPIs and/or SMART goals and this is one of the most attractive parts of OKRs.  The practical reality is that you need both KPIs – that is ongoing measures, as well as goals, which are finished once they are delivered and not ongoing.  Delivering on an Objective may require both Goals and KPIs, but easily summarised as Key Results.
Let’s take the first example Objective of “Increase profitability of sales”.

  • Achieve an average weighted margin of 45% (KPI)
  • Deliver $2m of sales revenue per month in Category A products (KPI)
  • Train and assess 90% of field sales staff in Category A core products by 30 June 2021 (Goal)
  • Align the commission scheme to profitability and implement to be effective from 1 July 2021 (Goal)

You can see that there is a combination of KPIs and Goals in the Key Results that relate back to the overall Objective.

In this example, Category A products are strategically important to delivering increased profitability.  There may be a point of difference that allows a higher profit margin. However, the sales team will need to be equipped to sell the products in the right way and their commission scheme needs to be aligned to support this overall objective if it is not already.  These Key Results would most likely be for a Sales Director or Manager. The Key Results for the sales team can then be cascaded down as well to include their own margins, sales of Category A products and being assessed as competent in the new product.

Where to from here?

OKRs provides a more rounded and relevant framework in which to measure performance, align priorities and to engage the team.  However, it also comes with the same risks and traps that KPIs have always had. Perhaps given they are less known and therefore have less baggage that they have a better chance of success.  The manner in which it is implemented is critical for success. So if you are going to embark on the OKR journey, please make sure not to repeat the same mistakes from the past, or else we may find ourselves jumping on the next model. 


If you have already done this, stay tuned for our 5H2G model of employee performance.
We always welcome questions, so send any our way through here.