7 Big Mistakes Companies Make With Performance Management

7 Big Mistakes Companies Make With Performance Management

In your company, if everyone simply turns up for work, cruises through a shift, and clocks out, you’re not going to build a high-performing organization. 

Performance management is the art of making good work happen. It’s making sure the activities of departments, employees, and managers all point in the right direction – to your company’s goals. Providing an environment to thrive in is part of that, as well as building processes and lines of communication that work.

Performance management isn’t a simple business, but it’s critical and needs to be deeply embedded into your company culture. When overlooked, you’ll end up with an unmotivated team, and a lack of clarity over what you’re really aiming for. The result? Lost productivity and low morale

Having worked with a wide variety of businesses in different sectors, I’ve seen some amazing initiatives that promote high-performing company culture. On the other hand, it’s so common to see managers fall behind and not take it seriously. 

Here are the 7 biggest mistakes companies can make with their performance management efforts, along with some thoughts on what to do about them. 

1 – Infrequent reviews

In the Performance Management Revolution report by Harvard Business Review, it’s claimed the major limitation in annual reviews is looking backward: 

With their heavy emphasis on financial rewards and punishments and their end-of-year structure, they hold people accountable for past behavior at the expense of improving current performance and grooming talent for the future, both of which are critical for organizations’ long-term survival.” 

Don’t overlook this. Basic human psychology tells us that in order to be happy and healthy, we need things to look forward to, and things to be proud of. If you fear an annual review, there’s a tendency to overwork or ‘crunch’ as it approaches, and the opposite, slack off in the period afterward. 

At Timetastic we don’t have a structured review system, we have a constant dialogue with the team. Instead of cramming all your constructive criticism into one big event at the end of the year – which is emotionally overwhelming for anyone, and too much to digest – make your performance management an ongoing process, small steps during the year, continuous improvement and refinement.

As you become more agile and flexible, your annual appraisal system will look like an archaic mode of employee development. More frequent meetings between managers and employees should happen alongside project beginnings, endings, and waypoints. Check-in when challenges appear; it’s the perfect opportunity to revisit performance alongside improving the way you do things in the future.

2 – Not communicating enough 

Nothing saps motivation like lack of clarity around what they should be doing, and how they’re doing it. Without clear, regular updates on performance, your team will be asking themselves:

  • Are they doing the right thing? 
  • When will they see the results? 
  • How do they know if things change? 

And if doubts arise because of lack of communication, people start to talk. Rumours arise. Misinformation will spread around the office as workers speculate on your ability to make a decision.

You need to keep everyone up to date with what their goals, responsibilities and performance results are. Constant reminders.

Most of your workers want immediate feedback and aren’t happy with being left in the dark. 

What does this entail? Regular reminders, open discussion in meetings (whether one to one or in groups). Visible progress reports, however best suited to your company; posters and collage boards up on the office walls, email updates, dashboards. As much information as you can provide.

Alongside more frequent check-ins and reviews, don’t downplay communication as a means to keeping everyone on the same path.

3 – Not using software

There’s always been an inherent lack of efficiency in paper-based review processes. 

There’s just so much data that goes into performance reviews, and having things hand-written or printed out on paper is a waste. Lots of effort goes into meeting with your team and noting down thoughts, only to have them filed away in cabinets and forgotten about.

They’re not searchable and you can’t extract any useful analytical data from these reams of paper, invest in some software. Switching to digital systems pays off long-term. Take the opportunity now and reap the benefits down the line. 

Performance management involves a mixture of measurable and subjective data. Evaluations are written in prose and metrics are measured in numbers. This data is too valuable to be locked away on paper, it’s perfectly suited for automated analysis.  

Connectivity is a major advantage of making things paperless, too. Digitise any business data and you open it up not just to a manager, but also any team member they need to share with. You’ve then got the ability to share raw data, analytics and visualisations without having to manually assemble insights. Progress reports and development plans are much easier to work with when they’re accessible to everyone.

4 – Not being flexible enough

Today’s workers have different expectations to those of previous generations. Flexibility is an important value for you to embrace; for attracting the best people, retaining them, and getting the best out of them. Forgetting this, and running your company to a set of rigid outdated rules, is not going to produce that high performing workforce you’re after.

