4 Common Reasons Performance Management is Broken

Ask the HR critics and they'll tell you, the future of performance management has been hanging in the balance for quite a while now. Clickbait headlines like, "The Annual Review Is Dead" and "15 Reasons Your Employees Hate the Performance Review" hit a strong note with those of us who know there are improvements to be made.

But the truth is, there will always be a need for a system of checks and balances to help employees be their best at work. As humans, we just care more when we know where we stand. In fact, in one survey 92% of employees that negative feedback is effective at improving performance (that is, if you deliver it well).

Love it or hate it, performance management is here to stay. But that doesn't mean you need to rip out and replace your entire system. More often than not, a couple small tweaks is all it takes to get your existing process back on track.

Let's take a closer look at some of the most common issues that might be tripping up your system.

1. Your Annual appraisals are too heavy

If that sounds like you, know that you're not alone.

In many ways, the annual review has become the scapegoat for companies that have much bigger cultural problems. Do they take too long? Usually, yes. Are they too one-sided, formal, and complicated? Probably. Does that mean you should throw the performance review baby out with the bathwater? Not so fast.

Before you get rid of the annual review altogether, first consider a faster, more efficient framework, including more feedback opportunities throughout the year. Second, engage employees in the process so they feel a sense of ownership over their performance goals and the metrics you use to measure their performance.

2. Your ratings are meaningless

Rating employees can be a contentious endeavor, especially when ratings are tied to pay increases and promotions.

But when used correctly, ratings can be a great way to create and uphold workplace standards. The challenge is knowing when to use, and when not to use ratings in performance reviews. For instance, if you're rating an employee on a vague personal identity characteristic like how "collaborative" they are, you could easily see a backlash. Especially, if you're not bothering to follow that rating with development opportunities to help them learn how to play better with others.

Instead, focus your ratings to help carve out a growth path for employees or measure a manager's subjective opinion of the employee, not the employee themself.

3. Feedback has no connection to mission

The biggest mistake in performance management is forgetting why you’re doing it. But if your approach isn’t aligned with your company goals, you’re working with a blunt tool.

A 2016 study found consumer companies whose employees understood their role in delivering the organization’s aims managed to triple their annual growth rates.

Start by finding your performance management north star. And keep in mind, this probably won't be an exact match to the mission statement hanging in the lobby wall, but it should definitely be related. For example, Starbucks's mission statement is “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”

It’s ambitious, but also simple. So for Starbucks's employees, the ‘north star’ is all about creating the kind of culture that leads to stellar customer service.

4. Employee reviews are full of fluff

When you sit down to evaluate an employee, are you asking the right questions?

A well thought-out question can mean the difference between a productive employee and a toxic workplace culture. And there are many ways to say the same thing. Think about your language, tone and phrasing. Is it accusatory or focused on growth? Is your intent clear? Dig deep, ask follow-ups and allow a two-way conversation to take place.

Here are a few example questions to help get you started:

  • What was your biggest achievement in the last year/quarter/month and why are you proud of it?
  • Which aspect of your job do you enjoy the most and why do think you're good at it?
  • What other ways do you think could contribute to the company?
  • What's been the most challenging part of your work and how did you deal with it?

Despite the buzz, there's no one-size-fits solution to performance management. Your performance management must evolve right along with the rest of your business. And if your business has changed and your performance management process hasn't, it's probably time for a tune-up, not a complete trade in.


Ready for a modern and effective performance management system?

Read our guide to getting started.