Top 10 Reasons Why Performance Management Systems Fail

Jul 10, 2021 | Organizational Dysfunction

Much has been written on the effectiveness of performance management systems in motivating employees, aligning behaviour, driving business performance, and supporting organizational change. There is substantial evidence to support the fact that performance management systems can, and should, have a significant impact on the culture and performance of a business as well as the engagement of its employees.

Unfortunately, the reality is that despite investing time and money into these systems, most organizations only see minimum returns and in many cases, no results at all. As a result, we hear people calling to abolish performance reviews all together. A bit of throwing the baby out with the bathwater from my perspective.

With over 25 years of experience designing and implementing these types of systems in organization, I still believe in their potential to have a powerful impact on the people, the leaders and the business. However, I also have a clear understanding of why they fail more often than they succeed.

Here are my top 10 reasons why performance management systems fail…

Reason #10: System design is inconsistent with the organization’s culture or the reality of where the organization is at today including the capacity of its leaders to work with the system effectively.

Reason #9: Lack of participant involvement in the design process, especially leaders, whose needs must be met if they are to fully embrace the system.

Reason #8: Lack of supporting systems and structures within the organization such as job descriptions, capacity to track completion and link to broader organizational goals.

Reason #7: Excessive complexity, too many performance measures, and a heavy focus on ratings can all undermine the impact of the performance system.

Reason #6: Too much focus on the aspects of the process that do not influence future performance and behavioural change such as excessively detailed completing of the form, reliance on technology to facilitate and overly backward looking.

Reason #5: Lack of true leadership buy-in, support and follow through which sends a clear message to employees that it is something that they have to do vs. see value in doing.

Reason #4: Ignoring performance management system outputs and relying on subjective decision making when it comes to determining compensation, promotions and development opportunities.

Reason #3: Poor initial and ongoing communication about the system including a lack of proper onboarding of new leaders and employees to utilize the process.

Reason #2: Thinking that one introductory training session is sufficient to equip leaders and employees to effectively use the performance system. 

Reason #1: Unrealistic expectations as to how long it takes for an organization to realize the benefits, work through the natural resistance (and complaining) of leaders who prefer to avoid the interpersonal conflicts that can emerge when discussing performance, and build mastery of leaders and employees to effectively use the process.

While it may seem daunting, be assured that you can breathe new life into your organization’s performance process and position it as a highly valued leadership tool. Find out some of the interesting ways that Caliber has designed and implementing these systems for our clients.

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