Do You Have an Effective Performance Management System?

Do You Have an Effective Performance Management System?

by Dr. Rick Goodman on October 28, 2019

In order to get the most out of your team members, it’s important to have a formalized performance management system in place. This is something I’ve written about in the past, and frankly, it’s something that most team leaders say they’re well aware of.  And yet, just because you have a performance management system, that doesn’t mean it’s working as well as it could. Even a well-intentioned performance management system may be ineffectual, and for any number of reasons.

Today, then, I ask a simple question: Do you have a truly effective performance management system in place at your company? If not, don’t panic! I’m here to lead you through some basic troubleshooting steps.

What is a Performance Management System?

First, just a quick word of review; it’s important for us to define our terms so as to ensure we’re all on the same page.

When I talk about a performance management system, I’m referencing the environment you create in your workplace… and the extent to which that environment empowers everyone on the team to do their very best work. I’m talking about the formal processes by which you articulate employee responsibilities; monitor their performance; and provide feedback and course-corrections as needed.

An effective performance management system is one that’s just, fair, efficient, and results in your team members making continuous improvements. Does all of that describe your performance management system? If not, there are several possible reasons why.

What Happens When You Don’t Have an Effective Performance Management System

These are some of the most common reasons why performance management systems fall flat:

  • You don’t offer employee feedback in a timely manner. Let’s say you observe an employee making a critical

    reasons why performance management systems fall flat:

    error. What do you do? Do you stop and offer a clear correction right then and there? Or do you wait a few months for the employee’s annual review to roll around? It may sound like a silly question, but you’d be surprised how many team leaders save all serious feedback for that once-a-year review… which effectively deprives employees of the kind of ongoing, in-the-moment feedback they really need.

    • A related problem that I often see: Companies that do the bare minimum by putting an annual review process in place, then don’t even follow through with that! If you promise your team members an annual review, it’s vital that you follow through!
  • You don’t provide employees with the right kinds of goals. Another potential problem is inappropriate goal setting. An effective performance management system will always give employees some clear benchmarks to strive for. Some of the biggest goal setting problems include:
    • Setting goals that aren’t objective or quantifiable; goals that can’t really be measured or tracked in any meaningful way.
    • Failing to set stretch goals; even your best employees should be given something to reach for. Goals should be attainable, but not too easy!
    • Setting goals that aren’t aligned with the company’s overall goals, or with the goals of the other team members.
  • You don’t provide employees a path to improvement. When an employee messes up, or fails to meet their goals, it can be demoralizing for everyone. Remember that the function of an effective performance management system is to provide a clear path to performance improvement. Don’t fall into the easy trap of being purely punitive. Give struggling employees the road map they need to get back on track.
  • An effective performance management system will always give employees some clear benchmarksYou don’t put it down in writing. Document, document, document! Document when employee reviews take place. Document the goals you set for employees, and the progress they’ve made since their previous review. Document any disciplinary actions you have to take. Your performance management system should always include clearly articulated justifications for why you do what you do.
  • You ignore problem employees. You may not like to initiate disciplinary action; you may not want to even think about firing someone. And you may be at a loss for more positive, proactive measures to help your struggling employees. But if you have someone who is toxic or who just doesn’t pull their weight, that’s something that’s bound to have an adverse impact on employee morale. An effective performance management system will always include a framework for dealing with problem employees, rather than letting their issues fester.
  • You don’t recognize your high achievers. One more thing to note: People like to be praised, and to have their good work acknowledged. It doesn’t necessarily mean you need a ticker-tape parade for each employee who does good work but do take a minute to offer a proverbial pat on the back when warranted. This can be an important way to boost morale and keep those high achievers fully engaged.

As you can tell, there are a number of ways in which performance management systems can fall apart. Let me add just a couple of further words of caution. One, the only thing worse than an ineffective employee management system is not having a system at all! And two, team leaders and HR professionals should be reviewing and reassessing their system regularly. Make continuous improvement your goal!

The Solutions Oriented LeaderReady to Chat?

More questions about how to have an effective performance management system? That’s something I’m always game to chat about. Reach out and let’s get into the weeds of your company’s performance management opportunities. Contact me at or call 888-267-6098.

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Dr. Rick GoodmanDo You Have an Effective Performance Management System?