Flexibility is a wide ranging concept, you’ve got to think about the ability to work remotely, either full-time or part-time. Working from home at least some of the time is essential for some people, especially those with childcare needs, or who take care of vulnerable people, even those who have a really long commute.

It also includes being generous with holiday allowance and sick days. Giving workers proper time off to rest, and to take care of themselves when sick, reduces absence over the long term. When they’re tired, overworked and burnt out, employees will be more likely to take sick days and their performance at work will suffer. Having healthy, well-rested workers ensures that they can live up to their potential and produce the kind of excellence you hired them for in the first place. 

If flexibility isn’t built into your processes, environment and culture, you’ll find motivation and performance is lower than it could be, and talented employees will leave. Your appraisals and metrics simply won’t have the right data when you’re seeing people not work to their full potential. 

5 – Failing to guide company culture 

Ignoring your duty to cultivate a happy and healthy company culture can have really damaging effects on your performance management. It’s pretty simple – let your culture stagnate enough and you won’t have any performance left to manage! 

Company culture is more than just a statement in a marketing document. It’s more than platitudes you tweet out or slogans painted on the wall. It’s the shared values, beliefs and behaviours that run through your organisation from top to bottom. 

How do you develop company culture? Well, start by defining what you want it to be. Writing it down and sharing it through a culture deck is a great way to start. Make sure everyone knows the kind of company you want to be – from new hires to long-term veterans. 

This will involve specifics (like your absence policies, how reviews work, how break times work, etc.) but also more broad declarations of “how we do things around here”. Do you promote employee wellbeing? Do you encourage open discussion around company goals? How much financial performance data do you share? 

For example, you could address concerns like “What should I do if I feel my manager is treating me unfairly?”, or “Am I expected to answer work emails when I’m not at work?” 

That’s the first part, anyway. Declaring these things and writing them down is a step in the right direction, but you have to actually live them. Employees won’t trust you if you say one thing and do another, so make sure these behaviours and values percolate throughout the organisation, from the very top to the bottom. 

Having a progressive, healthy company culture won’t just help you increase employee performance. It’ll help you attract and retain the best talent, and will act as a positive brand asset for years. You can be a leader in your industry not just by what you provide to customers, but by how you treat your staff and run your company. 

6 – Not investing in employee development 

Setting goals and KPIs is standard practise in monitoring progress these days. But what about your employees?

Without targets and milestones that benefit your team, they’ll feel like they’re giving their life to the company without anything but a salary in return (note, a salary alone is not enough to get the best out of people) So investing in staff ethically is something any high-performance company needs to do. 

We admire social media company Buffer’s policy on staff career development. For every member of their company they provide a fund of $800 per year, called the ‘Growth Mindset Fund’.

This is to be used for attending conferences, getting coaching, buying books, subscribing to journals, taking online courses, and more. It’s also a flexible fund; if employees want to use more, they just have to ask their manager and it’ll be considered. 

It shows real trust to offer something like this, and undoubtedly helps people upskill themselves and stay engaged with their jobs. And it’s why Buffer is one of the most sought-after workplaces in the digital world (they’re fully remote, too).

Just like having a compassionate company culture, having a development program for your employees will help attract and retain the best talent while making sure you get the best performance from them. The up-front cost is sure to pay off later on with happier, better skilled, more engaged workers. 

7 – Not giving proper recognition

Just like career development, there’s another non-monetary reward employees thrive on – recognition. Sure, money is essential, but people want a sense of achievement when they do good work that’s more human than just achieving an objective.

So failing to congratulate your team members on a job well done will damage performance by making them less motivated to work as hard in future.

Positive feedback is really important for staff wellbeing. There’s a number of ways you can deliver it; whether that’s directly in face to face meetings, giving shout outs in group meetings, sharing highlights and achievements via email and workplace chat, or decorating the workplace with congratulatory displays. 

Employee of the month type awards are a bit clichéd, but more specific awards can be a fun way to celebrate big and small wins – best improvement, most helpful colleague, funniest joke, things like that. 

If you have someone in a role that’s more difficult to track performance in (like a support role, perhaps), regular thanks and recognition will provide a big boost to their wellbeing and motivation too – especially as they’re less likely to hear it.

About the Author

Gary Bury is co-founder and CEO of Timetastic, an independent and profitable web app for managing time off work, used by thousands of companies around the world.


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