Why are companies struggling to implement performance management systems?

Why are companies struggling to implement performance management systems?

In this article I want to share my experience in implementing performance management systems and why companies fail to build a performance culture. At face value every organisation wants to claim that they have a functional performance management system, however, in reality there is no value added to the business by the performance management systems. So why do companies fail to build a performance culture?

  1. Implementing a performance management system because the Board said so

When you ask even some senior executives why they would want to implement a particular system of performance management and measurement you are informed that the Board wants it. Imagine when your executives are not enlightened enough to see value in the system, will it work?  Performance management systems only work when the top leadership, the Board included, see the value the system will add in driving business performance. Make sure everyone is on-board.

  1. Performance management not linked to the strategy

I find that sometimes despite the best effort by HR professionals to link the performance management system to strategy, in the majority of cases there is no connection. I find that most performance management system are job description driven rather than strategy driven. The challenge with anchoring your performance measurement system on job descriptions is that job descriptions are generic, static and do not speak to the strategy. The strategy on the other hand reflects the top priorities of the business and these priorities change from time to time and may never appear in a job description. The tendency by those charged with designing and implementing performance measurement systems to default to job description is the major drawback in implementing performance management systems.

  1. Not involving the people

Most strategy documents are “elitist”; they are known only by the top executives. Talking to people at lower levels who interface with customers on a daily basis, they will tell you whatever management is trying to achieve won’t work. They will offer very valid reasons that senior executives rarely pay attention to because they think lower level staff are not schooled enough to understand strategy. The sad reality is that most executives are so divorced from the reality that ordinary workers face on a day to day basis. As a result of this disconnect, the lower level staff will let you run with your strategy until you literally you get tired. They will offer some form of support in public but in private they will resist.  The reality is that if you do not involve your staff in strategy formulation the strategy execution is likely to fail.

  1. Implementing a performance management system because it is fashionable

Most companies implement performance management systems simply because others are doing so. As a result the implementation process is so divorced from the reality on the ground. Such systems are launched with pomp and fanfare sometimes by the CEO and Board members. Give it a few months, it’s forgotten completely because it was implemented with no regard of the company’s visible and hidden cultural currency.  At face value managers and ordinary employees will accept the system but in private they will be whispering that it will fail.  Take time to assess the current and envisaged company culture and assess how ready your business is to embrace performance management and measurement as a tool for driving business performance. Without this assessment and without proper preparation for the impending change process, you are wasting your time and resources.

  1. Imposing a system on managers and employees

Whilst in a hurry to impress the CEO and other senior colleagues, HR rushes to implement without imbedding the system in a change management process that ensures people’s concerns and fears are taken care of. If this is not addressed, you normally notice that managers only carry out performance assessments when HR puts pressure on them to complete the performance assessment forms. With such a scenario, you will never be able to build a performance culture.

  1. Failure to differentiate between good and poor performers

If a system of performance measurement can’t distinguish between those performing to the required standards and those not meeting these standards it’s useless.

  1. No consequence to what people do

Performance improves where people know that good performance will certainly lead to positive outcomes for them and bad performance will lead to negative outcomes. If that relationship is non-existent in your organisation you can forget about making a difference in business performance through your performance measurement system.

  1. Validating your strategy

Your performance management system must be used to validate your strategy. This assumes that your performance measurement system is linked to the strategy. You can do empirical analysis of your performance indicators and they should be able to inform you whether you are winning or not. It will also inform you which strategic initiatives are not   contributing to strategic success.

Memory Nguwi is an Occupational Psychologist, Data Scientist, Speaker, & Managing Consultant- Industrial Psychology Consultants (Pvt) Ltd a management and human resources consulting firm. He is the president of the Zimbabwe Psychology Association. He hosts a radio program HR Perspective every Thursday at 1900hrs on Capitalk 100.4FMhttps://www.linkedin.com/in/memorynguwi/ Phone 481946-48/481950/2900276/2900966  or email: mnguwi@ipcconsultants.com  or visit our website at www.ipcconsultants.com

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