When you’re contemplating how your business can rise to the next level, you might turn to an internal performance audit to gather information on the overall health of your organization. After all, audits provide a way to systematically analyze how your employees and locations are adhering to policies, procedures, and requirements. It also doesn’t hurt that auditing practices have been around since the 1800s.
But while you may have accepted them as standard practice, audits might not be all they’re cracked up to be. In fact, your company’s penchant for internal performance audits could actually be causing long-term damage to employee morale and your business.
Audits Elicit Anxiety In Employees
Most companies embrace audits as a way to track progress and gather information without constantly monitoring employees, but this practice has unintentional side effects that can damage employee morale:
1. Audits encourage an uneven distribution of effort. When you perform one or two major audits per year, it causes your employees to take on the same performance schedule: During the audits, they perform at their best; when the audit is over, they relax their efforts. This infrequent review causes employees to feel that the company only cares about the results of the audit. Employee performance — and the experience your customers have — sags between audit cycles.
2. Audits can cause confusion. Audits provide a one-size-fits-all approach to performance. If a location-wide audit goes well, employees celebrate — regardless of individual performance. And if the audit goes poorly, even top-performing employees get dinged. Without specific, personalized goals, employee motivation stagnates, and divisions arise between employees and management.
3. Audits put employees on the defensive. Audits put high-performing and low-performing employees on the defensive. Employees in need of improvement come away from the review feeling attacked and discouraged, and exceptional employees feel like they’ve survived a witch hunt.
Audits Hurt Your Company
Even if audits enabled your employees to function at their best, your company might not escape the heavy toll they take on resources and customers’ experience.
1. Audits interrupt the flow of business. What do you think is at the forefront of an employee’s mind when he’s being evaluated during a high-pressure audit? Customer needs? Industry best practices? Probably not. When your company prioritizes periodic audits, your employees are focused on their performance reviews — not your customers.
2. Audits promote a false sense of reality. Most audits operate as a fire drill. When auditors arrive, employees scramble to put their best foot forward, regardless of how they perform on a daily basis. The company comes away with a random score, and employees go back to doing what they were doing in the first place — for better or for worse. This reality gap between employees and management prevents anyone from seeing the big picture.
3. Audits drain resources. Any audit worth performing requires a serious time commitment. Time is required for planning, traveling, and implementing, and then gathering, analyzing, and reporting on the data. That’s all before you decide how to move forward with the recommended actions. This is valuable time that your management team could spend creating strategies and actions that will move your company forward (rather than evaluating what’s already happened).
Solutions for Moving Beyond the Audit
Fortunately, audits aren’t the only way to build and evaluate effective company processes. Here are three strategies for building up employee confidence and achieving consistent, high-quality performance:
1. Focus on incentives, not penalties. The purpose of an audit is to identify bad habits and eradicate them, but audits naturally focus on penalizing bad habits instead of rewarding good habits. This keeps your employees in a negative, stressful cycle of trying to avoid doing anything wrong — not trying to do things right.
Positive feedback is almost always more effective in producing desired performance behaviors in the workplace. Use this to your advantage. If possible, add a bonus component to the salary package based on a positive score, and move the needle up every year until you reach the results you want. Provide financial or tangential incentives for every behavior you want to improve, from sales calls to tidy workspaces.
2. Recondition employees to embrace honesty. Over time, audits condition employees to hide or ignore problems to avoid negative consequences. By the time senior leadership becomes aware of a problem, it’s turned into a more serious one.
Very few people can be perfect 100% of the time. Rather than keep employees quiet with audits, open the forum for honest communication, and reward employees who address problems before they become serious. Embracing mistakes as part of the learning curve and focusing on the positive will coax higher performance out of your entire team.
3. Choose small-scale audits over large-scale audits. Gathering data or tracking long-term performance isn’t an inherently bad practice — it’s the once- or twice-a-year part that makes auditing ineffective in providing employee feedback.
Instead, create a system of checks and balances that encourages accountability and oversight on a daily basis. This allows employees to make small, incremental improvements to their performances that will last, rather than infrequent periods of information overload.
All business owners want to understand how their company works and how they can make it run more effectively. You can achieve this goal without the morale drainers that come with traditional auditing practices. Use these strategic updates to your company culture to reap the benefits of the audit without the damaging side effects. Accountability doesn’t have to lead to apprehension.
Sam Bahreini, a seasoned operations officer and agile entrepreneur, is co-founder and COO of VoloForce, a company that helps enterprise retail brands understand organization implementation through automation and simplification.