Challenges in setting up good Performance Management system

Organizations face various challenges when setting up a performance management system (Fadil,Gelina ,2012). Further,   some of the interesting challenges of performance management are content of appraisal nowadays goes beyond task performance to incorporate contextual performance. A key challenge in this area is determining what constitutes good performance and hence what should be measured and stimulated. They argue that as organization’s leading performance indicators shift towards innovation and the creation of knowledge, more non-routine work and interdependence between workers is found and performance criteria at lower levels should shift to reflect this( Deanne , Paul and  Jaap , 2004).Also defining the evaluation criteria and Identification of assessment criteria is one of the biggest problems facing the executive manager ,creation of assessment instruments that focus on developing employees is another challenge  ,lack of competence in choosing the evaluation criteria, Errors in the assessment due to subjective assessment ,The assessment process can be faced to resistance from employees and trade unions for fear of negative assessment (Fadil,Gelina ,2012).The context of Performance Management is changing and cultural differences and the impact of new technology as interesting emerging areas . For instance, as more and more organizations work internationally, collaboration and coordination of people located in different nations increases. Often this collaboration within organizations takes the form of global work teams. Performance Management is problematic in such teams as members are likely to have widely differing viewpoints about appropriate ways to reward, recognize, evaluate and train and develop team members ( Deanne , Paul and  Jaap , 2004).

Furthermore, Bart, (2000) asserts that in order to guarantee successful implementation, an employee’s performance management system should balance consistency and flexibility.  The performance management challenge in organizations has many dimensions in today’s business environment and creating focused initiatives to overcome these challenges is not a silver bullet approach. In many cases remuneration schemes are driving the performance system, which creates a number on long term consequences in organizational behavior and culture. In other cases senior management are so focused on scorecard management to hold people accountable that the creation of the scorecard is not aligned with business focus areas, but rather a number of deliverable projects and tasks.  

According to Williams (1998), the first challenge is the lack of alignment due to various organizational processes being created in isolation.  The link between Strategy development, budgeting and operational planning is developed by different groups of people with different frameworks being used. The performance management system lacks alignment between individual performance, departmental performance and organizational delivery and so all systems default back to financial measurements. Furthermore, the second challenge happens at various levels of the organization in that poor measures are developed, in many cases targets are set but no relevant measure is put in place. In other cases no data can be collected or is kept as evidence to track performance (Armstrong, 2008) .Moreover, the Leadership and Management challenge has a huge impact on integrating and aligning a management system to deliver a comprehensive performance management system. The commitment and understanding of leadership and management of the requirements for achieving a workable performance system is critical to performance success (Armstrong, 2001). Further, management needs to appreciate that performance management is not an event but something that is managed daily but recorded and reported at certain times through reviews and appraisals(Ed Lawler, 2005). The management of poor performance is normally a reactive action, but in many cases it is delayed and therefore turns into a discussion that is difficult to make relevant. Another reason poor performance is not managed on time is the lack of valid measurements and the collection of required evidence and measurement data. The solutions for these challenges are embedded in a comprehensive approach ensuring alignment or planning, management and performance systems (Werner, 2014).

     Video 1 : 8 challenges for performance management 

     Source : Gary Cokins ,2009

Armstrong, M. (2001), Performance Management: The New Realities. Institute of Personnel and Development, London.

Armstrong, M. (2008), Performance Management: The New Realities. Institute of Personnel and Development, London.

Barts, (2000). What is Performance Management for You? The Performance Management .

Ed lawler ,A.g.,(2005), Managing Individual Performance. American Compensation Association: San Francisco.

Werner, J. M. (2014). Human Resource Development ≠ Human Resource Management: So what is it?. Human Resource Development Quarterly. 25, 127-139. doi:10.1002/hrdq.21188

Williams, (2002), Managing Employee Performance, Design and Implementation in Organizations. Seng Lee Press: Singapore.