Performance management is a hot topic in today's HR market. IDC predicts that performance management software and services will reach $2.55 billion by 2012. Even in today's downturned economy, many companies are evaluating and investing in performance management processes and systems.
Couple that information with an interesting article in the Wall Street Journal that advocates eliminating the traditional annual performance evaluation as a performance management tool. Why? A few of the major points are below:
· Pay is usually determined by market forces and/or a predetermined salary range linked to the job title, not performance. The review meeting is used to justify these pre-determined decisions, employees know it, and so it is not a useful performance management tool.
· Performance critiques are subjective, with the exception of easily measured items like sales numbers. Even 360 degree reviews bring in politics and agendas, only anonymously.
· A generic performance review form doesn’t consider the unique mix of strengths and weaknesses employees bring to the job. In addition, using the same performance rating scale for different job functions is not useful for effective performance management.
· The last place most employees will go when they need performance improvement advice is their boss because they fear the “shortcoming” will come back to haunt them. Performance reviews actually impede employee development because of this dynamic.
The assertion that employee development is impeded is particularly interesting, given that companies want managers to optimize their staff. Another impediment to employee development is the frequency with which performance evaluations are given. Annual performance management conversations aren’t sufficient to meet most organizational goals or employee development needs.
What do you think? Are performance reviews a valuable tool for performance management? Do they help or hinder employee development?
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