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5 key issues in performance management
Problems with the performance management process can lead to consequences such as discrimination or retaliation claims against a company. HR staff should learn about key issues.
Assessing employee performance is fraught with challenges. HR employees should learn about some of the most common issues that occur so their company can avoid detrimental consequences, such as legal action.
Performance reviews are intended to evaluate employee performance, identify any issues and provide steps for addressing those problems. Performance reviews can lead to positive changes, such as an increase in employee compensation or a promotion, but they can also lead to disciplinary action, including termination. If the termination is not carried out properly, the employer can be liable for discrimination or retaliation claims under state and federal laws.
Because maintaining a fair and professional performance review process can be challenging, HR departments must implement measures that ensure fairness and objectivity not only throughout the evaluation process but on a day-to-day basis as well.
Here are some of the most common issues that occur with employee performance reviews.
1. Bias and lack of objectivity
Bias and lack of objectivity can lead to problematic performance reviews because the manager performing the review is not fairly evaluating their direct report.
Recency bias, the halo effect, and the horn effect are a few types of unconscious bias. Recency bias occurs when an otherwise high-performing employee makes a mistake shortly before their review and the manager focuses on the recent error instead of taking a longer view. The halo effect occurs when an employee exhibits a positive trait that influences how managers rate other performance indicators. Conversely, the horn effect occurs when managers downgrade their overall assessment of an employee's work because of one mistake.
Employees might also receive unfair performance evaluations because of bias that is rooted in the manager's perception of the employee's race or gender.
2. Unclear expectations
Managers are responsible for clearly communicating expectations to employees, and problems can occur during performance reviews if employees are evaluated on expectations that were not clearly expressed.
To make sure employees fully understand their responsibilities and the benchmarks for success, managers should put performance standards in writing so that they and their employees can reference them. They should include specific examples for the most important responsibilities. The SMART -- specific, measurable, achievable, relevant and time-bound -- framework is one way for managers to establish KPIs for their direct report's role, then track how well the employee is meeting them.
In addition, showing employees how their work is positively contributing to corporate goals can improve employee engagement and productivity.
3. Infrequent feedback
Annual reviews are useful benchmarks, but more frequent check-ins can help prevent problems during performance reviews.
For example, if issues with an employee's performance have led to the implementation of a performance improvement plan, check-ins allow their manager to assess if required improvements have taken place within the mandated timeframe.
High-performance employees also benefit from frequent feedback, and giving the company's highest performers positive feedback on a regular basis could help improve retention of top workers.
4. Issues with performance management software
Performance management software can be helpful during the review process because it provides data that measures an employee's achievements and it can track employee performance fluctuations over time.
However, as with any software, performance management software can lead to unfair results. Since the software relies on quantifiable metrics, it doesn't account for context or nuance. For example, an employee might have failed to achieve one of their quarterly goals, which would skew the metrics unfavorably. But if the employee took a leave of absence, their failure to meet the goal might not be their fault.
5. Issues with using AI for performance management
Performance management requires human judgment and context, so insights from AI tools should only be used as a basis for performance review conversations.
Algorithmic bias can lead to an AI producing unfair employee performance conclusions. The humans who design AI systems bring their own biases, which can then become part of the software.
Employees might also dislike AI being part of the performance review process, which could affect company culture.
Lynda Spiegel is a freelance writer and former global HR executive for financial services, telecommunications and SaaS companies.
