Kathy (host):
Well hello there and welcome back to another episode of Help! My Business is Growing, a podcast where we explore how to grow and build a business that is healthy and sustainable. I'm your host, Kathy Svetina, a fractional CFO and an owner of a company called NewCastle Finance, a company where we believe that everything that you do in your business is eventually going to end up in your finances. And to get to healthy finances is to have a healthy business. Well, the million dollar question is, how in the world are you supposed to get there? Well, this is where this podcast comes in to help. Is poor performance a persistent problem in your business? Maybe you have employees who consistently clock in late or keep missing their deadlines, or there are team members who fail to meet expectations. Whatever the issue is, poor performance will eventually have a negative impact on your bottom line, which is why it's crucial to uncover the root cause. For example, is onboarding a problem? Could it be a lack of leadership? Or there might be a communication breakdown? Or maybe just plain bad luck when you are hiring people? So what are the reasons for poor performance in your business? And how do you make changes that will lead to tangible improvements? As a quick reminder, all of the episodes on this podcast, including this one, come with timestamps for topics that we discussed and each one has its own blog post. You can find all the links and detailed topics in this episode's show notes.
Kathy (host):
My guest today is Barbara Mason. She is the CEO of Career Pathways Consulting. She's a renowned career coach and HR insider with a passion for helping develop career-oriented teams that will help your business's growth and workplace culture. She has a remarkable track record in positioning professionals and CEOs for significant business and career growth. Join us.
Kathy (host):
Well, hello, Barbara, and welcome to the show.
Barbara (guest):
Thanks, Kathy. Good to be here.
Kathy (host):
Well, it's so good to have you here because we're going to be talking about something truly, truly important in small businesses and that is poor performance. And how do you as a leader deal with it? I work a lot with growing businesses and I see a lot of them struggle with this. Because when I come into the business, and we start to analyze the numbers, a lot of the times what I see is that the issue is poor employee performance. But the poor performance is not the root cause just yet. It's just kind of like one of the layers. And I started calling this the onion problem. You start peeling, and there's more and more layers to fix. So what ends up happening is that, you know, they have financial issues, we dig deeper, and we find that there's poor performance and poor performance is a symptom of other things that are happening in the business that could be, you know, the way how they manage people, maybe there's a hiring issue at the beginning, maybe there's a culture issue, maybe there's a values mismatch, and you know, there's all these issues under there.
Kathy (host):
So I'm really glad that we're dedicating an entire episode on this topic, because one, I would like for business owners to be able to look at this problem and hopefully be able to identify it, what's really causing it and to actually fix it. So let me pause here and ask you this question: What do you see as the drivers for poor performance in the business? I'm really curious, what is your side of this?
Barbara (guest):
Yeah, absolutely. I love the analogy. I've never heard this related to performance, about the onion, because I think you're right, that there are several layers. But if I had to kind of just boil it down to a couple of things that I see when I have been called in to talk about poor performance, a lot of it is leadership and expectations, right? It's amazing to me how expectations are not set in the beginning. And so we haven't clearly defined as leaders what we want the employee to do, but yet we're very quick to recognize, hey, this is not working out. This is not what I want. It seems like we've missed the first step. So the leadership piece is definitely lacking. And then I think just the accountability. So when I say accountability, having the measures in place to where you know sooner than later that something is not going right. And then there is a consequence or accountability to that individual when things are not going right.
Kathy (host):
Let's talk more about this accountability. How does that look like in practice? So let's look at the theoretical example that probably happens in most businesses. You have an employee, they're not performing well, then how do you fix this? Obviously, first, you have to probably have some type of conversation with them. And that is uncomfortable by itself. And we do have great episodes on how to actually have uncomfortable conversations with your employees or your vendors and anyone else that you have to have that with. But I want to talk about what are some of the steps that you need to take once you have identified there's poor performance here. Okay, what do I do first? Have to take a look at is it maybe me that's causing it? Is it truly them? Where do you even start?
