Advantages and Disadvantages of Performance Management

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.

2. Discouragement

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.

4. Biases

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

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.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.

If you would like to learn more about managing the performance of your employees, you can check out our book on Amazon!

Article originally posted June, 2012, updated

Comments

  1. Rod says

    Hi,
    Thank you very much for this piece. It helped me a lot to understand PM. It will be very helpful for my exam. Thank you very much.

  2. says

    Hi Patricia,

    this has really helped a lot to further understand how these processes work. am not really a fan of reading stuff like this but this was just exceptional. I guess some people are just talented like you and there is a need to really take out time to Acknowledge that.

    You are talented Patricia

  3. Abubakar Allumi Nura says

    Hi Patricia,
    I read your exceptional article and became convinced that you are versed in this area. please why are findings on PM not consistent?
    Thanks again.

    • Patricia says

      Hi Abubakar, I’m not sure I understand the question but would love to discuss with you! Thanks for the comment!

      Patricia

      • DARREN BURKE says

        why rewards are important , i have to do a report on ways to reward people without money. i found few different ones but any you can pick out it be very helpful

        • says

          Hi Darren. If I understand your question, I think you are asking for ways to reward people without spending a lot of money. Here are a few ideas: provide a reserved parking spot for top performers, allow employees to wear jeans one day a week, send employee a personalized note thanking them for their service, highlight an employee on the company website, invite an employee’s family to a staff meeting recognizing an employee, invite high performing employees to sit in on committees to offer ideas.

          Here are a few, I hope it helps.

          Does anyone else have ideas for Darren?

  4. Roger Dagondon says

    Warm Greetings to you In Christ!
    I had great learnings reading from your articles thru this net. Thanks for being so good and kind in sharing. God bless you always for this noble mission you are into. Hence, may I ask some favor in inquiring from you if you some free articles about management of employees in a restaurant business.Thank you very much.

    Roger Philippines

Trackbacks

  1. […] In chapter 1 we lay some groundwork and introduce some theory about why managing performance is critical to achieving church objectives and what the specific advantages are to having a structured process to manage employee performance. […]

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