Why Your Performance Management System Is Failing

By business.com editorial staff,
business.com writer
| Updated
Jun 01, 2020
Image Credit: fizkes / Getty Images

If your team isn't performing well, check for these problems with your performance management system.

  • Companies waste approximately 30% of performance potential due to not utilizing their management systems effectively.
  • Stay up to date on management tool trends to ensure you're using the latest strategies to evaluate employee performances. Along with evaluation, follow-up is essential to making the most out of performance reviews.
  • Documentation is an important feature of performance management systems. The system should also be consistently updated.

Companies that aren't living up to their true potential tend to have something 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 substantial 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 performance management system. In order to rebuild, it is important to first assess how and why your system is failing to produce results.

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 familiarity 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, GE 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.

2. Employees aren't receiving regular one-on-one meetings.

Yearly performance management reviews are 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 biweekly 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 managers and employees. This method lets employees solicit feedback, explore current issues and discuss progress on their goals.

3. You're not making use of modern technology.

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

Companies can keep employees connected with 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 only slow processes down.

4. 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 individual on a team serves a unique and integral purpose; as such, they should be respected. Special attention should be paid to the employee experience, 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, you should remember that performance management is not only about keeping upper management happy. If this is your focus, the inevitable repercussion is high employee turnover, which will come at a serious cost.

5. Your system relies on standard measuring tools.

Performance management systems should provide the option to evaluate each employee on different criteria. All tracking tools should be specific to the employee and their role within your company. For instance, you shouldn't evaluate an assistant manager with the same tools as a mail clerk.

6. You're not providing a clear pathway to improvement.

Although evaluation is an important part of performance management systems, they should also give clear objectives on how to achieve improvements. If employees are not told how to get better at their jobs, your performance review system is clearly failing.

7. The system isn't documenting properly.

The performance management system should store and record every evaluation, every feedback session, and all management notes. By having all this information saved, you can justify actions taken based on a performance review.

8. Your system is far too complicated.

Michael Armstrong is a leading researcher and author in the area of performance management. In Armstrong's Handbook of Performance Management, he insists that a performance management system should be "ridiculously easy to understand." Overly complicated processes are frustrating and counterproductive.

Your performance management system should be straightforward, intuitive and simple. Managers and employees shouldn't have to spend hours coming 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.

business.com editorial staff
business.com editorial staff
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