Barbara (guest):
Yeah, I think one is just to have an exploratory conversation. And even before the conversation, you as the leader, when you've noticed, okay, there's a performance issue. First thing I would ask is, do you feel like there is an attitude issue? Meaning they just don't want to do the job? Is it a capability issue? Maybe they're not trained. And so try to, at least as a leader, figure out in your own opinion what may be causing it. But I think the first step is to have an exploratory conversation with the employee. And when I say exploratory, meaning it is non-judgmental, when I say casual like, "Hey, Kathy, just want to talk to you about some things that I've noticed. Here's some things that I see that we need to kind of improve upon," right? And so you can ask, "Hey, Kathy, where do you feel like we're missing the mark? Or do you feel like we can do better in this area? What would help you?" Something like that. So first, identify the problem with the employee. And then let's explore how we can be better.
Barbara (guest):
And the reason why I say start exploratory is because you may not be aware that there may be some issues, right? So the employee may say, "Hey, you're right, I haven't been able to get this done, I've been having a problem. Because before I can get my part done, Joe has to get his part done. And I've gone to him several times. And I just don't know how to move forward," right? So there might be something else that's preventing them from getting where they need to be. Or they may be having a personal issue at home, and just say, "You know what, I'm so sorry, my child was sick. She's been up all night. So this week, I know that my performance has dropped. And here's the reason why. And I'm going to get back on track," right?
Barbara (guest):
So that's why I say exploratory, so that you can at least open the conversation, acknowledge there's a problem, but hear from the employee if there are some extenuating circumstances that may be causing the poor performance. So I think that's the first place to start.
Kathy (host):
So once you have this exploratory conversation with them, and let's say that they said, for example, "Dave in operations didn't give me these particular reports that I needed, so I could not do my job the way how I needed to," what do you do then? Do you go talk to Dave and have an exploratory conversation with him as well? Do you bring him into the conversation? Do you do that separately? What's the next step?
Barbara (guest):
Yeah. And I think it depends on the culture of your company, how big your team is, and how much oversight you have. Right? So if you're a small company, and you have a team of three or four people, then I think again, it's better for the employee to go back. So if for some reason Dave is not giving them what they need, as the leader, then maybe you can remove that obstacle. Maybe it's "You know what, you don't have to get it from Dave" or "You know what, tell you what, maybe let me talk to Dave and see how we can get this resolved," right?
Barbara (guest):
If it's a bigger organization, you may say, "Hey, tell me what you tried with Dave? And hey, why don't we all three talk?" So I think that part depends. But at the end of the day, your job as the leader is to help remove the obstacle, whether it's you talk to Dave, you bring Dave in, whatever the case may be.
Barbara (guest):
And then I think the next step in that conversation is again resetting expectations, meaning this is what I want to happen and by when, right? So there's the accountability piece. So let's say for example, in this situation, reports are due on Friday, they've been being turned in on Monday, Dave is the issue. We decide how we're going to talk to Dave. But then as the leader, you say, "Okay, so now that we got that resolved, here's my expectation going forward, is that I have those reports on Friday by 3 pm. If for some reason you're not able to get that to me, then let me know by Friday morning." So there is the expectation.
Barbara (guest):
And so when Friday comes at 3 pm and you don't have a report, and/or they have not said "I'm not gonna get it to you," then that's when you have to go back and have the conversation. And that is the piece that I think many leaders miss, because Friday will come and they don't say anything else, until they get so upset and so frustrated. Two weeks later they never get it and then they want to terminate. And I'm like, "Well, what happened the two Fridays in between that they didn't give it to you and you didn't go back and say anything?" Does that make sense?
Kathy (host):
Yeah, yeah, it does. So what happens if Friday comes and, and a lot of business owners that at least that I could see they get frustrated with as well is that the deadline has come to pass and they said, "Oh, I couldn't give it to you because of this reason." Okay. We'll try to fix that reason. Then the next Friday comes in and then there's another reason. And then the third Friday comes in, there's a third reason. What is the point when you're like, "Okay, I've given them so many chances. And then all these reasons that they're giving are actually becoming excuses." So what is the tipping point there? Number one, and number two, what do you do in that case?
