7 Reasons Performance Management is Failing and What To Do About it

Performance management is top of mind for HR professionals but, in most cases, it’s often viewed as not worth the effort and time. However, performance management is crucial in prioritizing and increasing employee performance and the growth of a company.

Performance management is a set of processes and tools that organizations use to measure, analyze, and improve the performance of their workforce. It can be applied in many different ways, including measuring productivity at work, evaluating job satisfaction as an indicator for retention risk, assessing leadership effectiveness by looking at leader behaviors on individual or group levels, and analyzing employee engagement through surveys or interviews.

The idea behind performance management is simple: if you can measure something, you can change it. This concept has been adopted with great success in quality assurance companies and organizations for decades. Unfortunately, in recent times, this philosophy has been failing – but not for the reasons you might think. Below are seven reasons why it’s failing and what you can do about it.

Quick Stats on Performance Management

Performance management is top of mind for HR professionals but, in most cases, it’s often viewed as not worth the effort and time. However, performance management is crucial in prioritizing and increasing employee performance and the growth of a company. According to Gartner:

  • 82% of HR leaders feel that performance management is ineffective at achieving its primary goal
  • 81% of HR leaders understand the ineffectiveness of performance management but are making changes to implement performance management
  • 67% of organizations felt the purpose of their performance management changed to focus on reducing the effort and time or performance management
  • 85% of employees perceive performance management to be worth the time and effort when it has high utility

Reasons Why Performance Management is Failing and How to Fix It

There are plenty of reasons why organizations are struggling with performance management. But they all have one thing in common: there’s an opportunity to do better. Keep reading for helpful fixes to the top 7 problems of performance management:

Problem 1: Lack of Strategic Focus

Your organization’s overall policy and goals must be integrated into your performance management process to deliver real business value. A well-designed process begins with a well-laid-out focus. Having too many company goals and trusting in a “cascade” process will likely leave your employees feeling unaligned, inefficient, and confused.

Instead: Try simplifying and prioritizing your organization’s goals, and focus your performance management on a few critical goals that are key to your business growth. Finally, help your employees understand how their individual goals and daily work are crucial in achieving its objectives. 

Problem 2: Lack of Leadership Support

Leadership support is crucial in the fulfillment of performance management. Unfortunately, in most cases, the higher-ups in the company or executives fail to establish clear goals and objectives with their teams to motivate them every day. 

Instead: Having leadership support in place will help drive performance management. In your performance management plan, identify who has what level of authority and how they can best be utilized to create a culture where everyone succeeds. Your leaders should be committed and actively engage their teams in performance management activities. They should also provide recognition and support to employees and managers who exhibit the expected actions and behaviors. Without leadership support, performance management will be unsuccessful despite how well designed the process is. 

Problem 3: Lack of Proper Communication and Training

Proper training and communication are a necessary component of performance management. Without it, employees may not be aware of the purpose and expectations for their positions, or they may lack knowledge on how to do their job correctly. This can lead to many problems, including low morale in the workplace and an inability by supervisors to identify who needs more training so that everyone is performing at their best level possible. 

Instead: Performance Management should start with communication- whether through email, meetings, one-on-one conversations, etc.–to help communicate company goals and policies and set clear expectations about what’s expected from each employee in their position. Proper communication will help explain the benefits of performance management and provide continuing training to properly help managers and leaders acquire the appropriate skills, knowledge, and behaviors to engage their teams in performance management properly. 

Problem 4: Lack of Timely and Meaningful Feedback

Giving your employees timely and meaningful feedback keeps them aware of their performance and how to improve. You don’t need to wait until the annual formal performance review to give feedback. By doing so, employees may feel blindsided, and this might lead to disappointment, frustration, confusion, and disengagement. Disengaged employees perform poorly and are less motivated to increase their performance.  

Instead: train your managers to provide timely and meaningful feedback when performance or behavior issues occur. Waiting too long to provide feedback hurts your company’s employee engagement, morale, and eventually your business performance. 

Problem 5: Lack of Recognition and Awards

It is well known that appreciating your employees by recognizing their input and rewarding them is a sure way to increase their productivity. By contrast, workplaces that lack recognition and gratitude for employees can be disengaging and uninspiring for all people. 

Instead: When designing a performance management system, include a section that recognizes and rewards employees for their performance. An effective recognition and rewards program should have clear criteria and expectations around what types of actions and behaviors are rewarded for driving your company forward. This type of recognition and appreciation will help keep employees inspired, motivated, engaged, and psyched up to produce better results. 

Problem 6: Lack of Simplicity

Whether you currently have a performance management system in place or not, the process you finally implement should be simple, easy to understand and use. Unfortunately, this is not always the case. Too often, employees and managers get lost in the weeds, having to spend hours learning new tools and processes or look for performance-related information and forms they need. Poor performance management is expensive and delivers very minute value. In fact, it can even lower your employee engagement level and harm your business growth. 

Instead: Consolidate information when possible. Make it accessible. Keep things simple and user-friendly. When done correctly, the impact of effective performance management is significant. You will not only see an upsurge in your revenue growth, but you will also prevent your top performers from walking out the door. 

Problem 7: Lack of Stakeholder Review

Stakeholder involvement is easy to overlook when you begin designing programming for your employees. But lacking proper consultation with key stakeholders will affect your performance management system as it may fail to address all your business needs. In addition, this puts you at risk of losing time and resources by implementing a system that nobody wants or knows how to use. 

Instead: When designing your performance management process, involve your major stakeholders early on as they are the future users of the system. Stakeholders are crucial in the success of a company. 

Putting it all together with coaching

Performance management is an essential component of any company’s success, but it can be challenging to get right. Many company’s turn to leadership coaching to help managers and leaders embed the skills needed to have better performance management across teams. Our team of experts can partner with you to create an effective strategy for managing employee morale, increase productivity and improve retention rates. Schedule a demo to learn more.

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