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8 performance management challenges and how to fix them

Successful performance management can help keep employees engaged, but challenges often arise. Learn the most common problems that companies encounter and how to address them.

A good performance management program is key for maintaining a happy and engaged workforce, yet performance management challenges frequently arise. HR leaders should learn some of the most common problems so they can take action to address them.

A good performance management program gives employees feedback on a regular basis, allows for employee input and delivers data that can apply to other decisions, such as salary increases. Getting feedback can help reduce employees' stress and apprehension, which might be higher than normal after the height of the pandemic transitioned into economic uncertainty.

Here are some of the challenges a performance management program can encounter and some possible ways to address them.

1. Leadership buy-in

Buy-in from leadership is a must for a performance management program to operate as well as possible. If managers and employees see that their company's leadership isn't supporting or engaged in the performance management process, they might feel less compelled to do so as well.

Lack of leadership support can be one of the hardest challenges to overcome. HR leaders sharing performance management success stories with other company leaders can make a difference. Being able to give some concrete examples of the program's results, along with feedback from leaders and employees, can help sell it to others within the company.

2. Employee motivation and morale

Employees likely feel stressed and overworked, and they might feel that performance management is one more item to add to their to do-list list. This perception increases if their company hasn't clearly articulated the details of the performance management program and its benefits for employees.

The company's leadership team should communicate the importance of performance management to employees. In addition, having employees participate in the goal-setting process and potentially contribute to the review in other ways can help them better understand their important role.

3. Limited budget

A new software application comes with many costs, including the implementation fee and ongoing licensing fees, and companies looking to implement new performance management software might not have the budget to do so.

HR leaders can work with other higher-ups to look for software that's less expensive, even if it doesn't meet all the organization's requirements. Another option is to take a less formal approach and encourage leaders to regularly provide verbal feedback and use the tools the company already has, such as an employee recognition platform.

4. Software challenges

If the software for the review process doesn't work as expected, it can negatively impact the whole program. For example, if employees encounter problems logging into the review platform, it could sour their view of the process from the start.

The vendor might be able to fix the problem or find a workaround until the problem is resolved. Communicating and being upfront with employees about some of the challenges and potential workarounds is essential.

5. Manager buy-in

Getting support from managers is crucial. If managers don't support the program, they won't put in the proper effort to make it succeed, which will also send the wrong message to employees.

HR leaders can work with IT to add automated reminders to the performance management software so managers who have not met the proper goals receive notifications to do so. Discussing the status of the review program with the executive team during leadership meetings can also encourage managers to participate. The executive team can also potentially help by reinforcing the benefits of providing employees with ongoing feedback.

6. Company reorganizations and acquisitions

A major reorganization or acquisition during or right before a performance review process can negatively affect the review process results. Employees might suddenly report to new managers, and employees and managers who were part of the process might no longer be with the company.

In these situations, HR leaders should work with IT to update the performance management software with the new reporting structure as quickly as possible, which will give managers more clarity on what they need to do to complete reviews for all their team members. Extending the performance review deadlines can also be helpful.

7. Poor use of tools

The success of the program is heavily influenced by how well managers and employees complete the work. For example, employees might submit too many or too few goals.

To counter these issues, HR leaders should create a system to check that performance review submissions are meeting the proper standards.

8. Lack of HR tech skills

A successful performance management program requires the proper skill sets on the HR team. For example, an employee must lead the program design, while another must configure the application, another must communicate about and sell the program internally, and another must train employees and leaders. The same employees could perform some of these tasks, but HR staff must be able to take care of all the tasks needed to carry out a successful performance management review program.

Depending on the timeline, HR leaders may be able to arrange training for HR employees. Another option is to hire an external consultant to support the team in areas where skills are lacking.

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