Overcoming Challenges for Performance Management Systems


The Performance Management season is upon us and I thought it would be a good time to share some insights into the challenges of performance management systems. A performance management system (PMS) is a process to monitor and align the objectives of the organization with the individual skills, competencies and deliverables of employees. The focus is on the delivery of promised results and improvement through learning and development. The primary purpose of PMS is to create a work environment that encourages productivity, efficiency and quality. Performance management is necessary so that individuals can perform to the best of their abilities, grow individually and also contribute to the growth of the company.

Like any other process in the organization, PMS comes with its own set of challenges. It is especially critical for the growth of a business because performance management is designed to suggest improvements in the contributions of employees. This not only helps in growth at an individual level but also organizational level by alignment with broader goals and objectives. This blog looks at some of the key challenges of Performance Management Systems and their solutions.

Recognizing the Need

Many companies, especially start-ups or small and medium enterprises, might think that PMS is not required for them. It may not be a priority over day-to-day operations. The difficulty arises when the growth journey of these organizations is hampered by a lack of performance management or inefficient systems of monitoring employee performance. An evolving organization must have an established performance management system. Incorporating the best practices from the very start, even if it is for a handful of employees, pays off in the long run. This contributes to the overall success of the company and the growth of employees.

Inconsistent Processes

Many a time there was a huge gap between documented processes and the implementation of performance management. This lack of consistency across the organization, usually, comes from ineffective and erroneous systems. Different departments and even individuals have varied ideas about aspects like level of performance, traits, behaviour etc. As a result, the performance management activity does not reflect progress accurately and may impact decision-making.

To overcome this challenge, there is a need to set clear standards and processes for PMS through strategic performance management. An HR Management expert can be useful in setting PMS and training employees and managers about rating systems, to create a uniform understanding throughout the organization.

Undefined Objectives

In smaller companies, one person likely plays multiple roles. There may also be some overlap between different employees with regards to responsibilities. This can lead to a lack of clarity and can negatively impact growth and productivity. While it is easier for smaller organizations to pivot in case of exceptional circumstances, this adaptability can also lead to a lack of alignment between organizational and individual objectives.

The need is to clearly define objectives, roles and responsibilities for all team members so that everyone is aligned with the organizational goal. Objectives should be visible and clearly communicated, even over-communicated if need be. OKRs and KPIs are useful frameworks for measuring and monitoring progress.

Employee Skepticism

Sometimes employees feel that the PMS is inherently biased. They also do not believe in company values or the larger purpose of the organization. Companies that can establish value and purpose in the minds of their employees are often the ones who succeed. Belief in these aspects of the organization not only influences the culture of the company but also helps in the retention of talent and productivity.

Companies need to recognize that the culture flows from the top down. A lot of hard work is needed to establish a sense of pride and belief in the core values of the company. These need to be integrated into the performance management system through the right feedback and recognition practices. Clear communication and incorporation of company values throughout various processes, including PMS, can help in shaping the organization from the very early stages.

Feedback Systems

A feedback culture is vital to the improvement and growth of an organization and an individual. Many companies provide feedback only at the time of performance review, which may be only once a year. This is too long a time to hold feedback in a world where improvements should be done as soon as possible to minimize the impact of unwanted practices and behaviour. Without a proper feedback mechanism, managers may not be able to provide constructive feedback or maybe apprehensive to make ant comments.

The need is to establish an environment where feedback is openly given, accepted and acted upon. To ensure that feedback serves as a motivator, managers need to be trained to handle these comments through the proper channel and in an effective manner. Inappropriate feedback can be as harmful as the lack of it. Means of documenting feedback should also be put in place, which will become a key part of the PMS to track the progress of an employee.

Overcoming Mind Blocks through Flexibility

Do we really need a performance management system? Should we conduct performance review for only a select few or all employees? Who should get an appraisal?

There are many questions that may arise in the minds of leadership and managers, especially when they are new to the performance management system. Personal bias and rigidity in thinking can many times hamper smooth and fair performance review. If not dealt with at an early stage, this mentality can creep in even as the organization grows. This will negatively impact employee satisfaction as well as the growth of the company.

There are many nuances in creating a robust performance management system. It is an activity that impacts the entire organization and employees of all levels. Companies need to have a flexible approach and impartial view about an employee’s performance. Keeping conventional ideas aside, organizations need to adapt to the changing needs and situations of the market as well as the workplace and individuals. The focus should be to recognize the performance and outcomes, rather than any other aspects. A well thought of PMS contributes towards achieving this goal.