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"PeopleStreme Human Capital provides Performance Management
aligning employee performance appraisal to the strategic plan. Available globally, the software utilizes
performance objectives aligned with strategic key performance indicators."
Source : PeopleStreme
Mistakes in Performance Management
Performance Management is also known as :
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Enterprise Performance Management,
Performance Management Solutions,
Performance Management Guidance,
Performance Management Software,
Workforce Performance Management,
Performance Management Business,
Corporate Performance Management,
Performance Management Articles,
Performance Management Forms,
Employee Performance Management,
Performance Management Definition,
Performance Management Tools,
Operational Performance Management,
Performance Management Initiatives,
Insurance Performance Management,
Performance MGMT Reports,
Performance Management Guide,
Performance Management Process.
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 this area.
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-to-day management.
Performance Management is the process that focuses employees, guides them to success and
assists in achieving the organisations goals. Appraisal without these objectives is a mistake that
provides little value to the employees, managers and the organisation.
Implementing Performance Management on Paper
In large organisations, manual Performance Management systems typically fail 18 months after
deployment. Compliance typically reduces 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 automated system that provides line managers with a
simple way to implement Performance Management. An automated system provides both HR and
line managers with a way to keep on top of the process through meaningful compliance reporting.
Force Fit Application to Automate Performance Management
One of the largest mistakes we have seen in Performance Management is to force the organisation
to change well established and highly functional processes (Force Fit) so that a new software
application will work properly. Performance Management is a journey and as such organisational
maturity and culture 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.
The message here is to ensure that the system which is deployed matches the level of maturity of
the organisation and the skills of the line managers and has a low level of change management in
the initial implementation. The criteria and measurement may be increased in years two or three
and then moved on to tighter remuneration linkages as well as other more advanced processes such
as Succession Planning, which draws on historical performance data.
Another mistake we have seen is to develop and deploy an in-house Performance Management
application. The applications are typically sub-standard, lack reporting and are often very difficult to
use. There is rarely a meeting of the minds of the stakeholders, especially IT and HR. The end result
is that compliance falls, the application is removed and HR has to start over with a very cynical
Assuming Line Managers can Cope with Manual Performance Management
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. i.e. compliance with the system. 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 employees 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.
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-to-day 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.
“Automating Performance Management will lower the quality of Objective Setting
This is a comment frequently made by those not familiar with the practical implementation of
automated 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.
In any review or objective setting meeting, one person will be writing or typing the outcomes so that
they are recorded. Whether the information is written or typed should not matter provided that the
person writing the objectives/review is competent at the process of recording the outcomes. If the
manager is not effective with a keyboard, then the manager should be encouraged to print the
automated forms and record the session in writing, the data transcribed into the system at a later
time. This is still better than a manual system because the data is recorded and can be reported as
and when required.
Automated systems are not designed to work with data entry only, i.e. where the staff do not meet
each other. The benefits automated systems deliver are ensuring the process happens, not
denying managers and staff a meeting where there is a quality exchange of information.
Well designed automated systems ensure that this cannot happen (review conducted with no
meeting) by providing a feedback loop to the manager of managers. The feedback asks a number
of questions including whether or not the objective setting and review were conducted face to face,
and the quality of the process. An electronic signing facility should also be provided so that both
employee and manager can sign their own part of the review.
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:
- a) Status reports for managers and HR as to process compliance.
- b) Access to the information. With on line systems, the data is available when you
need it, you don’t have to wait for forms to be sent to you.
- c) Features such as the Performance Diary which 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.
You cannot create objectives for all positions
We have often heard this comment from both HR and line managers. The truth is, every position
can and should have objectives. In addition to the two methods most often used for senior
management (Strategic Cascade Down and MBO method) IXP3 has pioneered the Outcomes
method which provides a simple to use framework for setting objectives for difficult to measure
The Outcomes method is typically used where work is not quantitative but qualitative. We typically
use the Outcomes method for creative designers, receptionists, marketing and several other
I can’t use an automated system as I have matrix positions
Although rare, this comment has been made to us before. IXP3 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.
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
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
This approach means that focus can be applied to other issues and focus is not diluted solely to
project management objectives.
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:
- a) Increase quality of Human Capital through personalised development plans thereby
increasing the organisations capability.
- b) 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
For more information:
Please refer to our web site at:www.ihr3.com
Or please contact:
Phone: 613 9869 8888