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What happens when performance management systems do not work as intended, as in the case of Sally’s organisation? What are some of the negative consequences associated with low-quality and poorly implemented systems? Consider the following list:
1. Employees may quit due to results. If the process is not seen as fair, employees may become upset and leave the organisation. They can leave physically (i.e., quit) or withdraw psychologically (i.e., minimize their effort until they are able to find a job elsewhere).
2. False or misleading information may be used.
If a standardized system is not in place, there are multiple opportunities for fabricating information about an employee’s performance.
3. Self-esteem may be lowered. Self-esteem may be lowered if feedback is provided in an inappropriate and inaccurate way. This, in turn, can create employee resentment.
4. Time and money are wasted.
Performance management systems cost money and quite a bit of time. These resources are wasted when systems are poorly designed and implemented.
5. Relationships are damaged. As a consequence of a deficient system, the relationships among the individuals involved may be damaged, often permanently.
6. Motivation to perform is decreased.
Motivation may be lowered for many reasons, including the feeling that superior performance is not translated into meaningful tangible rewards (e.g., pay increase) or intangible rewards (e.g., personal recognition).
7. Employees suffer from job burnout and job dissatisfaction.
When the performance assessment instrument is not seen as valid, and the system is not perceived as fair, employees are likely to feel increased levels of job burnout and job dissatisfaction. As a consequence, employees are likely to become increasingly irritated.6
8. There is increased risk of litigation. Expensive lawsuits may be filed by individuals who feel they have been appraised unfairly.
9. Unjustified demands are made upon managers’ resources.
Poorly implemented systems do not provide the benefits that well-implemented systems provide, yet they still take up managers’ time. Such systems will be resisted because of competing obligations and allocation of resources (e.g., time). Worse, managers may simply choose to avoid the system altogether.
10. Standards and ratings vary and are unfair. Both standards and individual ratings may vary across and within units, and may also be unfair.
11. Biases can replace standards.
Personal values, biases and relationships are likely to replace organisational standards.12. Mystery surrounds how ratings were derived.
Because of poor communication, employees may not know how their ratings are generated or how the ratings are translated into rewards.
The process of building and maintaining a performance management system for your employees isn’t the easiest thing your company will ever do, but It may be one of the most beneficial. Speaking of all the benefits a great performance management system is inspirational, but the consequences of a poorly developed employee performance program can be detrimental.
Poor Employee Performance Structure creates…
Even the most experienced and studied manager will bring a bias in the performance management process. Most of the bias that appears in performance management is unintentional, which makes it more difficult to detect and solve. Unfortunately, that means the employee and manager might not realize the appearance and the issue will go undiscussed, but be felt.
Recency bias, for example, is common for programs that do not practice continuous feedback, or have long breaks between reviews. This particular bias happens when recent events drown out employee performance as a whole. A mistake the employee may have made last week, overshadows the last 3 months of stellar performance.
- Loss of Employee Confidence
Performance management should have a healthy mix of constructive and positive feedback. If one overpowers the other too much, there is either a miscommunication, a misunderstanding or a missed growth opportunity. Performance management systems that lack structure generally are more reactive than proactive, which means employees only hear from managers when they have done something that can’t be ignored. This often means when he or she has messed up. This will take a toll on employee confidence and motivation.
Did you know? 30% of performance reviews end up in decreased employee performance.
Fair and organized performance management systems are backed by data and recorded documents. These pieces support performance reviews and manager feedback, giving depth to the conversations and decisions made by the company. This will protect the business in the case of any legal intervention.
One survey found managers spend an average of 210 hours a year on employee performance-related tasks. While managers should be dedicated to spending a fair amount of time on their subordinates, it’s safe to assume some of these hours are not being well spent.
Did you know? Companies that practice regular employee feedback experience 15% lower turnover rates.
From outdated technology, to lack of resources, to little support from executives, the list of obstacles a manager faces can add up. The result is an overwhelmed manager with vague reviews, possibly nonexistent supplemental feedback and disengaged employees. Continuous feedback with the right tools and technology can provide employees with desired feedback while giving managers an active record of performance.
Did you know? 79% of business leaders believe they have a significant retention and engagement problem.
Building a business model that provides continuous income is important to the financial future of an organization. Creating a performance management program that builds, retains and supports the growth of employees is just a pivotal.
There are so many risks associated with poorly planned performance management programs. Which ones have you witnessed or experienced? Share your stories with us on Twitter @Trakstar_hr.
Performance and performance management is a major challenge in today’s workforce. Issues with performance management lead to tremendous financial losses globally, for businesses of all sizes, and across every sector. Even more concerning is the fact that, if left unmanaged, problems with performance often lead to loss of competitiveness within entire industries.
In this blog, we’ll outline the seven most common problems with performance management, and we’ll discuss solutions that companies can implement to mitigate those issues.
What is Performance Management?
