The Consequences of a Poorly Constructed Performance Management System

The process of building and maintaining a performance management system for your employees isn’t the easiest thing your company will ever do, but It may be one of the most beneficial. Speaking of all the benefits a great performance management system is inspirational, but the consequences of a poorly developed employee performance program can be detrimental.

Poor Employee Performance Structure creates…

• Biased Appraisals

Even the most experienced and studied manager will bring a bias in the performance management process. Most of the bias that appears in performance management is unintentional, which makes it more difficult to detect and solve. Unfortunately, that means the employee and manager might not realize the appearance and the issue will go undiscussed, but be felt.

Recency bias, for example, is common for programs that do not practice continuous feedback, or have long breaks between reviews. This particular bias happens when recent events drown out employee performance as a whole. A mistake the employee may have made last week, overshadows the last 3 months of stellar performance.

• Loss of Employee Confidence

Performance management should have a healthy mix of constructive and positive feedback. If one overpowers the other too much, there is either a miscommunication, a misunderstanding or a missed growth opportunity. Performance management systems that lack structure generally are more reactive than proactive, which means employees only hear from managers when they have done something that can’t be ignored. This often means when he or she has messed up. This will take a toll on employee confidence and motivation.

Did you know? 30% of performance reviews end up in decreased employee performance.

• Compliance Risks

Fair and organized performance management systems are backed by data and recorded documents. These pieces support performance reviews and manager feedback, giving depth to the conversations and decisions made by the company. This will protect the business in the case of any legal intervention.

• Manager Frustration

One survey found managers spend an average of 210 hours a year on employee performance-related tasks. While managers should be dedicated to spending a fair amount of time on their subordinates, it’s safe to assume some of these hours are not being well spent.

Did you know? Companies that practice regular employee feedback experience 15% lower turnover rates.

From outdated technology, to lack of resources, to little support from executives, the list of obstacles a manager faces can add up. The result is an overwhelmed manager with vague reviews, possibly nonexistent supplemental feedback and disengaged employees. Continuous feedback with the right tools and technology can provide employees with desired feedback while giving managers an active record of performance.

Did you know? 79% of business leaders believe they have a significant retention and engagement problem.

Building a business model that provides continuous income is important to the financial future of an organization. Creating a performance management program that builds, retains and supports the growth of employees is just a pivotal.

There are so many risks associated with poorly planned performance management programs. Which ones have you witnessed or experienced? Share your stories with us on Twitter @Trakstar_hr.