Top 5 Reasons for a Dysfunctional Performance Management System
Tuesday, September 6, 2016 4:28:59 PM

A study by CEB shows that underperforming companies are cursed with poor performance management systems that are detached, disconnected, and disjointed from their ultimate corporate goals. Also, they often encourage conflicting behavior. All these banes eventually gather up together to cause a significant downfall in the company’s performance.

To overcome these hindrances, HR managers must take a proper mix of resources, people, money, activities, and targets to create a cohesive and organized system that coordinates actions of all  employees of an organization to pursue organizational objectives.

To achieve this feat, managers must begin by perceiving a basic understanding of all impediments in the way of performance management. Some of the basic problems associated with the failure of most performance management systems are as follows:

Dearth of Simplicity

No matter whether you possess a fully functional performance management system at hand or not, the performance management system that you ultimately implement in your organization should be handy and easy to use and understand. Your employees and managers should not spend hours to learn  new processes and tools.

Subsidizing Subversion

When you pay an employee for his/her excellent conduct or performance, you often open the doors to dysfunctional and competitive behavior. Employees start finding methods to undermine their competitors (peers) through ignoble means like resistance to sharing vital information, rumor mongering, etc. Therefore, when you reward your employees through monetary measures, you create a counterproductive way to encourage co-operation towards the common objective.

Lack of Clarity

If you do a survey of your employees, you’ll be surprised to find the objectives that each one of them holds when it comes to performance management systems. You’ll receive answers like:

  • Quantifying performance- Identifying the low, medium and high performers
  • Assessing developmental needs- To extend the performance and capabilities and performance for the future
  • Ensuring employees get rewarded on the ideal comparative grounds
  • Assessing turnover risks and encouraging worthy employees to stay

Such thinking is reflective of the confusion in thought, which can be a huge hindrance to your performance management system. Therefore, clarifying the objective of a performance management system becomes imperative to achieve a healthy performance culture. The main purpose of performance management is to align individual contributions with the organizational strategy. If the organization has varied purposes, it must convey its intentions in a crystal clear manner to all the stakeholders and ensure that their processes support their intent.

When everyone understands performance management’s major objective, it becomes far safer and easier to clarify and debug the current management process.

 Poor Managerial Skills

The key component of any performance management system is the manager. A manager drives the system by receiving and giving feedbacks, encouraging training and development, communicating the plans and setting ambitious expectations. An analysis done by Gallup revealed that the employees who rated their managers as ‘Best’ perceived the performance management system to be far more effective than the employees who rated their managers as ‘Below Average’.

70% of the employees considered their performance management system to be “Very Good” and they also considered their managers to be “Best”. On the other hand,  only 2% of employees considered their performance management system to be “Very Good” and they also considered their managers to be “Below Average.”


Employee-Manager Relationship

Good managers:

  • Present clear and cohesive performance standards and present the right structure for a good performance
  • Focus more on strengths than the weaknesses of employee
  • Help employees understand the primary purpose of performance management system
  • Communicate with their seniors and juniors on a regular basis
  • Clearly present the performance expectations, etc.

A sour relationship between a manager and an employee causes the downfall of any performance management system, irrespective of its capabilities and quality. Without a good relationship the two-way street that performance management offers, it cannot function optimally.

Bad performance management delivers little value and proves to be extremely costly to the organization. Also, it can lower the organization’s engagement level and hamper business’ growth. But when it is done right, its effect can be felt at every level of an organization. Not only will it fetch increased revenues but it will also help in talent retention of the organization.