At a very macro level, performance management represents the approaches, processes, procedures, tools, and techniques, employed by businesses, to monitor, assess and enhance employee performance across the organisation. The primary goals of performance management are to:
- Increase employee efficiency
- Enhance organisational productivity
- Maintain and sustain competitiveness
- Reduced input time and cost
- Improve profitability
- Discourage high employee turnover
The ultimate result from accomplishing these goals is about understanding employee motivation, supporting development, and helping them find the best path forward -- which can be within the organisation or outside of it. However, problems with performance management systems – IT-driven or manual workflow-based - can seriously impact an organisation’s sustained ability to create productive workforces that deliver optimal performance. Let’s review some common performance management problems and possible solutions that’ll put organisations on a path to better performance.
Seven Common Problems with Performance Management
Organisational performance management systems are the best way to measure and manage employee performance. However, not all businesses have performance management software that either work well or delivers optimal value to the company. Here are seven common issues with performance management systems to focus on:
- Competencies/Skills gaps: Organisations are unaware of the skills gaps in individuals, positions, or groups that they manage. As a result of this lack of awareness, managers are often blind to the skills possessed by their employees, and those needed by the organisation.
- Irregular performance activities: There is a lack of regular performance review and management activity. As a result, organisations remain unaware of performance issues festering or entrenched within the workforce – until the next scheduled performance appraisal.
- Lack of Objective Assessment: Too often, employee performance is left to the opinions of a manager. Needless to say, even the most effective manager’s objectivity may be questioned if they deliver less than glowing evaluations.
- Irrelevant job descriptions: In most organisations, the job description is the primary tool against which performance is measured and managed. With irrelevant or vague job descriptions, employees are left guessing what their performance expectations are, and managers struggle with managing those vague expectations.
- Inadequate feedback: It’s insufficient, as a performance management measure, to only let employees know how well or poorly they perform. Feedback must not only review and highlight performance gaps but must also include clear paths to performance improvement.
- Inadequacy of formal appraisal systems: One issue with performance management systems is that they are often too formal. These systems are inadequate because they are typically scheduled as an annual or bi-annual process and often conducted using a template/cookie cutter-based system. Over-reliance on solely formal appraisal systems is often inadequate when it comes to timely and in-the-flow-of-work performance management.
- Absence of a “plan” for addressing below standard performance: Highlighting performance gaps is of no value unless there’s a plan to address those gaps. Lack of a performance improvement plan leads to a wasted performance management opportunity.
Addressing these issues can not only lead to improved manager and employee performance but can also result in enhanced organisational performance. But, how do companies address these challenges?
The Road to Better Performance Management
Here are some common-sense solutions to the performance management challenges discussed above:
- Competencies/Skills gaps: Competency gaps must be highlighted for improvement and better performance management, and then proactively addressed. Appraisers may suggest more training, better supervision, or even assign coaches and mentors to address such gaps.
- Irregular performance activities: As part of a robust performance management process, frequent appraisals, check-ins, and other feedback are essential. Don’t restrict performance improvement feedback to just annual/bi-annual cycles. Real-time feedback (in-the-flow-of-work) management (observe, instruct, encourage, coach, and evaluate) can lead to better performance at all levels.
- Lack of Objective Assessment: Suggested tools to address objectivity in assessments include implementing systems such as 360-degree appraisal, on-the-job-assessment, management by objectives, peer reviews, and trait/behaviour-based appraisals.
- Irrelevant job descriptions: Clearly explain an employee’s role within a team and the larger organisation, discuss performance expectations, and ensure clarity around how performance is measured. As part of the job definition, set achievable and measurable (SMART) performance objectives. Link company goals to an individual's job description, and their performance against those descriptions.
- Inadequate feedback: The root cause of such inadequacy often lies in either cursory feedback (“Needs improvement” or “Work on communicating better”), or providing feedback long after a potentially “teachable moment” has passed. Giving concise, yet clear feedback, and across a broad spectrum of performance metrics, is a great way to address this issue.
- Inadequacy of formal appraisal systems: Performance management shouldn’t be primarily a “timed” or overly formalised process. When managers and supervisors act as front-line coaches, or “in the flow of work” or “in the moment” performance appraisers, their actions will have a significantly better impact on performance than the bi-annual or annual systems of measurement.
- Absence of a “plan” for below standard performance: As part of a performance management plan, implement a robust performance support system. Components of the plan include consultations and counseling, recommendations for additional training, suggesting refresher courses, continuous skills improvement, or assigning mentors.
Organisational performance (i.e.: profitability, competitiveness, brand loyalty, reputation, pricing power, market share growth) depends on a high-performing workforce. And getting employees to perform at optimal levels depends on better management of that performance. If supervisors don’t do a good job of performance management, or if inherent problems with performance management systems are continually ignored, organisations may also lose talented and experienced employees to the competition.
Still feel unclear on where to start with your performance? We can help.
Kineo offers Totara Perform, the revolutionary performance management software built with Kineo managed services at the heart. Perform integrates with your business and gives you the power to set and achieve your performance goals. Book a demo or chat with our experts.
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