Well implemented, the employee performance management system benefits every organization of any kind. The role of such a system is to tie the business outcomes with the individual and vice versa, so that individual and team input can be identified in the growth of the entire business. All good and beautiful, but things cannot be cut so clearly in practice.
There are differences between business types and within the same business between functions. For some quantitative measurements (number of outputs, time, number of errors, etc.) KPIs are easy to set. For the qualitative ones, more difficult. But, beyond these differences, there is a common story about the inappropriate use of such a Performance Management system.
Through a poorly managed performance assessment system, companies can lose up to 20% of their turnover or do not grow to the potential and at pace of development of the industry.
Where does this loss come from? From the departure of the best talents, by not properly identifying the skills development directions, or by disrupting people's commitment. The latter category affects important parts of the firm, because there are significant differences between the self-perceived contribution and the reward offered. And this can be manifested at the same time for a large part of the employees.
We can accept that in a company's population, not all are outstanding (champions) and that at the same time we need the employees to be engaged in the business. In addition, there are in any company people at the beginning of the road or others who either do not have the skills or do not have the necessary commitment to do their job well. But that does not mean that in the end it is mandatory to have a Gauss distribution of employees after the performance evaluation, and this independently of the business results.
How do some companies ”succeed” in having an inadequate Performance Management system?
- Such companies are more likely to assign the process responsibility to the HR department (if any) or to a person who will formally administer the process (usually a formal role).
- These companies bind the system only to salary increases or bonuses, without considering the development of skills. Sometimes aberrant decisions arise through which managers set the level of wage growth and then determine the level of performance appraisal they hold.
- There is a difference between the employee's personal ambitions and the limits of the system (for promotion or salary increases) elements that are not directly aware of the manager during the year, but only when the performance appraisal process takes place (6 or 12 months).
- Being a blurring of responsibilities and roles, in such companies the periodic evaluation conversation becomes a dialogue of deaf people through which mutual blame can be cast.
- Finally, this evaluation meeting is launched to draw attention - in a mutual or just one-sided way - to what the other person does not do well.
What could be a better way to do this at a minimal level with a company through the general manager and his managers:
- Understand that Performance Management is all Management and cannot be done from time to time or once every 6/12 months
- Take responsibility for the real implementation of the system and not pass it on to the human resources department or to a person lacking power in the organization
- Talk to people without waiting for formal moments; to understand their challenges and ambitions and to support them through resources and encouragement.
- Monitor progress and give quality feedback whenever needed: these two elements - along with conversations from the previous point - represent those micro-moments over a period that, integrated, give life to the Management the performances.
Thus, both the general manager and the managers will be able to say that they have done everything possible in such a turbulent period about the existence and loyalty of quality employees to create an attractive work environment and achievement of development ambitions.