From the course: Human Resources: Building a Performance Management System

Impact of performance management systems (PMS)

From the course: Human Resources: Building a Performance Management System

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Impact of performance management systems (PMS)

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- One of the biggest problems I see with performance management is that instead of being focused on development and positive reinforcement, managers get sucked into simply rating their employees. Unfortunately, this also means they're failing to take advantage of the benefits of performance management, to collaborate on improving performance. Ratings might be helpful for pay increases, but they don't help develop employees and they certainly don't help organizations advance their strategic goals or enhance culture. If you fail to give employees proper feedback, they impact is that they can disengage because it hurts their morale. This means that employees are less productive, make more errors, call in sick, and in the end, probably leave, costing you in turnover. Employees might also unintentionally hurt the organization itself. If you hire a receptionist who never receives feedback, but his manager knows he forgets about people he leaves on hold sometimes, then what happens to those customers who were left on hold? They purchase from your competitor. If the manager openly communicates about performance, the receptionist and the company will be much better off. One constant problem I see across my clients, who call me because the culture is out of whack, is that managers aren't using appropriate performance management techniques. I see this resulting in high turnover, reduced engagement, and poor relationships. All this means is that employees don't really want to be at work, which makes managing them harder. Not to mention, every time an employee quits or does a job incorrectly, management is tasked with fixing the problem. This sounds exhausting, doesn't it? In terms of impact on the organization, we all know that leaders like phrases like, return on investment and bottom line. Well, poor performance management results on a hit in your bottom line, and there's not return on investment for poor management skills. If managers are trained to deliver performance and coaching conversations, and given the tools to have positive, collaborative conversations and relationships with employees there's a bottom line result. From all sides, you can see that performance management is vital to organizational success. Without a proper system, your employees suffer, your management suffer, and your organization suffers.

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