Smaller but not the same : performance management in high-growth SMEs

Abstract

Purpose – The purpose of this article is to explore performance management (PM) practices in high growth, small and medium-sized enterprises (SMEs) and the strategies used to maximise the output of rare resources. In addition, this article explores challenges in managing performance during periods of high growth. Design / Methodology / Approach – This article is an exploratory study of employee performance management within high-growth SMEs. The analysis of twelve in-depth interviews with high-growth SME individuals provides deeper insight into how formal and informal processes are used to manage high performance. Findings – High-growth SMEs rely on informal management practices to build a high performance culture. These practices include building relationships, honest and frequent communication, addressing the diverse needs of their employees, empowering individuals to recognise their value within the firm and utilising peer accountability. Various challenges were identified including perceived unfairness due to inconsistent informal processes, risks management resulting from informal control practices, managing low performers due to limited formal records and neglection of addressing poor performance due to close relationships without honest conversation. Practical implications – This research highlights the need for start-up and small SMEs to manage employee performances for sustained growth to larger SME’s. This groundwork provides insight to build long-term growth. Originality / Value – This article introduces a framework to describe the informal performance management practices of high-growth SMEs. This framework contributes to the understanding of how informal PM practices align with the strategy of the firm.