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Performance Management - Pro's and Con's

 

As with any process of Performance Management also has its advantages and disadvantages.

The following is some of the advantages of implementing a Performance Management process within a company:

 1. Increased Performance of individuals and department/organisation:

The main goal of performance management is to improve the performance of individuals to eventually improve the performance of the organisation as a whole. The correct application of performance management will identify development areas of each individual as well as good performance areas. By planning specific outputs linked to specific standards and measuring the success of the individual against this on a continuous basis will have a direct impact on the performance of the individual and indirectly the organisation as a whole. Utilising the results of the performance management discussions to identify focused development programs for employees will further assist in attaining the department/organisation goals. Existing and future problems can be identified and addressed and eliminated before becoming major obstacles in realising organisational goals and strategies.  

2. Better Communication:  

Performance Management focuses on the improvement of communication between the manager and his subordinates. The feedback and planning interview create opportunity for the creation and development of communication channels as well alignment between the manager and his subordinate.

It creates an opportunity for the manager to communicate organisational / departmental goals, policies, strategies and information to the subordinate and to ensure that the outputs of the subordinate is in line with policies and strategies. It also creates an opportunity for the manager to give recognition for good performance.

It creates an opportunity for subordinates to express their views and opinions as well as suggestions for improvement of performance and identification of obstacles. The subordinate gets the opportunity to discuss personal and company goals ant together with the manager fins a balance between them.

3. Performance Standards and indicators:

Performance Management focuses on specific valuable outputs that the individual must deliver which is linked to specific goals and standards that must be achieved during the evaluation period. By clearly defining the outputs, performance standards and performance indicators the subordinate can understand exactly what is expected from him. The impact of the subordinate’s outputs on the department and organisation can be explained much easier during the planning phase.

4. Succession and Career planning:

The Performance Management process provides valuable information that can be used during succession and career planning. Employee aspirations can be clarified and where possible incorporated into overall planning of the employee's goals and outputs as well as his development plan. Clarification of the managers goals and direction regarding the employee and his role within the department. Compilation of formal training and development plans per employee to ensure the development of the employee based on the results of the performance evaluation phase of the process.  

5. Training and development:  

The Performance Management process, when applied correctly, will supply valuable information regarding developmental areas of a subordinate. The information is used during the compilation of the subordinate's development and training plan after evaluating the individual's performance. This will also provide a "check point" to determine whether the past training had any positive effect on the employee's performance.  

6. Remuneration:  

Performance Management simplifies the linkage of salaries, bonus and allowances because it is comparable and explainable.  

7. Recruitment and selection:  

The latest requirements and specifications of a specific job and the readiness for promotion of the subordinate, are supplied by the Performance Management system. It is a tool that can be used for the selection of the most appropriate candidate for a specific job.

 

These are just a few examples of the advantage that performance management has for the individual and the company and the manager. 

The following is some of the disadvantages or problems of implementing a Performance Management process within a company:

 1. Decreased Performance of individuals and department/organisation:  

It is possible that by implementing performance management within the company could have a negative impact on the immediate performance of individuals and indirectly the organisation. This could be because of the following reasons:

 

2. Degrading of Communication:  

Performance Management is a two-way communication process and should managers neglect this and turn the performance review into a one-way disciplinary interview it will have a negative impact on the employee. Should the employee feel that this interview is just to be reminded of things that went wrong, it will have a negative impact on the employee's performance. There need to be a balance between providing negative as well as positive feedback. Negative feedback should be given in such a way that the focus is on improving the employee's performance the next time the task has to be performed and not on another parent-to-child session telling the employee he hasn't done his job. The focus should either be on giving guidance as to how to prevent this issue occurring again or even clarify the requirements should it appear that this was not understood by the employee.  

3. Lack of Management commitment:  

Even though you may spend lots of time and effort in designing and implementing a performance management process for your organisation it may have a negative impact on performance due to the level of management commitment. The most important factor to successfully implement this process is the commitment and support of Top Management as well as Line Management. Employees must "feel" that management is committed to the process and it is to their own benefit to improve their performance, as there are some rewards in the pipeline should they improve their performance.  

4. Subjectivity:

Subjectivity during the performance management process with specific reference to the manager, is one the most fatal elements that can negatively impact on an employees performance. I have noticed many times how subjective evaluations of managers can negatively impact on the employee's performance. Therefor it is extremely important to eliminate subjectivity of performance evaluation by utilising specific measurable performance indicators i.e. financial statistics to prove whether the employee has dome his job or not. Usually the "gut feel" evaluations are very subjective and can be influenced by the current emotional state of the manager. To further eliminate subjectivity of performance evaluations is to implement a 360º Performance management process. Various people provide their inputs regarding the performance of the employee to provide a more objective and fair reflection thereof.  

5. Lack of Rewards:

Should there be a total lack of rewarding the employee for his performance (either negatively or positively), the performance management process will not be very effective in improving employee performance. There is always a "what's-in-it-for-me" element that you will have to address. Employee must see the benefits of the process. Whether financially or by "soft" rewards (i.e. being nominated as Employee of the Month).
6. Negative Attitudes:

 Negative attitudes of managers:

1. Conflicting goals with regard to performance evaluation.

2. Lack of knowledge regarding the setting of objective performance standards.

3. Incompetence to distinguish between responsibilities that the subordinate has control over and responsibilities the subordinate does not have control over.

4. Fear of communicating performance evaluation results to the subordinate.

5. It de-motivates employees.

6. Performance evaluation is used for reprimanding poor performance.

Negative attitudes of subordinates :

 

1. Lack of understanding why performance is evaluated.

2. Lack of objectivity and fairness.

3. Subjective measuring used for performance evaluation.

4. Personality evaluation and not evaluation of outputs.

5. Managers attitude that the subordinate is in full control of his performance.

6. Nothing is done after the performance evaluation.

7. Performance evaluation is just a tool to discipline the subordinate and has no advantages for the subordinate.

These are just a few examples of the disadvantages / problems that performance management has for the individual, the manager and the company. However there may still be more items to add to the list, it is important that when you implement Performance Management that these disadvantages / problems and attitudes are identified and specific features or actions are built into the process to counter the effects of these disadvantages / problems / attitudes.