I went to a conference earlier this year and rode the airport shuttle with one of the conference instructors.
When he learned that I was also attending the conference, we began talking about all sorts of things but performance management (PM) and more specifically performance appraisals (PA) came up.
He had very strong feelings about why he thought performance appraisals were a waste of time and ultimately added no value to the employee or organization.
Most anyone who has managed people or been managed by someone has experienced the sometimes stressful, time-consuming process of performance management.
In theory I agree that organizations that do not have strong performance management systems can have a negative effect both on employees as well as their managers.
However, a well designed performance management process can be rewarding for both the employee as well as the manager.
So what are the advantages and the disadvantages of performance management?
Disadvantages of Performance Management
1. Time Consuming
It is recommended that a manager spend about an hour per employee writing performance appraisals and depending on the number of people being evaluated, it can take hours to write the department’s PA but also hours meeting with staff to review the PA.
I’ve know managers who had 100 plus people to write PAs on and spending weeks doing it.
If the process is not a pleasant experience, it has the potential to discourage staff.
The process needs to be one of encouragement, positive reinforcement and a celebration of a year’s worth of accomplishments.
It is critical that managers document not only issues that need to be corrected, but also the positive things an employee does throughout the course of a year, and both should be discussed during a PA.
3. Inconsistent Message
If a manager does not keep notes and accurate records of employee behavior, they may not be successful in sending a consistent message to the employee.
We all struggle with memory with as busy as we all are so it is critical to document issues (both positive and negative) when it is fresh in our minds so we have it to review with the employee at performance appraisal time.
It is difficult to keep biases out of the PA process and it takes a very structured, objective process and a mature manager to remain unbiased through the process. Performance appraisal rater errors are common for managers who assess performance so understanding natural biases is an important aspect to fair evaluations.
Advantages of Performance Management
1. Performance Based Conversations
Managers get busy with day-to-day responsibilities and often neglect the necessary interactions with staff that provide the opportunity to coach and offer work related feedback.
A performance management process forces managers to discuss performance issues with employees. It is this consistent coaching that affects changed behaviors and employee development.
2. Targeted Staff Development
All employees are on a development journey and it is the organization’s responsibility to be preparing them for increased responsibility.
If done well, an effective performance management system can help to identify employee developmental opportunities and can be an important part of a succession planning process.
3. Encouragement to Staff
Performance appraisals should be a celebration of all the wonderful things an employee does over the course of a year and should be an encouragement to staff. There should be no surprises if issues are addressed as they arise and not held until the annual review.
The trick to positive appraisals is to focus as much on what the employee is doing well while gently course correcting undesired behaviors.
4. Rewards Staff for a Job Well Done
When pay increases and/or bonuses are tied to the performance appraisal process, staff can see a direct correlation between performance and financial rewards. This motivates and encourages employees to perform at higher levels.
5. Under-performers Identified and Eliminated
As hard as we try, it is inevitable that some employees just won’t cut the mustard as they say. An effective performance appraisal process can help identify and document underperformers, allowing for a smooth transition if the relationship needs to be terminated.
6. Documented History of Employee Performance
It is very important that all organizations keep a performance record on all employees. This is a document that should be kept in the employee’s HR file. The goal is to maintain a historical record of an employee’s performance and development journey.
7. Allows for Employee Growth
Motivated employees value structure, development and a plan for growth. An effective performance management system can help an employee reach their full potential which can be a positive experience for both the employee and manager. A good manager takes pride in watching an employee grow and develop professionally.
Organizations should take a global look at their performance management system and have very objective goals that are tied to strategic initiatives and the performance management process. Successful organizations have learned the secret to this. And while not always perfect, striving to constantly improve the process can be one of the best ways to help organizations achieve their Mission.
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Article originally posted June, 2012, updated September 2015.