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Why Your Performance Management System is Failing

ByStuart Hearn, writer
Feb 28, 2017
> Human Resources

If your company isn't performing well, watch out for these missteps

Companies that are failing to live up to their true potential tend to have one thing in common: their performance management systems are inefficient, unclear, unhelpful, and disjointed. Companies failing to make full use of their existing performance processes waste an incredible 30% of their performance potential. On top of this, only a tragically low 14% of organizations claim to be happy with their current performance management system.

Done right, performance management stands to revolutionize a company, boosting productivity, employee engagement, and workplace morale. For this reason, leading conglomerates spend a substantial amount of time and money rehauling their existing processes in line with research and performance trends. If you notice your employees are listless and unmotivated, or if your profits are plunging, it might be necessary to reassess your evidently faulty performance management system.

In order to rebuild, it is important to first assess how and why your system is failing to produce results.

You’re not keeping up with evolving performance management trends

All HR executives should be well aware of the fact that performance management is an ever-changing field. New research is constantly being conducted, and our understanding of psychology and what motivates employees will continue to improve in the years to come. As such, flexibility is a necessary part of performance management, as is the ability to keep familiar with current performance management trends.

Ten years ago, leading companies such as General Electric were fairly united in the belief that stack-ranking and number-based means of judging performance were optimal. Recently, however, evidence has come to light that refutes this. Reducing employees to numbers can be tremendously detrimental, creating a fight-or-flight response in the brain. In response, General Electric has abandoned its stack-ranking system, as has Amazon. This is just one example of how performance management is constantly in flux; the best systems are aware of this and adapt as necessary, for the benefit of the organization and its employees.

Employees aren’t receiving regular one-on-one meetings

Yearly performance management reviews are now a thing of the past. When performance discussions are simply an annual event, they become irrelevant and unhelpful. Communication and feedback are more important than ever. As such, forward-thinking companies have begun to implement a continuous form of performance management, which involves weekly or bi-weekly performance discussions.

At first, managers might make excuses and claim there is simply not enough time to incorporate weekly one-on-one meetings with employees. However, given the necessary informal nature of the check-ins and their frequency, they tend to be short and tremendously productive. They are known to increase employee engagement, keep employees motivated, and improve communication between manager and employee. This method means employees can solicit feedback, explore current issues, and discuss goal progress.

You’re not making use of modern technology

We live in the digital age, and the majority of society relies heavily on technology to structure their lives and keep them organized. We utilize it in every single aspect of our lives. There is no reason, therefore, why it shouldn’t be at the heart of our performance management systems.

Companies can use it to keep employees connected, using team communication and collaboration tools such as Microsoft Teams and Slack. They can also use performance management software to keep track of employee performance, goals, and personal development plans. Paper-based systems have no place in a competitive organization and will only serve to slow processes down.

Your focus is in the wrong place

When constructing or adapting a performance management system, HR executives should remember the value of their employees. Each and every individual on a team serves a unique and integral purpose and, as such, they should be respected. Special attention should be paid to whether or not the employee experience is positive, how to improve it, and whether or not the workforce at large is engaged. If they are not, measures should be taken to resolve this.

At all times, it should be remembered that performance management is not only about keeping upper management happy. If this is your focus, the inevitable repercussions are high employee turnover, which will come at a serious cost.

Your existing system is far too complicated

Michael Armstrong is a leading researcher and author in the area of performance management. In his book, Handbook of Performance Management, Armstrong insists that the ideal performance management system should be “ridiculously easy to understand.” Overly complicated processes will be frustrating and counter-productive.

When considering your existing performance management system, take care to ensure that the system should be straightforward, intuitive, and simple. Managers and employees shouldn’t have to spend hours getting to grips with new processes and performance management tools. Remember, processes should be adapted to suit the needs and culture of your organization — not the other way around.

Image from Shutterstock

Stuart Hearn
Stuart Hearn
See Stuart Hearn's Profile
Stuart Hearn has twenty years of experience in the HR sector. He co-founded plusHR, a leading UK HR consultancy, and previously worked as International HR Director for Sony Music Publishing. Stuart is currently CEO of Clear Review, an innovative performance management software system.
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