The Performance Management Problem: What Is It and How Do We Fix It?

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Performance Management Problem

Performance management is a necessary and valuable practice for both administrative and developmental purposes in organizations. However, many employees involved in traditional performance management, whether as raters or ratees, have negative reactions to it.

HR professionals and practitioners generally describe traditional performance management as being cumbersome, time-consuming, inaccurate, too formal, or just plain difficult.

These are extremely fair points to make about traditional performance management, and there is a plethora of evidence coming from many different perspectives to support the legitimacy of these claims. However, oftentimes organizations that explore doing away with performance management find that they cannot. Below we discuss what the performance management problem is and how we can fix it:

What is the performance management problem?

Since WWI, research and practice have made great strides in identifying many different variables that go into effective performance management. Specifically, much research has been on rating scales, cognitive processes, and social context.

Although we know significantly more about these areas and others concerning performance management, there is still a disconnect between what has been discovered as the best practices in performance management and what HR professionals and practitioners are actually doing.

Just last year, some of the most prominent researchers1 in performance management took a step towards bridging this gap by listening to what HR professionals and practitioners were saying about performance management and matching it with empirical research that informed the specific issues brought up. The following are some of key takeaways and recommendations from the discussion.

One of the clearest and actionable recommendations is doing away with the formal, annual or semi-annual performance management system.

Trying to have managers remember and rate the performance of their subordinates over 6 to 12 months is nearly impossible to do accurately, and this formality will most likely cause frustration and negative reactions from everyone involved.

So what do you do instead of performance reviews?

Replace it with informal, frequent conversations (or “check-ins”) with employees that include giving feedback on their performance. This will take the pressure off of having only one or two meeting per year and will allow for the performance management system to be effective in dynamic work environments. By doing it this way, organizations can improve upon both the administrative and developmental functions of performance management. Administratively, the frequent conversations will allow for additional performance ratings throughout the year leading to a more comprehensive representation of performance. Developmentally, employees will not only be aware of how they are performing on a more regular basis, but it will also help them to continuously improve their performance by receiving more timely, useful, and relevant feedback.

The accuracy of performance ratings is another contentious subject amongst HR professionals and practitioners and rightfully so.

Raters are not always motivated to be accurate with their ratings and may rate more leniently or severely for various reasons. Thus, steps need to be taken to increase the accuracy and utility of these performance ratings. Outside of accuracy, raters have been found to be motivated by organizational norms, impression management, and biases.

So what can you do about this?

Motivate employees to rate more accurately by creating a culture that values the performance management system and holds raters accountable to their ratings. As for biases, interventions can be used to reduce implicit biases related to race or sex to make ratings more accurate (i.e., structured free recall).

Overall, performance management still has legitimate issues. In fact, going as far as saying it is broken is not a stretch.

However, doing away with performance management or ratings entirely is not a viable option due to their administrative and developmental purposes. Thus, our best option is to take steps towards improving it.

“We find that the best way to significantly improve the Performance Management process is to focus in on the effectiveness and frequency of meaningful conversations between leaders and employees. When performance discussions only happen once or twice a year, it’s understandable why the process doesn’t work. Performance reviews can be shortened at mid-year and year-end when the dialogue has been happening all year long,” notes Lisa Codispoti, ERC's Director of Consulting.

Research and practice have both informed on how to develop an effective performance management system, and it is an achievable feat. There needs to continue to be communication between practitioners and researchers to ensure what needs to be researched is being researched and what needs to be put in practice is being put in practice. If this line of communication continues to develop and is utilized, the outlook for the continued improvement of performance management will be bright.

Citation: Levy, P. E., Tseng, S. T., Rosen, C. C., & Lueke, S. B. (2017). Performance Management: A Marriage between Practice and Science–Just Say “I do.” In Research in Personnel and Human Resources Management (pp. 155-213). Emerald Publishing Limited.1

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