The goal of performance management is to support employees in optimizing their on-the-job performance. It’s all about helping them be the best they can be and providing them with the tools, training, and knowledge necessary to achieve key targets and objectives. However, if your performance management system isn’t really doing that, it may be broken. How do you tell? In this post, we’ll explore some of the signs of performance management importance including how to determine if your performance management system is broken and needs to be replaced with something better.

Is Your Performance Management System Broken?

Your Turnover Is Atrocious

All businesses and organizations are going to suffer from some degree of turnover. It happens. People leave to pursue their dreams. They move because of family obligations. They get better job offers that you just can’t match. However, if you’re struggling with high attrition rates, then it might be a sign that your performance management system is broken. In this instance, employees lack engagement because they’re not being recognized for their efforts or success, because they lack the guidance necessary for growth, or because there is no constructive feedback, only criticism.

A Lack of Responsibility

When an employee has questions about their performance, do they know where to turn? Do they go to the HR department? Do they turn to a team leader or a department manager? If there is a lack of responsibility when it comes to performance management, employees become confused and frustrated.

However, it is also important to remember that no one works in a vacuum and every department within an organization is interdependent on all the others. Performance management is therefore a collaborative effort that requires input from a wide range of people. Peer review processes allow each individual to provide their input while ensuring that employees have a clear understanding of where responsibility lies.

Compliance Focused

Why do you train your employees? Why do you review their performance in the first place? For too many business owners and decision-makers, it’s a question of pragmatism. You’re required to do X to comply with government or industry rules and regulations.

The only reason that you do X is because of compliance. That’s a sure sign that your performance management system is broken. If you’re following a top-down, compliance-driven process, you’re getting it wrong.

Instead, you need to adopt a more holistic approach. You also need to focus on developing the skills of your employees to build a stronger business. It’s not just about compliance – it’s about supporting your team members now and in the future. That’s the key to talent retention, employee engagement, enhanced productivity, and improved profitability.

Failing to Reach Goals

Failing to manage employee performance generally results in missing your targets. There’s no way to achieve business objectives if your employees’ efforts are not managed correctly. That is not a reflection on your team. It’s a reflection of your performance management system. Each team member could be giving it their all, but without the right processes in place, that effort could be wasted.

Often, failure to reach goals has nothing to do with employee effort and everything to do with the goals themselves. Are they clearly communicated? Do your employees have the resources necessary to reach them in the first place? Are the goals even realistic? Do the goals and actual outcomes match? Have you explicitly communicated your expectations to team members?

Correctly setting goals is critical to performance management. Without clearly communicated, realistic, achievable goals, everything is for naught. You can set SMART goals, or pattern your goal-setting after a successful company like Google or Adobe, but the point is you must be able to align employee objectives with overall company strategy and cut out any confusion.

It’s All in the Feedback

What sort of feedback are you providing your employees? Chances are good that if you’re not seeing results, it’s the wrong type. What does that mean, though? There are two primary types of “wrong” feedback:

  • Biased – Biased feedback comes from someone with blind spots themselves and is often based on an incomplete or inaccurate picture of goals and targets.
  • Subjective – Subjective feedback is unactionable. It provides no value because it is not concrete.

To get around this, you need to change your mindset when it comes to feedback. Make sure that you provide continuous comments to your team regularly. Sit down once a month, once every two weeks, or even weekly, and discuss things. Have a conversation surrounding goals, targets, efforts, and what needs to be done.

You also need to ensure that your employees have the resources and knowledge necessary to reach those objectives. A mentorship program can go a long way toward improving the situation, delivering timely, positive feedback, and helping your employees toward a brighter personal and professional future.

There’s No Growth

Once upon a time, an employee entered a business and made it their career. Often, they remained in the same position for years, even decades, receiving cost of living raises and performance-based raises. However, those days are behind us. Today’s professionals want more than a stagnant professional life. They want to hire on with a great company and then grow with them.

This is challenging for companies who lack the infrastructure necessary to help employees grow. Many leaders are still mired in the mindset that professional development falls only on employees. With that type of thinking, no amount of performance management will do you any good. Your top talent is going to jump ship the moment they find a way to grow themselves into something better.

As part of your performance management, provide tools and resources for your team members to use in reaching personal development goals. Prevent stagnation and give them a map to higher achievements.

In Conclusion

If what we discussed above sounds familiar, then your performance management system is broken. There is good news. It doesn’t have to be that way. Modern performance management helps set achievable, realistic goals, supports your team in personal and professional development, reduces churn, and ensures a stronger, thriving business.