7 Reasons Why More Than 90% Performance Management Systems Fail?

What’s wrong with the performance management systems?

1. Everyone Dislikes it

2. No-one Does it well

3. It Doesn’t Deliver Results

In Order to Fix This Situation, you need to understand the key issues which are holding back you and your employees from growing


Despite the best intent and design, the PMS don’t deliver due to the following 7 reasons.

Reason No. 1: Performance reviews are not regular, they are generally annual 


Employees need feedback and goal alignment much more frequently than annually. You may switch your annual system to informal ongoing feedback and have periodic formal review system at least with monthly one-on-ones.

The monthly performance review should be planned for maximum 30 minutes, which will help you save time in annual reviews.

Reason No. 2: Managers lack the skills to conduct reviews: 


Managers need to be trained on the system and to be groomed by personal handholding during at least 3 to 4 performance reviews.

The handholding should be on listening skills, objective evaluation, giving and receiving feedback, identification of the “K.A.S.H.” gaps and finally developing an action plan on improving performance.

Reason No. 3: Subjectivity in performance evaluation: 


Subjectivity in evaluating performance is the most toxic element of PMS. At times, it may be prevailing deliberately.

To address this issue, the goal needs to “S.M.A.R.T.” and balanced with quantitative and qualitative aspects. The “S.M.A.R.T.” goals needs to be essentially developed on “COST, QUALITY & TIME” parameters. These are the only real performance measures.

Reason No. 4: Lack of Credibility 


A strong performance management system relies on a trusting relationship between employees and managers. The lack of credibility may come from inexperience, poor communication skills or general incompetence.

The credibility can only be built up by providing timely and candid feedback to the employees. The basic rule of the PMS is the performance needs to be differentially rewarded. Managers need to be fair and transparent in differentiating the performance with data and facts. They also need to be trained on giving clear feedback on poor performance and consequence management.

Reason No. 5: Lack of Consistency


Poor performance management results can also stem from managers delivering inconsistent feedback on performance. Mixed messages can cause confusion and resentment among employees, leading them to distrust the performance management reports.

Business leaders and managers must maintain consistent tone and content in their feedback to employees. Consistency would emerge only from regular/monthly reviews documented with facts & figures followed by improvement action plan. The action plan needs to be evolved and agreed mutually.

Reason No. 6: Missing alignment with Organizational goals: 

A good performance review system is always designed to facilitate strong alignment and integration between organizational objectives and individual goals. A Balanced Scorecard Framework is most widely practiced tool to ensure alignment of goals. The approach for goal setting is Top down and for reviews it is bottom up. Organizations should seek help of OD [Organizational Development] Experts to ensure the goal alignment.

Reason No. 7: Lack of Clear Strategy 


Just as a lack of clear goals can interfere with performance management assessments, so can a lack of a clear strategy on how to achieve those goals. Leaders must provide guidance and plans for their subordinates to follow.

A clear strategy also gives the business “milestones” to measure the company’s progress toward its goals and alternative tactics if the current actions are ineffective.

The strategy should be dynamic and consistent with the long-term objectives of an organization. Organizations should seek help of OD [Organizational Development] Experts to evolve the strategy with scientific approach.

The mantra to develop effective PMS is:

Your existing system is designed to give us the results we’re currently getting;

If we want different results,

We must change the



KASH of the People

Snapshot :

about How to overcome various problems in Performance Management System

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