Why Employee Performance Management Fails (and Possible Solutions)

An employee performance management process is one of the oldest, natural and most universal forms of creating a conducive environment in an organization. It’s a continuous process to build a competitive atmosphere where people develop a sense of purpose and thrive. Studies, however, show that a critically high percentage of companies and workers claim to be dissatisfied with their existing performance management system. Without a doubt, rethinking performance management needs to be at the top of executive teams’ agenda today. To help companies overcome existing inefficiencies, we’ve listed a few reasons why employee performance management fails and what we can do to help people perform their job to the best of their ability.

why employee performance management system process fails

Performance management can be traced back to the U.S. military’s “merit rating” system, created during World War I to identify poor performers for transfer or discharge. After World War II, more than 60% of American companies had begun using them, and by the 60s, this figure was close to 90%. The purpose of any performance management system is to achieve three business goals: (i) seek agility, (ii) improve team effectiveness, and (iii) foster high levels of employee engagement. Over the decades, performance management has earned reputation as a bureaucratic process forced by human resources teams, which added little or no value to the bottom-line.

Why Employee Performance Management Fails

A number of forces have played a key role in diminishing the value of performance management system. Workers on the receiving end of evaluation do not always look forward to them. If you are planning to implement a performance management system in your organization, or to improve the existing one, here’s a list of common reasons why employee performance management system fails and how you can avoid it.

Lack of Recognition/Rewards

Employee recognition is the key to keep your employees happy and engaged. A performance management systems fails when the organization fails to recognize or reward its employees for their hard work. It’s important to keep track of employee performance and show appreciation on time.

Annual Employee Performance Appraisal

A performance management process is only valuable when it’s done on a continual basis. Annual performance review isn’t enough in today’s hard-hitting times. A monthly or bi-annual performance management process may consume a major portion of managers’ time but it’s the only way to keep track of performance and provide regular feedback. The lost productivity that comes from waiting for an entire year to give or receive feedback can eat up on the organizations bottom-line.

Recency Bias

This is one of the most common reasons why performance management fails in today’s times. Recency bias occurs when managers rate an employee’s most recent behavior instead of the total time period. For instance, a high performer makes a mistake and their past performance is forgotten. Or a lazy employee does something good and their poor productivity is forgotten.

Lack of Communication

Ironically, a performance review process is when managers have difficulty providing constructive feedback. Managers often forget that a systematic give-and-take of feedback can help the employee carry out their responsibilities and meet their objectives.

Lack of Clear Goals

No business can succeed without goals. Similarly, an employee cannot thrive in the workplace unless they have a clear vision of the future. Any performance management process fails when the wrong goals are chosen in order to help the employee succeed. A clear vision can not only help the employee stay motivated but also perform better.

A Well-defined Performance Management System

A performance management process isn’t a one-time thing. It’s a continuous process and needs to be repeated as often as necessary. This isn’t possible unless the organization has a well-defined performance review system in place. One of the biggest reasons why performance management system fails is when the organization is unable to improve the overall performance of its people due to an unaligned and inefficient process.

A bad employee performance management process is costly and delivers little or no value. It can not only lower your employee’s engagement level but also put the business’s overall growth in jeopardy. An efficient system, on the other hand, will not only help you increase your revenue but also improve the bottom-line.

Diana Coker
Diana Coker is a staff writer at The HR Digest, based in New York. She also reports for brands like Technowize. Diana covers HR news, corporate culture, employee benefits, compensation, and leadership. She loves writing HR success stories of individuals who inspire the world. She’s keen on political science and entertains her readers by covering usual workplace tactics.

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