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What are the consequences of a poorly structured performance management process?

by , 25 May 2015
Everyone wants to be able to implement an effective performance management process. This helps you to evaluate and measure individual performance.

Moreover, when it comes to an increased productivity, this can only be possible if you make sure the everyday actions fit the main strategic business goals.

Doing this also offers "visibility and clarifying accountability related to performance expectations".

An efficient performance management process does the following, says Successfactors.com:

-    Documents individual performance to support compensation and career planning decisions

-    Establishes focus for skill development and learning activity choices

-    Creates documentation for legal purposes, to support decisions and reduce disputes

When it comes to improving performance through various practices, here are some of the most common and recommended ones, as provided by the same source:

-    Delivering regular relevant job feedback
-    Setting and communicating clear performance expectations
-    Linking performance to compensation clearly
-    Identifying organizational career paths for employees
-    Evaluating performance and delivering incentives in a fair and consistent manner
-    Providing appropriate learning and development opportunities
-    Recognising and rewarding top performers

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But what are the consequences of a poorly structured performance management process and what downfalls could you encounter?

First of all, when the individual goals aren't aligned with business strategy, time and resources are wasted, explains our source.

A low employee engagement levels could be proof that individuals are not performing at their best.

Moreover, inconsistent evaluation criteria and rewards can lead to mistrust, lower productivity and higher attrition.

An impact on employee's morale can take place in case top performers "see no differentiation in performance ratings, opportunities and compensation from underperformers".

Also, lack of documentation, visibility, and accountability can negatively affect stakeholders who are demanding more and more transparency.

Another consequence is represented by the fact that "if accurate performance information is unavailable or difficult to access, training and development decisions along with project assignment decisions may not be made in the company's or the individual's best interests".

You should keep in mind that a once a year process can't really give a proper review to managers on problems in a timely manner.

A final consequence is that an improper documentation when it comes to performance can lead to legal issues.

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