Barbara (guest):
Yeah, absolutely. So let's talk about what you do, because I think the tipping point is going to vary by business, right? And depending on what the task is, how new the person is, there's just a lot of factors that are going to dictate like, "Okay, I've had enough," right? Whether it's time two, or there's time five, but in terms of when you get there of how to handle it.
Barbara (guest):
Again, you're having conversations along the way. I think it's important for the employee to know whatever tasks they're doing, how it associates to the bigger picture. So for example, "Hey, these reports are due on Friday, because I have a meeting with my boss on Tuesday, and it gives me a chance to prepare. So when you don't turn in the report, and I have to now go and dig and find the research myself, which causes me to step away from what I should really be doing, right? And then I'm not prepared to meet with my boss," that's just a classic example.
Barbara (guest):
So I think one, let them know how their part plays in the bigger picture. The second thing is, once you feel like reasons are becoming excuses, I think you have to decide to follow your disciplinary procedure, whatever that looks like. So for some, it may be a written warning, for some it may be immediate termination, but whatever it is, you have to clearly communicate, "Hey, we've had this conversation, you know, three times, I don't see any improvement, you know, and what, you know, whatever that looks like. And so at this point, either we're going to have to do this, or your position is going to be, you know, eliminated or employment is going to be terminated or something like that." But I think it can go many different ways.
Barbara (guest):
But the point is, you have to know as a leader, what is the tipping point? When is that? And make sure that you've had some conversations, that you've given them a chance to improve, right? And you see we're at the point of no return, and then it's time to do something different.
Kathy (host):
And also, I want to ask this too, because I think this is really important. It's like, how do you document these performance issues? Because it could be, and we had another episode on this too, is that employee could come back and say, "Hey, I was not given a fair chance." They could sue you. They could do all sorts of things. So how much do you have to have it written down that this was an issue? These were the steps that you took to resolve, especially when you are a small business? Let's say that you only have 5 or 10 or even 20 employees? I know once you get to 50 employees, there's a different threshold for that. But do you have to have like an official PIP (Performance Improvement Plan) document? Or how does that work?
Barbara (guest):
No, you don't have to have an official document. I think again, let's use some reasonableness here. I think have a conversation and make sure that you document, and I would say at least have two to three pieces of documentation. Now keep in mind, I'm giving an overview because every situation is unique.
Barbara (guest):
But with this pretend example that we're using, let's say you have the first conversation, you're gonna document that - "Talked to Kathy on January 1st about turning the reports in on Friday at 5. Also talked to Dave, set the expectation." You know, next Friday comes, there's a reason why. You go back to talk to Kathy that Monday, "Hey, what happened?" She gives a reason. So you're going to document that again. And when I say document, it's literally "Talked to Kathy, reset expectation, asked her to do XYZ, did not happen." And you're gonna document that, right, two to three times.
Barbara (guest):
And I think that is sufficient enough for whatever you need to get done, again provided there's no extenuating circumstances. And there's no discrimination involved and things like that. That's a pretty boilerplate example of what you can do. As the leader, you need to feel comfortable that you set the expectation, you gave them a chance to improve, and you told them exactly what they needed to do to improve, like whatever the expectation is. And you went back and followed up.
Kathy (host):
With the businesses that you work with, have you seen that there's generally a certain type of process that they have? For example, you know, three strikes and you're out? Or maybe there's an actual termination for certain things that needs to happen if they're not happening in the right place or the right time? I mean, what have you seen that other businesses do to make this easier on themselves?
Barbara (guest):
Yeah, absolutely. So I think having a written disciplinary guideline and process is key. And so what I encourage my clients to do is to document what your disciplinary process is. A very simple one that is pretty effective is to have, you know, a three-step process. And we divide performance into two categories: one is conduct and two is poor performance. The difference is conduct is something that they do that violates a policy. So let's say for example, you own a boutique, and they're stealing, we're not going to go through three steps for them stealing, right? That's an immediate termination. That's a conduct issue, they violated a policy. Poor performance is I'm coming in five minutes late every time I have a shift. So for the disciplinary process, we outline for conduct issues, and we identify what those things are - theft, fighting, whatever, those are immediate termination. For poor performance, we go through the steps: verbal warning, written warning, termination. That's a very simple way to do it. It's a three-step process. So in our example that we've been talking about, when you go and have that exploratory conversation, that can be your verbal warning if you want it to be. Then, if they don't do the second thing, then you're going to put them on a written warning. "Hey, you know, Kathy, we've talked, you know, for three weeks in a row, and we're still not getting the reports on time. At this point, I'm gonna give you a written warning, the very next episode is going to be immediate termination." So with that process, you have a verbal warning that you've got, even though it's verbal, you've documented, "I talked to them on this date." Then you have a written warning, that's a second piece of documentation. And if they're on written warning, they know the very next thing is going to be up to termination. So when you terminate, you have your framework, you have your disciplinary process that says, "This is what we do," and you followed it. And you have the documentation. I think this is very clear and this was super helpful.
