Performance Management Systems have been criticised for decades, as new practices and use of technology have failed to bridge the gap. However, the management of employee’s performance remains one of the biggest challenges for line managers and leaders in this new normal. 35 years ago Edwards Deming described the idea of evaluation of performance, merit rating or annual review as alluring, and the result of the process is exactly what the word means. Many other followed Edward Deming and got on the bandwagon as performance reviews are not done often enough or too often managed poorly. Constructive and unbiased feedback is like finding water on mars. Covid-19 has changed business models, workplace, and the workforce needs to adapt, so how we evaluate performance needs to be carefully considered. It is especially important to plan for the competency development for the new normal.

Organisations invest mountains of resources in implementing performance management systems, but the outcome is always disappointing as employee engagement, employee motivation, and employee performance is not always guaranteed. For employee’s performance management system may not reward high performance or motivate them to improve performance.

Line managers may find the process time-consuming and difficult, taking them away from their core work. Senior management does not believe that performance ratings are true reflection of employee’s efforts, which may complicate connecting other processes like talent acquisitions, employee engagement or employee motivation. HRs face the pressure to simplify and make the most out of their performance management systems. Why performance management systems have become ineffective in a way that frustrates employees and decreases their continuous and consistent performance? Here are a few reasons why the performance management system in most organizations could be broken as they fail to provide useful feedback and establish clear expectations.

It is about too many things, such as providing the basis for talent acquisitions, career development, building relationships and on-going communications, managing expectations, continual guidance and providing documentation for compliance. Although these SMART goals are important, they serve essentially distinct interests and often struggle with each other. Each of these require entirely unique measures, metrics, and systems, yet most performance management systems try to meet all functions with a singular approach.

Mistrust: Many times, managers are bias in performance appraisal reviews and therefore this process needs careful monitoring to make sure they do the right thing. This mistrust may lead to unnecessary processes that requires too much written documentation, several steps and too many layers of approvals, all these adds complications with no value.

Faulty assumptions about people behaviour and psychology. Managers believe that impartial performance ratings will motivate employees to improve their performance at work. In fact, 80% of employees already believe that they have achieved the highest levels of performance, and they do not want to hear otherwise. High performers often find the performance evaluation process demotivating and time-consuming.

Performance review systems are too theoretical and offer truly little support with communication, feedback and relationships among employees and managers. The key focus remains on the steps to complete, filling long forms and the processes to follow. With remote working this will be even hard to achieve.

When performance management is done poorly it can undermine employee confidence and damage relationships. Managers regularly provide informal feedback and appreciation to employees. However, the same managers have often been seen formally documenting any negative traits of performance of behaviour, just for fear of damaging relationships with that employee they count on to get the work done. Managers now in the new normal are expected to manage people they may not see for months, and who are dealing with issues that cover analysis of complex data or negotiations.