Why Employees Hate Performance Management (and what we can do about it)
Performance management is often portrayed as the most strategic of core HR talent management processes. From a C-level leader’s perspective, it should:
- Focus all employees on priorities and maximize individual productivity
- Provide a foundation and process for improving the overall capabilities of organizational talent
- Align individual efforts with the business unit and organizational goals to maximize efficiency and effectiveness of organizational execution
- Align rewards and recognition with performance outcomes to ensure retention of key performers
However, from an employee’s perspective, it is too often seen as an unfair system that surprises and demoralizes. This is a long held perception, Rensis Likert offered this critique of the performance review discussion in the July 1959 issue of the Harvard Business Review, “The aim of reviewing the subordinate’s performance is to increase his effectiveness, not to punish him. But apart from those few employees who receive the highest possible ratings, performance review interviews, as a rule, are seriously deflating to the employee’s sense of worth … not only is the conventional performance review failing to make a positive contribution, but in many executives’ opinions it can do irreparable harm.”
Why does performance management receive such bad reviews (pardon the pun)? There are a number of contributing causes but four reasons stand out for me:
1. Managers don’t have the requisite foundation skills – Managers need to have basic skills to manage performance effectively. Too often skill training is not provided. These skills include:
- Setting Performance Goals
- Monitoring Performance
- Providing Performance Feedback
- Conducting Performance Reviews
- Conducting a Developmental Planning Meeting
2.A lack of collaboration in the process – Goals should be established collaboratively. Collection of relevant information should be done collaboratively. Discussions concerning progress toward goals should occur frequently and focus on what can be done to help ensure success. Ongoing communication and collaboration helps to prevent surprises and drives higher employee-manager agreement on performance.
3.Overly focused on results – Organizations need to realize that there are two aspects of performance. There are the “what” of performance which focus on goal performance but there are also the “how” of performance which focus on how results were obtained. Results against goals may only be partly under the control of the employee while behaviors and effort are directly under the control of the employee. Including competency performance as an equal part of the performance evaluation promotes a higher sense of fairness in the process.
4.Overly focused on pay rather than development – When the performance management system is all about pay, the performance review often turns into a debate. The employee wants to maximize pay and the manager wants to control costs. This leads to the employee focusing on defending mistakes, justifying actions, promoting their accomplishments, and challenging the manager’s evaluations. The purpose of performance review discussions should primarily be on development and improvement. Discussions about pay should occur separately and recognize that pay decisions are only partially informed by performance. Organizational performance, the employee’s position within their pay range, and external supply and demand factors also contribute significantly to pay decisions.