7 myths about performance management systems
If your company still uses a traditional PM process, everything you think you know about performance management could be wrong.
Here are 7 myths about performance management systems, and why they are such falsehoods.
Myth #1: Once a year performance reviews are all you need
For a number of reasons, conducting annual performance reviews as your sole performance management activity is ineffective. In fact, it can do
more harm than good. “Once a year evaluations are really rife with bias and are not reliable at all,” says Libby Stewart, 7Geese’s Head of Professional Services and Research. “If people aren’t having positive experiences, we are actually missing the end goal. We are not driving future performances with these processes. Almost no one likes annual performance reviews and the data supports that.
If you’re only checking people’s performance once a year, it doesn’t leave your company any time to course-correct an improve throughout the rest of the year. Your employee could be overperforming in their current role, slowly becoming a flight risk as they look elsewhere for another challenge. You may have entire teams that have lost their enthusiasm for your company culture or individuals who need additional coaching to achieve the desired results of their role. Ignoring these factors creates unseen overhead and impedes growth.
Lastly, infrequent review processes can fall victim to recency bias — the way a person performed on their most recent project may affect the perception of their effectiveness always. As we are sure you can understand, this may be a false indicator of their ability, good or bad. You run the risk of having inaccurate assessments, the less frequently you conduct them.
Myth #2: Setting one primary company goal is good enough
Your company has a vision statement, along with annual and quarterly sales goals. That should be enough to help you stay on track and achieve your outcomes, right? Maybe if you’re exceptionally lucky, but in most cases, it takes a lot more than that.
In order to achieve excellent company performance, you have to identify goals at the team and individual level, so that everyone knows how their work affects the company’s outcomes.
We use OKRs (Objectives and Key Results) but any goal-setting methodology that gets everyone in the company involved is fine with us. “I’m goals agnostic,” says Libby. “Whatever approach you use, just make sure you stick to the science and make sure you have quantitative goals.”
Myth #3: Performance management just helps executives identify the rockstars and underperformers
It’s is a common mistake that many companies make — thinking that performance reviews are nothing more than a chance to separate the wheat from the chaff. But performance management is about more than just measuring the performance of your people. It’s about letting them know that you’re invested in their career growth and the impact they can have on your company’s success.
People want to feel invested in and listened to. It’s as much for them and their needs as for the company. A well-structured performance management program may not only yield results in performance towards goals but also help your company reduce employee churn as they remain loyal to you over the long term.
People who feel like the company cares will stay longer and perform better. People who who do not enjoy a positive employee experience are almost twice as likely to want to leave their company.
Myth #4: Working long hours is an indicator of commitment and performance
We could have listed this myth first. Put simply, presenteeism is a false indicator of job performance. It’s even more difficult to quantify your team’s performance during our current remote work realities.
Have your people self-direct the measurement of outcomes against their individual goals for a truer measure of performance. When your people and their managers are in alignment around the goals of each individual, it’s much easier to tell who is getting it done and who is merely filling a seat for appearance’s sake.
Myth #5: Employees only want to know how much of a raise they are getting
Whether compensation discussions are part of your performance management processes is up to your discretion. You can set the expectation that your process will include remuneration changes, or you can set the expectation that they will not. One thing that a lot of companies don’t realize that is that just as important for workers as a financial incentive is job satisfaction and knowing they are making an impact.
Your people will perform better when they know how their work affects outcomes and they are recognized for it. “The Employee Experience Index,” a study by IBM of over 100 companies and over 600 employees showed that when employees agree that they receive recognition for good work and feedback on their performance, they reported a better overall employee experience over 80% of the time.
The career management and growth of your people is what helps your company and its culture succeed. If you conduct performance management activities frequently, you can address any remuneration corrections as they arise, or as part of a usual schedule. But don’t make the mistake of thinking that people are only motivated by money when they engage in your people management activities.
Myth #6: Performance management doesn’t work
This one is both true and false. Many companies implement performance management systems that end up being unsuccessful. The failure of a performance management system can be caused by any number of reasons:
- No one knows why you’re doing it
- There’s no appetite for change at the company
- No one knows how to execute the changes that need to be made
- The process only serves the needs of the company and not its people
- Taking a flavor-of-the-month approach to implementation
- Superficial attempts at change, e.g. “throw tech at it”
- Conducting one-off, once-a-year performance appraisals
- Not linking the program to anything real or tangible (compensation, culture, rewards)
- No buy-in or participation from the executive (leading by example)
The companies who treat their performance management as a complete ecosystem, with continuous performance management, outperform those who don’t.
The aforementioned IBM study found that companies in the top 25% for employee experience scores outperform the companies in the bottom quartile by a factor of over 3x.
Myth #7: We just need a performance management platform
We sell exactly that and we would love to say it’s true. The truth is you need more than a tool. You need a change management system — one the recognizes that any new process or solution in your workflow and tech stack will require your people to make adjustments.
Continuous performance management takes into account important pieces like recognitions, goals, frequent feedback, and career management.
There is plenty of science to support the reasons to invest in a performance management system. Follow the science of goal setting, be transparent with your people about the company’s progress and their contributions, and support that goal attainment with a complete ecosystem.
Learn more about performance management tools and ecosystems
Want to see how 7Geese can help? Find out how your company can implement a complete performance management process that helps you track towards the goals of your company and all of its individuals. Contact us for a demo and we will show you around.
To learn more about OKRs, read our ebook OKRs for companies.