I met two young entrepreneurs recently and during our discussions they brought up their woes on unsatisfactory employee performance. “Is it because we are a small company that we are not able to attract and retain productive employees for our company?”

For those who have had the same woes, ill give you my two cent of wisdom corrugated over numerous years in the HR field, whether you are a large or small company you need human resources policies, procedures and strategies if you are to attract and retain key personnel that will help your business grow.

With human nature being what it is, employees will test limits and act "less than appropriate" in workplace situations, so you need a strategy for developing, communicating and enforcing a set of policies and practices that reflect your standards of acceptable behavior and expectations. This is because the focus in business is not just about meeting specific goals, but also about how you achieve them. And the "how" affects the liabilities you create in the process. A successful human resources policy, procedure and strategy will do more than draw boundaries; it will also recognize and address people's needs so at to create a working environment that is conducive to high productivity levels.

So how can we make sure our employees have clear understanding as they work to help build our company? Well, the answer to this question is found in developing human resources policies and procedures centered on four key elements: roles, rules, consequences and tools.

Roles

One of areas I noted about the entrepreneurs company was that their employees did not have a clear understanding of their role in the company as well as the roles of others. We discussed this and although they felt the titles of the employees was adequate they later agreed with me that every successful team needs well-defined positions for all its members. Everyone needs to know what he or she is to do, how to do it and how their performance can impact those around them.

In business, this means you need to have clear reporting structures that spell out who's in charge and how tasks are to be accomplished in the organization. Role definition is a fundamental part of establishing clear performance expectations for each employee.

Rules

The entrepreneurs had only three employees when I first met them and felt that they all knew the rules on the company. However, on discussion with the employees, they came to realize that the understanding of each employee of the rules of the company was different.

Employees need to share a clear understanding of what is and what is not acceptable behavior within the company. Unfortunately, in today's workplace, an employer can be held liable for the bad behavior of an employee, especially when that bad behavior affects other employees, clients or individuals. Having a clear set of behavioral expectations is critical to establishing behavior expectations in the company.

Setting clear and specific behavioral standards in the form of rules establishes a framework for spotting and addressing violations of those standards. If you rely on loosely defined general standards that aren't properly documented, then violations become subjective and open to interpretation. The result of such ambiguousness is often litigation.

Consequences

Rules without clearly laid out consequences do not make any impact within among the employees. The entrepreneurs therefore saw that it was important to have clearly stated consequences for violations in behavior and performance standards so that the employees knew what to expect and have fair warning of those expectations. In addition, clear consequences would help to ensure that the entrepreneurs were not limited to their options for dealing with improper behaviors.

To establish these standards and violation consequences, the entrepreneurs would sit down and think through the over-the-line behaviors that won't be permitted in your company. It's essential that you know ahead of time what employee actions require an immediate dismissal. Similarly, you want to know what performance issues may qualify for a more progressive disciplinary approach, and then define the steps involved in that approach.

By nature, people are complex beings who will confound you one minute and astound you the next. And except for violations that warrant immediate firings, it's usually a wise, compassionate and financially prudent course to help people strengthen their character by overcoming their weaknesses. Also, this approach provides you with a way to retain experienced employees and recover your investment in their training.

Business owners are often disappointed in an employee's performance even though they never clearly communicated their expectations to that employee. If you don't take steps to set clear expectations, the consequences you administer for failure to meet those expectations can seem unfair. This is extremely important because an employee who feels they've been treated unfairly can create a great deal of liability. In many cases, the key issue is not whether they were actually treated unfairly but whether the employee feels or perceives that they were treated unfairly.

And it doesn't stop with the affected employee. If you haven't clearly communicated your expectations to one employee, chances are you haven't done so with other employees as well and they can be quick to empathize with any affected employees. It's natural for employees to wonder, "What if that happened to me?" To avoid the negative effect such a chain-reaction can have on your workplace, be clear about your expectations with all employees at all times. Most employees will appreciate and respect your forthright clarity.

Tools

Tools address the question of how you support the people in your company who manage other employees. When faced with a specific personnel issue, what resources are available to them? Do they have an employee handbook or a policy guide? What about simple, easy-to-use forms to guide them when dealing with particular issues? Are you giving them a clear directive on working with your human resources personnel?

The entrepreneurs understood that tools would not only help to avoid litigation, but also to minimize the time it took for them to deal with productivity-draining people issues instead of core business matters.

When we finalized our discussion my two entrepreneurs, it was clear that performance improvement is really about the process of setting expectations and meeting them. Building a great company has a lot to do with how people work together. Policies and practices can improve the way your employees interact, while minimizing the personnel obstacles that often arise in today's workplaces.