Why Performance Systems Fail

Organizational Performance should never be confused with performance ratings. Sadly, sometimes the two end up having nothing to do with each other.  Let's talk about a couple of myths before we dive into why Performance Systems Fail. 

Myth #1: Performance ratings are a reflection of organizational performance - Performance ratings are reported in distributions but are really reflections of many leader's assessments of the goals for a particular employee. Performance occurs all the time outside the traditional performance management system. Sometimes the rating is not all-encompassing. There are many reasons this happens. The quality of the goal, the measurement of the goal, application of the rating, and the calibration of ratings to name a few.  

Myth #2: Employee performance means organizational performance - See Myth #1. Because of all the issues with Performance Ratings, it is impossible to have a broad employee population reflect organizational performance. In fact, organizations post large EBIDTA numbers and have employee performance gaps all over the place. Organizations also have high performing employees be part of an underperforming organization or department.  

Managing the work, performance, and outcomes of every employee so that organizational performance occurs means dissecting the Performance Management System. Remember, ask why it matters, what success looks like and what is in the way.  

    • Why even have a Performance Management system?  Have you built a system that has become a bunch of administrative tasks and papers to justify bonus payouts? Is it a way to deal with the problem employees? Did you purchase an HRIS system and now trying to design performance to fit the technology?  
    • What does an effective Performance Management system look like? Are you starting with the right talent? Do they have the skills and willingness to do the job? Do you have the right scoreboard to win the game? Is it flashing the score daily? Is your pay for performance system a farce? Are people getting bonuses that did not perform? Is the money fairly aligned with outcomes? Are leaders offering the right information, goal setting, support, and feedback? Are barriers to performance being handled immediately? Are performance and development being confused?  
    • What are the real pain points with the current Performance Management System? Once you know why and what success looks like, you have to take a hard look at your current system. Look at it with no defensiveness or arrogance. Really look at where you are at.  And make sure you look at it broadly.  Ask the CEO, the C-Suite, key executives, leaders, employees.  

So here it is... why Performance Systems Fail:

  1. The C-Suite has not defined the “why” or lack alignment on the “why” before jumping to the “how”.
  2. Lack of alignment in the C-Suite on success indicators of what having a system will achieve. 
  3. Executives and leaders are too defensive to identify the gaps with the current performance system. 
  4. There are overcomplicated processes and technology and a resistance to change them. 
  5. Performance is disconnected from Culture and Leadership. 

To read the full article Why CEOs Are Struggling to Solve the Talent Trifecta:  Performance, Culture and Leadership Read Now

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