Top 10 Mistakes in Performance Management

"Mistakes do get made, not through lack of effort, but rather lack of experience and understanding in..."

We have worked with many organisations to fine tune their Performance Management systems. In doing so, we have seen many mistakes made, not through lack of effort, but rather lack of experience in this area. This White Paper outlines some of the re-occurring mistakes we have seen over many years of practice in Performance Management.

1. Our Appraisal system does the job

With an Appraisal system, reviews are typically conducted based on the definition of what the employee was originally employed to do, their position description, letter of offer or some other static document. Appraisal systems fail to address the critical issue that jobs change as business and organisational environments change. Appraisal systems do not focus staff on critical performance outcomes but only review if the employee has performed their basic job function.

Our view is that the basic job function should be dealt with through day-to-day management of the employee while Performance Management systems should deal with the critical focus areas. Managers should set specific objectives for business outcomes as well as developing the employee. Appraisal without these objectives is often a waste of time as the manager should be dealing with the core job function during day-today management.

Performance Management is the process that focuses employees, guides them to success and assists in achieving the organisation’s goals. Appraisal without these objectives is a mistake that provides little value to the employees, managers and the organisation.

2. Implementing Performance Management on Paper

In large organisations, manual Performance Management systems typically fail 18 months after deployment. Completion rates typically reduce to less than 30% after 18 months. This is because manual systems do not facilitate effective and timely reporting. Therefore, line managers learn that they can avoid the process by simply not doing it. HR are then blamed for lost forms, line managers don’t complete the process and the process becomes fragmented.

The recovery from this position is to install an online automated system that provides line managers with a simple way to implement Performance Management. An online automated system provides both HR and line managers with a way to keep on top of the process through meaningful reporting. Typical reporting needs line managers ask for include the following:

  • What has been done?
  • What is left to do?
  • What is the quality of my team’s
  • objectives?
  • How well aligned are the people in my
  • team?
  • How are they progressing on achieving
  • their goals/objectives?
  • Where do I need to focus to drive better
  • outcomes?

Furthermore, we have interviewed many line managers and one of their greatest frustrations with manual systems is keeping track of where they are within the process. Managers lose track as to who they have set objectives for, who has been reviewed and what actions they need to take in relation to an employee’s development plan. Invariably, nothing happens as the line managers forget what actions they need to take (forms are sent back to HR and then nothing happens). The fact that line managers do not act, means that staff don’t see action and in turn see little value in the process.

3. Force Fit complex processes

One of most frequent mistakes we have seen in Performance Management is to force the organisation to change from simple to complex processes. This change of process is often accompanied by the introduction of new forms or software. In one instance, HR recommended that line managers evaluate their staff on a Competency model of 15 competencies. On the surface this sounds simple, but the evaluation process required the line manager to rate up to 5 behaviours associated with each competency. In all, this meant the line manager had to rate each employee on 75 behaviors plus other elements of the Performance plan including Values, Business Objectives and a Development Plan.

The line managers did not understand the Competency Framework, said the review took far too long and refused to participate in the process. The basic message here is “keep it simple” and refine the process as managers attain the required experience and understanding of Performance Management. Performance Management is a journey and as such, organisational maturity and manager skills need to be considered when implementing the system. It is pointless trying to get managers to evaluate employees on complex criteria when they can’t even set objectives and review staff against basic objectives.

4. Home Grown IT Developed Application

Another mistake we have seen is where an organisation thinks it’s a good idea to develop and deploy an in-house Performance Management application. The applications are typically sub-standard, not very usable, lack reporting and are “clunky”. There is rarely a meeting of the minds of the stakeholders, especially between IT and HR. The end result is that line managers get an inferior product, HR and IT both lose credibility, completion rates decline, the application is removed and HR has to start over with a very cynical audience. In reality, this is not an unexpected outcome. Performance Management applications are now quite mature (some in their 10th year of revision) whereas an in-house application will be a generation 1 product, suffering from usability, lack of feedback and required reporting. Generally a very big and costly mistake!

