Disadvantages of a Poorly Implemented Performance Management System

A performance management system in any organization is an extremely crucial HR function that drives and directs all decision-making processes in the organization and determines the effectiveness of individual and organizational performances. A strong performance management system can play a key role in transforming a good organization to a great one. But on the contrary, a poorly implemented performance management system (PMS) can create several issues and over time can cripple the functioning of the organization. We’ll analyse the several adverse consequences that an organization is likely to face when it does not have a robust PMS in place.

If a PMS is not functioning as it is supposed to function, it will fail to serve one of its basic purposes – the evaluation of the performances delivered by employees. Since the results of appraisal or assessment determine the decisions regarding promotion, salary increment or revision, rewards, variable payments etc, an improper appraisal resulting from a weak PMS will lead to improper or wrong decisions by management. This will result in issues like:

–          A decline in motivation to perform one’s best as employees will feel that their superior performance did not get rewarded suitably and it did not bring them the desired increment or promotion or recognition.

–          The PMS will be perceived as an unjust and unfair one by the employees. If an employee perceives another employee receiving same level of reward in spite of performing at a comparatively lower level, he will feel resentment towards this disparity and unequal treatment of employees by the organization.

–          Employees may feel resentment towards management for not recognizing their performance or for showing lack of parity in rewarding others. They may also feel resentment towards other employees who they perceive as the recipients of undeserved rewards. This resentment is detrimental for the desired healthy relationships amongst individuals in the organization.

–          Above all, the organization can face an increased attrition rate. Dissatisfied employees can start looking for other opportunities. These employees will either quit the current organization or refrain from putting adequate efforts into their work until they get the opportunity to quit the organization.

PMS is also aimed at providing a constructive feedback to the employees about their performance on a regular basis. This regular and appropriate feedback helps the employees in identifying where they are going wrong, what are their weak areas or what deficiencies they need to take care of. A weak PMS will:

–          Lower the self-esteem and confidence of employees if the feedback given is not pertinent or adequate or appropriate, and fails to let the employees know about their real strengths and shortcomings.

–          Hinder the developmental process of employees. Employees will not find the scope to rectify their mistakes or improve their performance in absence of a timely and proper feedback.

–          Make it difficult to track the errors or their sources at a later point of time. So those sources remain unidentified and the year-end appraisal process can’t help in discovering those. But a regular monitoring and feedback can help in pointing out the errors and reasons behind them without delay and thus facilitate in taking timely corrective measures.

–          Lead to over-expenditure of resources, time and money if the issues are not detected and dealt with in a timely manner.

–          Failure in identifying proper training needs. Feedback serves as an important source from where training needs can be identified. If the feedback is not proper and relevant, the sources of performance deficiencies will not be uncovered and thus a useful training curriculum will not be designed.

The PMS process needs commitment of time and money. When a weakly designed PMS fails in accomplishing its desired goals, the entire time and money spent for it is wasted. Further, the PMS will be perceived by both managers as well as employees as a meaningless process that simply eats up resources and causes work overload. Consequently, neither employees nor managers will show the required commitment and spend adequate effort and time when doing their parts in this process.

The inaccuracies that result due to a poor PMS are not always committed inadvertently. In a poorly implemented PMS, it’s highly probable that standardized procedures will not be in place. The absence of standardized procedures coupled with lack of clear communication leads to variance in ratings across and even within departments for equivalent performances, lack of awareness on how a particular rating is arrived at or how a particular rating is linked to a particular level of reward etc. It also creates opportunities for unfair practices like fabrication of information about an employee’s performance, favouritism, biased decisions etc. This in turn can sometimes create another type of challenge for an organization – lawsuits filed by disgruntled employees who feel that they have been victims of unfair treatment owing to an unfair PMS.

Since a poorly designed and implemented PMS can lead to several issues ranging from issues like high attrition, employee dissatisfaction, loss of motivation etc. to issues like complaints of unfair treatment, expensive lawsuits against the organization, loss of organizational reputation etc., the wise decision would be to invest the right amount of effort and time to put in place a robust PMS. This investment will be a long term investment that will keep on reaping rich rewards for the organization and its employees.