Often, performance management is a tricky affair for every organization; the idea of assessing someone else’s performance can always be stressful and difficult. As much as it helps an organization sail towards the future, it can bring chaos and troubles, if not taken enough care of. For managers and employees both, having a clear idea about the advantages of performance management along with its disadvantages will provide the much needed impetus to drive all the benefits of performance management, just the way they need it.

For this, the employees, the mangers and the organization at large must understand the importance of performance appraisal in an organization so that they can leverage the same. At the same time, the disadvantages also must be carefully analyzed, so the effective measures can be taken to improve the efficiency of the same.

Advantages of Performance Management:

Performance based interactions:

Many people rate performance appraisal to be complex, lengthy and often hectic for all the people involved; however in the real world, it cannot be written off as it controls the performance of the business and how it offers the best to the customers, and various stakeholders of the organization. As the assessment always involves the measurement of an employee’s performance based interactions, it helps the organization understand the areas where important professional development is needed. If there is any area that needs improvement, assessment helps the organization to identify them so that relevant employee training and development strategies can be adopted in time to solve them. Though HR teams may find this process to be tedious and time consuming, it can always be made simple with the help of simple cloud based performance management solutions like SuccessDart.

It aims at employee development:

One of the most important objectives of any employee performance appraisal management is the development of the employees. The progress of the employees is what will prepare the organization to meet the challenges they have to face in the immediate and the later future. Any performance management system process must be able to critically analyze an employee’s capabilities so that required development of the employees can be driven. It is only through the development of the employees that the organization can equip itself to deliver everything the organization promises to the customers in the best way possible. Though customers are the most important aspect of any business, it is the employees that create, satisfy and retain the customers through effective interactions and service delivery.

It facilitates employee rewards and recognitions:

One of the most important outcomes of any performance assessment system is employee recognition; and the role of performance management system in doing so is immense. It is only through an effective employee assessment system can an organization identify the employees who make outstanding contributions towards the betterment of the operations and success of the organization. Any performance appraisal system without any support of a meaningful reward and recognition process will not bring the desired changes in the performance of the employees and the status quo of organization.

performance management importance

It appreciates deserving employees:

One of the major issues that haunt many organizations across the world is that not all of their employees perform the way expected by the organization. There are always employees who perform exceptionally well, there are employees who often perform well and there are employees who may not live up to the expectations of the organization. An appraisal system will help the organization understand these employees and band them according to their performance. It is the constant efforts of the organizations to improve the performances of such employees so that the business itself can perform better. This is only possible through employee motivation and motivation can only come through rewards. When a performance appraisal helps the organization understand about certain high-performing employees, appreciating them with rewards and recognition can motivate others to perform better, as well.

It helps to filter the low-performing employees from the system:

This goes as the continuation of the process that was discussed in the previous point. Any performance management system helps to band the employees into performing and non-performing employees. This, over a period of time, can help the organization understand the employees who historically do not perform as per the expectations of the organization. Such employees, who do not develop over a period of time despite the efforts of the organization, can be removed from the roster effectively. This practice however is not that welcome in today’s work environments where a successful organization would do whatever it takes to motivate their low performing employees with extra training, sessions and incentives to improve them. But ideally they too need access to these non-performers and performance management systems help to identify them easily.

It helps the organization understand the performance and development history of the employees:

Any organization would, from time to time, need to carry out a performance assessment of the organization along with the employees. When an effective appraisal system prevails in the organization, it helps the organization understand the growth curve effectively. When the organization has such information with them, they will be able to effectively plan their training and development processes and efforts. A streamlined training process based on the findings from an effective appraisal system can help the business race towards the right direction.

It drives for effective employee development:

Most of the objectives of performance management end with the desire to elicit effective employee development. When healthy interactions happen between the organization and the employees, it ultimately helps the employees understand that the organization cares for their development. It can bring in a positive attitude of the employees towards the organization, making them reach their full potential. When the employees are receptive of the development programs that the organization metes out for them, the managers will be able to orient them towards better growth and development.

