Mistakes that ruin Performance Management in business

What’s performance management? To put it simply, the goal of performance management is to close the gap between a company’s desired results and its actual results.

Even though the details may change, companies generally follow the same steps:

  1. Establish goals and objectives that derive from a strategy
  2. Monitor how those goals and objectives are satisfied
  3. Evaluate the performance, generally in the form of performance reviews
  4. Adjust system for better performance by fixing performance problems
  5.  Reward top performance
What could go wrong with that? Apparently, a lot

In fact, performance management is one of the most hotly debated topics in management. It is the object of much criticism if not ridicule: useless, inefficient, antagonizing, overly complex, hated by employees and managers, referred to as one of the 7 deadly diseases of management. It’s even seen as a source of actual brain damage.

And yet, most companies still implement performance management process. Not because they are masochists, but because they answer to a profound need: creating order out of chaos by planning, setting goals and executing them to improve the company’s outcomes.


Performance management is an endeavor fraught with problems and pitfalls, but still necessary, and the first step in overcoming those problems is to become aware of them.

You don’t understand what performance management actually is

Probably the most common misunderstanding about performance management is that it is not the same thing as performance review. The performance appraisal is only a part of the whole process outlined above.

Worse, performance management is often confused with the mostly outdated annual performance review. If it is to be taken seriously, performance should be monitored on an ongoing basis so that problems are fixed when they arise, and opportunities exploited as soon as possible. It is a continuous process, not an event.

Thinking this way is one of the things that get organizations into trouble, because the yearly appraisal process, no matter how well designed, is not enough to ensure that employees perform at their best.

It is also not a purely administrative burden: performance management is about making people and organisations more efficient in a measurable way, not about filling forms and having meetings to collect data that will never be used.

Basic misunderstandings about performance management explain both why it is reviled, and why it is inefficient when companies decide to go through with it even though they are missing critical pieces of the puzzle.

You think performance management is a silver bullet

Very often, performance management is seen as a kind of monolithic solution that will fix every problem in a company. Company isn’t doing so good? Performance-manage the hell out of it. But companies are far too complex for that to exist.

As Alfredo Behrens highlighted in an article :

“What are we looking for? Improved alignment? Fair compensation? Competency development? Let’s stop thinking a single approach can change our organizations. We need more purpose, realistic values, increased feedback, more autonomy, better recruitment approaches, only to cite some of the changes we need to go through.”

Performance management is not a single comprehensive theory that can be applied blindly. It’s more of a bag of tricks that need to be applied with high dexterity so that your efforts in one area do not cancel out with efforts made in another.


This article was first published by Beeye