The Pitfalls of Performance Management

performance management
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By: Abdul Hanan Abd Mokti, Senior Consultant, Sageconsulting Sdn Bhd

Imagine this scenario: over the years your organisation has faithfully implemented an employee performance management system (PMS). At the end of every year supervisors perform the annual performance assessment rituals. Performance are discussed and scores are given. Those with high scores are given some form of commendations and sometimes monetary rewards, depending on the organisation’s financial standing and culture.

You feel that you have done everything that needs to be done as far as employee performance management is concerned. But you still sense something is amiss. Employees are still unmotivated; there seems to be no incentive for them to perform better. Above all they view performance evaluation as a chore that has little to do with their daily responsibilities.

The above is a familiar scenario being played year-in and year-out in countless organisations the world over. Performance management does not seem capable of achieving what it is supposed to do, which is to increase and sustain employee performance.

There are numerous reasons for the above. However, before looking at the potential pitfalls, let us look at some fundamentals in performance management.

First the objectives: an effective performance management system is supposed to:

  • Drive individual and hence organisational performance;
  • Develop organisational culture and individual capabilities;
  • Measure performance in a more objective and systematic manner; and
  • Facilitate effective HR and operational decisions in line with organisational strategy.

You know something is not right when your performance management system does not contribute towards the above.

Second, the performance management cycle; a typical performance cycle consists of 4 stages as illustrated in the diagram below:

AHM Article

  • Planning stage: when the performance dimensions and criteria are defined, and the targets are set;
  • Monitoring stage: when the achievement during the performance period is regularly monitored, shortfall identified and corrective measures taken;
  • Assessment stage: when the achievement at the end of the performance period is assessed, any shortcomings identified and improvements proposed; and
  • Consequence management stage: where the implication of performance or non-performance is determined, for the purpose of reward, improvement, or any other purposes.

Having looked at the fundamentals, it is easier to understand why many organisations have not managed to create highly and sustainably performing and motivated employees despite diligently implementing performance management practice. Let’s explore some of the common pitfalls in performance management:

Misalignment during cascading:

“How I perform does not have any impact on how the organisation performs”

Individual performance management is essentially an extension of organisational performance management. Sadly, in a lot of organisations there seems to be misalignment between the two, where there is no clear line of sight between the performance expectation of an employee with that of his business unit, and hence with that of the whole organisation.

Vague performance dimensions, KPIs and targets:

I am given some KPIs but they are so vague that I can define them whichever way I like to suit myself”

An employee needs to know exactly in what areas he is expected to perform, how his performance is going to be measured and how well he is expected to do. These need to be planned and agreed upon at the beginning of the

period under consideration. However a lot of organisations do not give enough thoughts on identifying clear and objective KPIs that closely reflect the expected performance.

Failure to refer to job description:

“My main accountabilities are one thing but I am assessed on something else”

An employee’s performance expectation is the combination of his unit’s performance expectation cascaded down to him, and the expectation on how well he does his daily job. A good job description should clearly state his operational accountabilities, and these should be reflected in his KPIs. A lot of organisations fail to incorporate performance measures as part of the job description or even worse, do not have a JD at all.

Failure to do periodic review, surprise at year end:

“The last time I look at my performance plan was in January this year. Suddenly we are at the year end and I haven’t done anything”

Performance management should be continual; undertaking continuous measurements and providing ample opportunities for improvement throughout the performance period. However many organisations play it out like a ‘cup’ rather than a ‘league’. A frenzy of activities at the beginning of the year (for target setting) followed by 10 months of lull, only to be closed off by another month of frenzied activities (for performance evaluation). By then it is already too late to do anything. And the same scenario plays out again the following year.

Monitoring not supported by data and diligent recording

“I am sure I am a high performer but I don’t have any figures to prove it”

Performance management needs to be supported by documented proof. This can only be done through systematic and diligent capturing of performance data. Otherwise assessment will be reduced to gut feel and guess work, which invariably lead to a lot of other problems such as window dressing, loss of objectivity and unfairness. Not many organisations incorporate diligent recording of performance achievements throughout the performance period.

Supervisors untrained in performance management

“As an operations supervisor, I assess my subordinates my way. After all this is my unit and I will do it whichever way I see fit”

Many organisations hold the view that performance management is the exclusive responsibility of HR managers. Therefore they fail to see the need to provide line supervisors with the necessary skills in managing their team members’ performances. This leads to several problems especially during the assessment stage such as:

  • halo effect: where an supervisor’s overall impression of the employee influences his assessment on his performance;
  • recency effect: where a most recent incident overshadows a whole year of performance;
  • contrast effect: where a supervisor tends to benchmark an employee against another, usually high performing, employee; and
  • central tendency: where a supervisor plays it safe by giving all employees a generally average assessment.

Failure to normalise:

“I have a tough boss with high expectations. My colleagues in other units are luckier than me, they have more lenient bosses and therefore get better assessment”

It is normal to have supervisors with varying expectation levels. Without normalisation this will lead to unfairness. Those ‘unlucky’ employees with stringent supervisors with high expectations will be at a disadvantage compared to those under more lenient supervisors. The role of HR is to smooth out these bumps through normalisation as well as providing objective basis for assessment.

No link between performance plan and performance assessment:

“My boss did not even refer to my performance plan when assessing my performance”

Strange as it may sound, this actually happens in many organisations, more often by neglect rather than by design. It is therefore imperative for HR to ensure that the linkage is incorporated into the performance management process, and to ensure supervisors actually refer to performance plans when undertaking performance assessment.

No consequence of performance outcome:

“I was assessed highly but I feel I am not given any recognition. My colleague performed consistently badly but nothing happened to him”

Performance management is undertaken with the objective of facilitating and sustaining high performance. If the outcome of the assessment is not acted upon, employees will lose the motivation to perform, bearing in mind that employees are motivated in different ways and not everyone is naturally achievement-driven. Employees need to be made known of the consequence for their performance / non-performance, and the consequence management need to be firmly and fairly implemented, and the impact felt.

Focus on punishment rather than addressing reason for non-performance:

I was penalised for non-performance, but nobody asked me why I did not perform, or discussed with me how to help me perform”

The main objective of performance management is to facilitate and sustain high performance. Very often organisations lose the sincerity of performance management and use (or abuse?) it as a tool to punish. While it is good to implement consequence management as a means to motivate, it is more important to address the reasons for non-performance and seek ways towards improvement. There are multiple factors that may contribute towards performance including:

  • Level of motivation: as an outcome of remuneration practice, working environment, career opportunities, nature of job, management style, and the list goes on;
  • Level of competency fit: as a result of recruitment practice, placement practice, development practice, competency assessment practice, job design practice and so on. (Note: competency is not limited to technical and managerial skills, but also motive profile); and
  • External influence, such as market situation, industry competition etc.

Addressing the above pitfalls requires an organisation to carefully design and implement its performance management practice based on a comprehensive framework, such as the one illustrated below:

At the end of the day, performance management is just a practice aimed at enhancing organisational maturity and achieving organisational goals. As with any practice, it continually evolves and its implementation must take into account the organisations readiness.

The author would like to thank the Group CEO of Profess Consulting, the COO of Irshad HR Consulting and the COO of Sageconsulting for their input

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