Do You Need A Performance Improvement Plan – Of Course You Do

Here’s what you’ll find:
● The Six Questions Method for Performance Improvement Planning.

● Specific questions, guidelines and tips for implementing this Method.

As we start to gear up for the end of the year push, it’s time to ask, “Will we develop a written performance improvement plan for our business for the coming year?”

Bring On the Excuses

Sadly, research shows that owners of most established small businesses answer, “No, we’ll take a pass.”

It’s time to beat the odds and change that decision for your business!

You know it’s a smart idea to build a written Performance Improvement Plan for next year. You’ll find no more urgings here for you to do it, or a listing of the many reasons researchers say it’s useful. (See this resource if you do want to learn more.)

Just one brief reminder: “failing to plan is planning to fail.”

The planning process doesn’t have to be painful drudgery. It can be interesting, informative and yes—even fun!

Here’s a straightforward, unusually effective planning method I’ve used with clients successfully over the years.

The Six Questions Business Improvement Plan Method

This structured approach involves exploring six fundamental questions in an extended conversation with others you trust and who know your business. To get the greatest value, start with questions 1 and 2—in that order—and do the rest in a sequence that makes sense for your business.

1: How did we do this year?

What do your numbers say?

  • Top-line revenue
  • Gross and net profit
  • Sales – #’s of units or engagements or projects
  • Amount and types of customers added and lost
  • Cash flow: positive, negative or breakeven
  • Owner and management compensation: more, less or about the same

2: What is the current financial health of our business?

Based on your income statement and balance sheet:

  • What is our independent expert’s assessment of the business’ financial health?
  • How do we grade the health of our business on an A, B, C, D, and F scale?
  • What aspect of our financial performance must improve? Why?

3: In what way did our business improve this year?

  • Financial results
  • Sales results
  • Fulfillment results
  • Staff improvements: in numbers and/or knowledge and skills
  • How do we measure and assess the improvements?

4: What are the two or three major goals for our business next year?

  • Why are these our major goals?
  • How will we measure and assess our progress on and the status of these goals?
  • How will we know if we’ve achieved our goals?

5: What one major business operating function must get better next year?

  • What is the strength of our three main business functions:
  1. Financial and cash management
  2. Customer acquisition
  3. Delivering and fulfilling our promises to our customers
  • Based on what assessment criteria?
  • What will happen to the business if this function doesn’t get better?
  • How will we measure, assess and know whether this function is improving?

6: What is my specific goal to improve my business leadership and management skills and/or knowledge next year?

  • What is the one thing I must know more about—or do better or more consistently—as the owner and steward of my business?
  • How would I assess my overall business management and leadership skills?
  • What does my business most need from me that I’m not giving it now?

10 Guidelines for Using the Six Questions

  • Start in October. Your goal is to have a finished written Performance Improvement Plan by December 31st.
  • Do the first two questions in sequence.
  • Involve your senior management staff, partners, trusted advisors and mentors in the process.
  • Keep each planning and discussion session to no more than two hours.
  • Consider delegating some of the questions—after the first two—to small groups to research, create ideas and provide feedback. Then share what they uncover in your planning sessions.
  • Have one person record the findings from each question and put this in a Performance Improvement Plan document. Your written Plan need not exceed 5 pages in length. It’s not about the number of pages. It’s about the thought, analysis and examination contained in the pages.
  • Distribute the finished Plan to everyone who participated in the process for review and comment.
  • Schedule Plan progress review sessions every monthly and quarter. Consider these review sessions a priority.
  • If internal or external conditions change during the year, adjust the parts of the Plan that are affected by the changes.
  • Take overall leadership of the Plan as the navigational direction of the business in the coming year. Refer to it often. Communicate it to your managers and staff.

The more importance and confidence you invest in the Plan, the more your managers and staff will, too. This will help all of you make your Plan a living, dynamic tool in your business.

The more experienced you get with the Six Questions Method, the better you’ll get at implementing and using it—and the better off your business will be for it.

Key Points

  1. Creating a Performance Improvement Plan is a smart thing and a must-do for established small businesses.
  2. Remember: “Failing to plan is planning to fail.”
  3. The process for building an effective, usable Performance Improvement Plan can be interesting, informative, engaging and fun for you and your managers.
  4. The Six Questions Method of Performance Improvement Planning is relatively simple and unusually effective when you follow the suggested implementation guidelines.
  5. Review your Plan’s progress and, if necessary, adjust the Plan on a scheduled basis, monthly and quarterly.
  6. Having a written Performance Improvement Plan will not—by itself—guarantee the success of your business. Neither will not having one.
  7. You significantly increase the odds of improved performance in your business by having and using a written Performance Improvement Plan.