Kathy (host):
But let's talk about the scenario where you as a business owner, you know, you're growing the business, things are not as clear as you would want it to be. Like, for example, you're just putting a certain process together, you don't really have the right… You need someone to build it from the ground up for you. You don't have those clear identifications of "I need to do this, I need you to do this, I need you to do this." So you cannot verbalize that just yet, but you know that they're not performing well. What do you do in that type of scenario?
Barbara (guest):
So one of the things I would do in coaching a leader is my first question is, if there is no expectation, then how do you know that they're not meeting an expectation, right? Because there's always an expectation, whether or not it's documented or communicated, if someone's not meeting it, then there's an expectation, right? So it can't, it's not just a feeling, it's something that you're like, "Hey, they did this, I would have rather them do this," right? So there is an expectation. So with that, it's going back through the same steps - making sure the expectation is clear. Now to your point, it may not be written down as a procedure, or as an SOP. But still, you can have a conversation. So for example, let's say you don't have an attendance policy that's written down, you're just starting, it's you know, we want to be flexible, we want to have work-life balance, but yet you have an employee that is taking extra lunch breaks, or is always 10 minutes late, right? Even though you don't have it down, you can still address it and say, "Hey, your shift starts at eight, I noticed, you know, it started off you were coming in on time. And now I see each day you're getting later and later to where you're about 15 minutes late every single day, I need you to go back to being you know, on time, I can give you a five-minute grace period, past that I need you to be on time for your shift." It's just that simple, right? So even though it may not be a written attendance policy, you can still address behavior and say, "You're doing this, I would prefer that you do this."
Kathy (host):
Yeah, that's good. And also when you're growing a business, and you're starting to hire people, especially when you're doing a lot of hiring, when the business grows, you might come into a situation where unfortunately, and I've seen businesses struggle with that, too, is that there is this epidemic of poor performance in the business, and they can't really figure out why it's happening. So usually, to me, and I would like to hear your story of it, to me that says that there's something happening in the onboarding process, there's probably… And then the first thing is probably that you're not… The hiring process that you have, how you're hiring people might be an issue, too. So can we talk a little bit more about that?
Barbara (guest):
Yeah, absolutely. So if there's a systemic problem of poor performance, it certainly could be the hiring process. That could be one, but it also is probably stemming from there is no accountability and no expectations, right? A lot of times CEOs have it in their head. They want people to do it the way that they would do it. But they haven't communicated that, "Hey, this is the best way. This is what I prefer, you know, I prefer that you call people back within 24 hours," right? They may be calling people back in 48 hours, right. But you feel like that's too long. But you haven't said that. So again, I think it still goes back to accountability and expectations. In terms of the hiring process, again, if you as the leader or the CEO are not clear on what you want, then it's going to be almost impossible for you to interview and select what you want, if you're not clear on what you need for your business, right? So if you're hiring people, and it's just like, "Oh, okay, they have a resume, they should up for the interview." But you haven't clearly identified what the job is, what type of skill set they need to do the job, then you're probably going to be frustrated, right? So for example, taking an executive assistant, that's one of the first jobs many CEOs hire, if you're only looking at resumes and hiring people, "Oh, they have EA experience," but you haven't thought about, "Well, what do I need my EA to do? What type of personality do I need? What skill set? You know, do I need them to have… Do they need to be able to do also my accounts payable and, you know, order supplies?" And, you know, a lot of times we hire without a clear expectation of what we need. We're just… We're desperate. We're hiring at the last minute and it's, "Oh, I like them because they went to such and such school," or, "Oh, their resume looks good," but we don't have clear criteria. So that also goes back to poor performance. Because you've hired the wrong person, they're not capable, again, going back to the capability versus attitude, they're not even capable to do the job that you've hired them to do.