5. Assuming Performance Management is easy for line managers

HR practitioners often think that setting objectives is a simple process. This is because HR practitioners are educated in the framework and process and properly understand Performance Management. Line managers typically have little or no appreciation of the process and often struggle with setting objectives. Line managers also tend to defer setting objectives because it means they have to think and plan (thinking and planning is more difficult than doing the day-today job and responding to more urgent work issues).

Our perspective is that any implementation should be complemented with detailed training for line managers. Training must be provided on how to set objectives and appropriate examples provided for each functional unit. In addition, more senior managers may need one on one coaching on how to set meaningful objectives for their teams and ensure their teams are aligned to the strategy.

6. Automating Performance Management will lower the quality of Objective Setting and Review

This is a comment frequently made by those not familiar with the practical implementation of automated online Performance Management systems. The underlying principle of Performance Management is that staff members and managers should meet and have a high quality discussion, not merely type information into a computer.

Automated online systems are not designed to replace the conversation that a manager and employee need to have for objective setting and reviews, i.e. online systems are designed to capture data and provide managers with reports, not replace face to face meetings. The benefits that automated systems deliver are ensuring the process happens, making it easy for employees and managers and not denying managers and staff a meeting where there is a quality exchange of information.

7. People will do it on the computer and never meet face to face

Again, this assumption is a mistake made by people who are not familiar with automated systems. Staff are still required to meet face to face in order to set objectives and perform reviews. The benefits that accrue through the use of an on line system are realized through features that help HR and Line Managers get the job done. Features that do this are:

  • Status reports for managers and HR to process compliance.
  • Access to the information. With online systems, the data is available when you need it. You don’t have to wait for forms to be sent to you or scratch around trying to find the original documents.
  • Features such as the Performance Diary that enable all staff to comment on the performance of their objectives all the way through the year. They can then come to a review fully informed, with meaningful content and have a higher quality conversation than if they were using a manual system.

8. You cannot create objectives for all positions

We have often heard this comment from both HR and line managers. The truth is, every employee can have objectives that align them to the strategy of the business unit that the employee works for. By connecting employees to the strategy, you drive employee engagement upwards by giving the employee a clear picture of their contribution to the overall strategy. We sometimes hear employees saying “I can’t use an automated system as I have matrix positions”. Although rare, this comment has been made to us before. PeopleStreme has overcome this issue through some intelligent software development which routes reviews to not one but two managers. The logic sounds simple but the business rules are complex.

The answer is that matrix reporting can be dealt with through intelligent design and workflow.

9. Using Performance Management for project management

In organisations’ that are very project orientated, line managers are tempted to use the Performance Management system as a project management system. Typical symptoms are the request for many objectives and extremely detailed objectives (high in number). Managers need to be coached to use summary objectives, not one objective for each project. For example, a manager using the project management approach may write 8 objectives that read something like:

  • Deliver the SPACE project by 13th December, budget of $400,000.
  • This may be repeated several times over. The alternative approach would be an objective that reads like:
  • Deliver all projects for the financial year on time and on budget.

Comments are then made in the Performance diary about the projects delivery on time and on budget.

This approach means that focus can be applied to other issues and is not diluted solely to project management objectives.

10. We can’t justify the expenditure on a Performance Management system

Most CEOs want to improve the quality and quantity of their human capital output. Performance Management is one of the most powerful ways to:

  • Increase quality of Human Capital through personalised development plans thereby increasing the organisation’s capability.
  • Increase output through clarity of focus

Performance Management systems are easily justified as an expense or capital expenditure if this is the objective of the organisation. Take for example an organisation with 500 staff. The lowest cost per employee will be in the region of $50,000 per annum assuming all on costs are included. This means that the organisation is deploying some $25 Million dollars of human capital each year. Assuming a 1% improvement in performance, this equates to $250,000 that can be used to justify a Performance Management system.


Performance Management is a very powerful process if implemented correctly. Mistakes can be avoided by consulting experts who have had experience across multiple industries and many implementations quality objectives that articulate where value is being added and where it is not.

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