Managing Employee Performance With good management skills, you can evaluate the performance of your employees and even inspire them to do better.

Q: I own a small manufacturing company. I can't afford to hire an industrial engineer to set standards, but I need some advice on what is reasonable to expect regarding the performance of my production employees. I don't know if I should hire more people or expect more out of my current employees. Do you have any formulas or tips?

A: The question about how much employees can do at work should be answered in the context of how much can they do safely (particularly as it relates to overuse injuries and strains) and how much a person can do without becoming stressed-out psychologically.

Regarding physical stress, people are able to do incredible amounts in the short run. But when the work involves manufacturing, you would have to limit production rates if employees were producing at rates that could not be sustained without causing overuse injuries such as carpal tunnel syndrome and arthritis.

The amount that a person can do without stress is a function of whether he or she is managed by positive or negative reinforcement. Positive reinforcement is an antidote to stress. If positive reinforcement is the dominant way people are managed, they can perform at very high rates for extended periods of time with no negative side effects. Negative reinforcement, on the other hand, triggers stress-related illnesses and complaints of job burnout.

Next Step Positive reinforcement really works when it comes to motivating employees. For more details on techniques you can use in your business, consider this advicefrom Ken Blanchard, author of The One Minute Manager. Want to transform your work force into a team of high-performers? Learn lessons from real-life case studies in Peak Performance: Aligning the Hearts and Minds of Your Employeesby Jon R. Katzenbach. Bringing out the Best in Peopleby Aubrey Daniels offers step-by-step guidelines that aim to help managers maximize the performance of employees.

It's impossible at this point to know what the limits of performance are, even in situations where people have worked for years. In many situations where we worked with supervisors to improve the performance of the poor performers in a work area, invariably the best performers also improved.

One way to get an estimate of what can be done in your situation is to look to the best performer in the job. This tells you what can be done. If you compute your average performance and compare it to the average of your best performer, you have a measure of the potential improvement. In his book Human Competence: Engineering Worthy Performance, Thomas F. Gilbert shows that among competitive athletes, even a small change in performance can make a huge difference in outcome. On the PGA tour, for example, the golfer who is 100th in scoring average would need to improve his game by less that 3 percent to become number one.

Sometimes, however, the gap between the best performer and average performers is quite significant. In many jobs, sales being one example, the best performer is frequently several hundred percent better than the average. Performance gaps of this nature are actually quite common in business, and they represent a huge potential for improvement among current employees. Even if you think it's impossible for everyone to perform at the level of the best performer, think what your improvement potential would be if you got everyone up to the current average performance.

Whether the variance among your performers is large or small, by computing the difference between the best and the average and multiplying that number by the number of performers in that job, you can get an idea whether you need more people or whether you need to concentrate your management efforts on improving the performance of the ones you have. If the difference is large, it's better to work to improve the performance of the employees you have. If the difference is small, you probably need to hire additional employees.

Aubrey C. Daniels, Ph.D., founder and CEO of management consulting firm Aubrey Daniels & Associates (ADA), is an internationally recognized author, speaker and expert on management and human performance issues. For more about ADA's seminars and consulting services or to order Aubrey's bookBringing Out the Best in People: How To Apply The Astonishing Power of Positive Reinforcement, visit www.aubreydaniels.com, or contact Laura Lee Glass at (800) 223-6191 or lglass@aubreydaniels.com.

The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.