Kathy (host):
And I've also seen that people are capable on the resume, however, they might not be the right fit for the business too. And I see that a lot when people get super excited hiring, you know, I come from the corporate world, too. But corporate world is very different than a small business world. When you hire someone who, for example, is… Let's say a project manager in the corporate world. And they're used to that structure, they're used to all the systems, they're used to, you know, the layers and the bureaucracy and stuff, it's very different in a small business world, when you don't have that when you have to build basically everything from scratch. So taking someone like that into the small business, it might work, it might not, they have the right skill set, but they might not have the right mindset to thrive in that particular environment.
Barbara (guest):
Absolutely. And that goes back to your hiring process. So that's a great example, if you're hiring a project manager as the CEO, you can't just, "Oh, I'm gonna look at the resume, let me get the one who has the PMP and the most years of experience, they've worked for all these big corporations," you may want somebody who has worked for a small company, you may want somebody you know, where you do some additional, what we call testing, to see what their strengths are, because in a small business, you have to wear multiple hats. You know, if you've only worked for big companies, you're used to a big budget, you're used to somebody else, you know, scheduling the meeting on the calendar, and you just show up. In a small business, you know, you're scheduling the meeting, and you're following up, and you're gonna go get such and such. And so, again, thinking about that ahead of time, helps you dictate what questions you ask, and also how you screen the candidates, right? So that's a very good example, I've had some project manager positions before, for small businesses. And, again, have you worked with a small business, have you worked with a nonprofit, have you worked… If they've only worked for Fortune 500 companies, they may not be the best fit for you, because they don't understand the constructs of a small business, and the limitations as well.
Kathy (host):
And they're also going to be frustrated, and you're going to be frustrated, and it's just not going to be a good fit. So and also, I want to go back to your point of owners wanting their employees do it, how they do it, I think there's also this misconception of "I'm going to hire someone and you know, I have the process that I'm going to replicate, and they're going to do it exactly the way I want it." I think the problem there too, is you are the owner, that is essentially your baby in your business, right? The employees are a step removed from it, they're not so emotionally invested in the business. Obviously, if you hire the right people, they're gonna want to be able to help you and help you thrive, but they are not so viscerally connected to the business and they never will be.
Barbara (guest):
Absolutely, that's a great point. And again, there are multiple ways to get something done. And so I think as the owner, this is where delegation comes in, and a lack of control. Because being a leader, you have to delegate, you set the expectation. And as long as we get to point B, and it's done in an ethical way, a way within your culture and all that, then it should be okay. It doesn't have to be done in the order that you do or in the way that you do it. Unless that order is specific to how the product or the service is delivered.
Kathy (host):
So that's where the whole idea of micromanaging comes in. And absolutely, you can burn yourself and your employees out. So just… Yes, don't do that. So the businesses that you work with, when they struggle with this type of issues, do you have an example of someone that was really struggling with their poor performance in their employees, and how you were able to… What are the steps that you implemented to help them with that? I always like to give like real examples of the real world.
Barbara (guest):
Yeah, absolutely. So one of my clients is a boutique travel company. And when I started with them, they were I would say, within like a million dollar business, they're now like, a $20 million business. And in like three to four years, they grew really, really fast. Once they started hiring a team. When I first started working with them, they were solo, like they only had contractors, they did not have any W-2 employees. And so as we grew the business by hiring a team and things like that, the CEO, of course, was the one giving feedback or not giving feedback and managing expectations. But it's different when you have one W-2 employee and now you have seven or eight, right? So in that first year, they grew extremely fast. And so the issue of poor performance really was something that we could resolve, it was the CEO just didn't have time to deal with it, like, deal with giving expectations, inspecting what you expect and all of that. So one of the things we did in year two, as we started to continue to build a team was we started to hire some leaders. So a leadership layer where she had an operations person. So the operations person was responsible for the employees, no longer the CEO, right, because as you continue to grow your business, you don't have the time to manage the people. And so instead of hiring 15 individual contributors, at some point, you need a level of leadership, a manager in between you and them to help manage that performance. And so once we did that, and that person had more direct contact, more direct accountability, performance was easily turned around.
