6 Most Common Reasons Why Performance Management Systems Fail

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Performance management system is one of the most important aspects of an organization. HR managers are usually the ones who carry out the performance management process in an organization.

Most organizations already have a performance management system, but 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 for the failure of performance management system that you might need to avoid.

1. The Process Is Not Structured

One reason why performance management fails is that the process is not properly structured. It is not a one-time process and needs to be repeated more often. It is not possible if you don’t have a well-designed structure for performance management. Because the main reason behind having a performance management process in an organization is to improve overall performance of the employees in the organization.

So, a well-structured performance management system helps the employees understand the organizational strategies better and work towards achieving their goals with more motivation.

2. Goals Aren’t In The Picture

In many organizations, employee goals aren’t in the picture when the performance review process is carried out. Sometimes performance management also fails because wrong goals are chosen to optimize the performance of the employees. In short, goals are important to keep employees motivated and perform better.

3. Lack Of Communication

Sometimes, managers aren’t able to communicate what they expect from their employees. It is important for them to communicate properly with the employees about the benefits of performance management. Employees should be provided with necessary resources to improve themselves constantly and should know the importance of continuous learning and a performance management system.

4. Overemphasizing Recent Performances

This is one of the most common mistakes that managers/ HRs make. Performance management processes are plagued with various biases in general. Recency bias is one of them. This is an unconscious bias since part of the problem can be attributed to memory and the way the mind makes associations. But it is a dangerous bias all the same. Very simply, it is because recency bias can make or break a performance review. So overemphasizing recent performance can result to failure of the performance management system.

5. Annual Performance Evaluation

Performance evaluation is valuable only when it is carried out on a regular basis. Annual performance review is not enough for any organization. Some mangers claim that it consumes a major portion of their time. But if performance evaluation is carried out annually, employees have to wait for a year to give or receive feedback; which is not good for the organization’s productivity.

So, annual performance evaluation is one reason why your performance management system could fail.

6. No Recognition/ Rewards

Appreciation and recognition are very important to keep your employees inspired and to drive productivity. A performance management system that doesn’t include recognition and rewards for employee performance tends to fail more easily. It is important to keep track of employee performance and appreciate their good work.


If you want to know how Engagedly can help you with performance management in your organization, request for a live demo!

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