Collective performance improvement of the organization and the employees alike:

The ultimate aim of any performance assessment system is to improve the performance of each employee. When the performance of several employees improves, naturally the collective performance of the organization will improve, too. By effectively utilizing various performance appraisal systems and technique, even the minor shortcomings of the employees and organization at large can be taken care of. As minor tweaks here and there from all sections of the business can merge together, it can obviously become an exceptionally great impetus to drive the success of the organization.

It helps in career planning:

While this may not be an obvious benefit of various performance appraisal systems employed in organizations, it definitely does the part. Each assessment session will give insights into various skills, abilities and qualities of the employees that sometimes the employees themselves may not be aware of. When such qualities that continues to grow in the employees, organizations can drive the career growth of the employees knowing them that they have what it takes to be at a higher position than they are currently at. As the career aspirations of the employees can be understood through the performance appraisal systems, the employees themselves can plan their career.

It shows the professional history of the employees:

Career advance is always something that every employee wishes for. An employee who can grow is what most of the organizations look forward to hiring. Most of the performance management programs and systems can help the organization get the quantifiable data about the growth of the employees and can make effective decisions about promoting the employees to a more responsible position. This becomes very important when an organization decides to move and promote employees internally. With the data available with them, they can easily understand which of their employees fits the bill effectively and carry out the responsibilities and tasks expected of such a role.

As you have now seen the advantages of employee appraisal, let us look at the factors that make the process a little difficult to execute perfectly, all the time

Disadvantages of Performance Management:

effective performance management process

The entire process of performance management is complex and lengthy:

Most organizations face this difficulty, especially when they have too many employees to assess, and it naturally takes a lot of time. It can affect several other activities of the organization, if not already prepared or planned for. As it requires the interactions with all the employees, it can also put pressure on other employees and their performance as well. However, implementing a performance management tool like SuccessDart in your organization can easily take care of this problem. With such tools in backend, the organization can plan and execute highly effective performance appraisal systems.

The mismanagement of the process can hinder employee growth:

While it is acknowledged that performance appraisal is in the best interests of the employees, most of the time it may not be so. Depending upon the attitude and leadership style of the manager who carries out the appraisal, the employees can become stressed and frustrated.  This can lead to issues that the organization might not expect to encounter. Sometimes, the employees might feel that their contributions to the organization are undervalued and ignored. There will always be complaints if two different employees are given the same recognition despite having serious difference in performance and this can dissuade and discourage the better performing employee. This issue too can be addressed with the implementation of unique performance management tools for sure.

Contradicting opinions in the performance file:

Most of the time, managers tend not to keep performance related notes of the employees regularly and as a result, there may be instances when the repost of the manager and the actual performance of the employee may not agree with each other. In order to avoid these issues, the manager must keep regular performance notes about the employees. At the end of the year, the manager can definitely create a report that can effectively reflect on the actual performance of the employee.

Favoritism and partialities:

It is a common complaint raised by employees of organizations all over the world. It is human to be inclined towards certain employees positively and negatively. Some managers tend to protect certain employees despite not-so stellar performance and the opposite is also quite possible. Even after performing greatly, certain managers tend to mark unfavorable performance reports on employees. Managers who have pack mentalities and preconceived notions can break the entire concept of effective performance appraisal and they tend to forgo of the very concept of performance management system.

Flawed appraisal systems and techniques:

It is also quite possible that the appraisal systems that an organization uses might not be the best one, despite the availability of exceptionally good performance appraisal systems in the market. This can prove to be detrimental to the growth of the organization as it is the performance of the employees that run the business toward success and better service deliverance to the customers.

Lack of expert appraisal staffs:

It is quite possible that an organization lacks the required expertise to carry out such extensive process quite efficiently. Many may not even carry out the entire steps in performance management cycle. While this is an understandable hurdle in front of the organization, with the help of many advanced performance appraisal systems, this issue also can be easily addressed.

It must be understood that an organization must effectively utilize the appraisal system to drive better growth of the employees and the organization, at large and by realizing the scope of performance management. With the availability of several advanced systems, techniques and programs, no organization must compromise on the quality of the process, ever.


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