Kathy (host):
And that's that Chief of Staff type of position where they go to them. So they're the leader, and you become the leader of the leaders, not the leader of the individual contributors.
Barbara (guest):
Absolutely.
Kathy (host):
You know, what do you do in that situation? It's kind of a chicken and the egg situation because you have poor performance, it affects your financial picture, obviously, you cannot afford to hire someone who is going to be your in between, between the people and you. And because you can't do that, the financial performance obviously goes down, because you do not have the time and the skills to be in the business all the time to see what these people are doing. And on the other hand, you have a really hard time doing this as the business grows. What do you do in that situation when financially you cannot afford to have that layer in between? That's that layer, right?
Barbara (guest):
It has to be you. I mean, that's, that is the answer. If you don't have the money, or are not willing to invest in hiring another person, until you do that, it has to be you. Otherwise, there's nobody else to do it. Right? If you have only a team of individual contributors, and none of them are leaders, you are the leader. And so you have to do it. And so you have to create spaces and opportunities to make it easier for you. So one of that is having documented processes, right? And so when you think about building a business, it's like building a house, right? You don't do the windows first, you build a foundation. And what a lot of people do, they start a business, it's an idea, it's a service, it's a product, it goes well, and like, "Oh man, now I'm making money. Oh, now I'm making lots of money. Okay, let me hire somebody," right? But we don't think about the infrastructure. And so when you have employees, you need infrastructure. And part of that infrastructure is documented processes, SOPs, policies, guidelines, and it seems like, "Oh, I don't have time for that," you don't not have time for it. Because that's what's going to help save you, as well as help expedite your ability to manage people, because you have something written down.
Kathy (host):
That's really good. The infrastructure. And I see that too in businesses that I work with. You need infrastructure with everything - with your operations, with your financial systems, with the way how you do your sales, the way how you do marketing, the way how you do it all. Once you start growing, you know, when you're small, like maybe up to like $3 million, you have a couple of people, you might be able to even carry a lot of that yourself too, because depending on the product or service that you're selling, but once you really start adding more people to it, you need that structure to support you. If you don't have it, this is where problems start happening. Absolutely. So Barbara, we gave a lot of… There's a lot of information in this podcast. If someone's listening, let's say that they have performance issues with their employee, they have no idea where to even start. Obviously, like I said, you know, it's an onion, then you just keep peeling, there's layers. What is one thing that if they're really struggling right now, with this performance issue, what is the one thing that they can do in the next week or two to fix that? Something actionable.
Barbara (guest):
First of all, figure out what your performance issue is, and have a conversation with the individual. That is the quickest action because you're going to find one or two things. Either the person is going to respond positively, or they're not going to respond positively. Right. And so that is the first step, you have to address the elephant in the room. And let's just say it's no one's fault. Let's say, you know, as a leader, "You know what, I didn't set the expectations. And so we're where we are, because I didn't do what I was supposed to do." Let's just say that's the thing. Then you go to the employees, like, "Hey, I know we've been doing it this way. And I know that this is kind of how you were brought in. Here's what we need to do to change course. Now I need you to start doing this. Tell me what you need from me to help you to be able to do that." That is the first step. That's really good.
Kathy (host):
Thank you so much, Barbara. Where can people find you?
Barbara (guest):
Yeah, absolutely. So I'm on social media, on Instagram and on LinkedIn, under Barbara Mason, or my website is www.careerpathwaysconsulting.com. You can go to my website, and you can grab a couple of free resources, as well as schedule a time to talk with me.
Kathy (host):
Fabulous, and we're going to put all of these in the show notes. So if you didn't catch any of that, you can always go to the show notes and get it from there. Thank you so much, Barbara.
Barbara (guest):
Thank you so much, it was great. Thank you.