Here in Dubai and all around the UAE the performance management has become a major concern for the businesses and organizations. Businesses whether small or large have started adopting to modern performance management systems and processes. The continuous performance management help managers effectively boost the productivity and outcome of their teams and departments, which is great. But sometimes the managers are failed to obtain the desired results and sometimes the performance management system can even have negative impact on the overall productivity of the business. It is easier to identify the negative impact of poor performance management, however, it is harder to realize if the performance management system improves the outcome but still the organization is less than the maximum performance level they can achieve with an effective performance management system in place. In this blog we will discuss what the major consequences of poor performance management are and how managers can identify them?
Poor performance management can cause a lot of problems for the managers and for employees too. It impact the productivity and also have significant impact on your customer facing channels. In short the poor performance management impact almost each and every aspect of the business including cost, expense and sales. Here are a few key aspects which you should notice if you want to understand your current performance management system and strategy:
Poor Performance Management Risks: Lack of Employee Engagement
One of the biggest problem with any performance management system is the lack of clarity. When the employees are not clear what is the primary goal or high-level organizational goal then they lack motivation to achieve it. Another reason is the lack of communication. When managers failed to communicate the individual goals, daily tasks and responsibilities to employees they get confused and don’t know what to do or how to do. This results in lack of employee engagement and eventually employee loose interest which can have devastating impact on their performance and productivity. When the managers failed to explain employees that how their daily tasks and individual goals will contribute in achieving the organization’s mission, they have no reason to grow or put extra effort. Furthermore if the employees feel the performance management system and evaluation methods are unfair or less-transparent they tend to loose motivation for the hard work.
The employee need emotional connection with the goal, which is impossible without a proper communication framework, when employees are engaged in goal setting processes, in evaluation and reviews and everything else, they feel emotionally connected with the goal and strive harder to achieve it. Furthermore the employees feel important and they feel their work is important too. The performance management system not only let them understand the importance of their own goals, but it also help them understand the weight of their efforts in the high-level organizational goals and vision. An effective performance management system always have award and training programs, which keep employee motivated and emphasize on the impact of achieving their goals on their personal development and individual growth. Professional and talented individuals need feedback, the managers should be able to provide them guidance and highlight them their strengths and weaknesses.
The performance management system should include the training and personal development program to upgrade the personal and professional skills of the employees. If they don’t find options and opportunities to grow and improve, they will lose interest. In such circumstances employees usually left, which also have negative impact on the performance and productivity. The poor performance management grow your employees disengaged and make them unattached from the high-level organizational goal and vision.
Poor Performance Management Risks: Inability to Deal with Common Performance Problems
Whenever managers set a goal for the individual employee or teams or multidimensional project teams there are some very common problems that they have to deal with. Such as:
- Identification and arrangement of the required resources that the employees might be needing to achieve the goal.
- Evaluation of the employees on the bases of required skill set and identification of required training to make them able to achieve the required goals or to produce the expected results.
- In-depth analysis of required job roles. This is required to understand if each component of the employee job role matches with the required task, or what is their level of compatibility with the required task/goal.
- Reassigning of the poor performers or incompatible employees. If the employee is not compatible or if he/she is performing poorly then they should be reassigned to another role, and should be replaced with a more suitable employee with compatible skillset and knowledge.
- The last resort is to layoff the poor performing employees. The poor performing employees also demotivate others and put extra strain on peers who have to carry them.
All the above mentioned decisions are common occurrences in any business. However, it is extremely important that all these decisions are made on the bases of in-depth and highly accurate performance data. Without an adequate performance management system the managers can find these decision very difficult and often tend to be wrong. These are very crucial decision and as such activities help boosting performance if not done correctly can have devastating effects on performance and productivity.
Poor Performance Management Risks: Ineffective Reward Program
The poor performance management processes lead to poor communication, less employee engagements and unclear objectives. When the manager fails to communicate what is to be expected from the employees, what is the scale of measuring the success, and how the employee should improve themselves, the employee tend to take no interest in reward program as well. In such circumstances mostly the employees are not sure what the reward criteria is and how their work will be measured for rewards and recognition. This make them confused and doubtful about the reward program. They often not trust on reward program and instead of motivating them the rewards make them insecure and anxious. It also lead to negative perceptions of the managers and the entire performance management program. Such things discourage employees and create a sense of hopelessness in them. Which impact their performance very badly in longer run. That is why it is crucial that a perfectly clear and completely transparent reward program should be implemented by the performance management system to inspire and motivate employees for better performance.
Poor Performance Management Risks: Biased Reviews and Rating
Whenever it comes to performance reviews and rating, the most common complaint every employee have is the biased reviews. Most of the time the biased is unintentional but with the poorly managed performance management the right review framework is not in place which results in inaccurate rating and reviews. This lead to distrust among the employees and also the managers. The distrust on the rating system further cause hopelessness and stress among the employee and grow them disengaged. The performance management system enables businesses to conveniently conduct 360 degree reviews and evaluation. On top of that a good performance management system continuously monitor the performance of the employees. Traditionally the reviews are only conducted once or twice in a year which also result in inaccurate results. Most of the time in yearly or biyearly reviews the reviewer only focus on the most recent performance and incidents, which also impact the overall accuracy of evaluation process.
Furthermore the personal relation, morale values and other human emotion can also impact the judgment of the reviewer. However, a good performance management system includes continuous review process which increase employee engagement, reduce biased and improve transparency.
Poor Performance Management Risks: Low Job Satisfaction and High Turnover
Poor performance management, unfair/biased reviews and low or no recognition lead to employee dissatisfaction. When employees are not satisfied with their job they don’t take much interest in their work, resultantly their performance declined. They don’t feel motivated toward their work, their morale and self-esteem deteriorate and they do not see growth or personal development in their current job role. Eventually they will leave and find another job which increase employee turnover and also raise the hiring cost. The HR department should keep working to fill in the gaps by hiring new talent, which obviously is a costly process and the new employees also take some time to get integrated in the organizational environment. This all could have further toll on the performance. That is why it is crucial to have a good performance management system in place. The performance management system increase employee engagement, communication between employees and managers, it connects employees with the company vision and high-level organizational goals which help boosting their performance.
The performance management system help bridging the gap between the management and the employees, it make employees more confident and expressive, it also help managers identify the problems and obstacles that employee might be facing. The performance management system help building a very productive environment which makes employee happy by solving their problems, fairly rewarding them for their achievements and allowing managers to arrange very effective training and personal development program. All these efforts encourage employees to perform well and also increase their job satisfaction. Employee satisfaction drive employee loyalty and reduce their turnover.
Poor Performance Management Risks: Unhappy Customers and Negative Impact on Brand Image
The repercussions of poor performance management are not limited to the internal environment, in fact the poor performance have more impact on the external stakeholders such as customers, business partners, suppliers, investors, etc. When the employee failed to perform and when they are unable to achieve their targets, the customers also get effected. It is not only the customer service or support department that have direct impact on the customers, in fact when a business or organization fails to perform well, each and every business function got effected. The customer don’t get satisfactory service and they don’t get high-quality products. The entire customer journey got impacted by bad performance. Businesses will have to offer excellent service and high quality products in order to obtain a competitive advantage if they failed to do so, the customers start leaving. Which have very negative impact on the brand image and brand reputation. When customers get bad experience and a bad interaction they start talking about it too, sometimes on social media and sometimes with their peers, which promote negative popularity and badly impact brand image.
How to identify Poor Performance Management?
One of the biggest and most common reason of poor performance management is following traditional and very basic performance management processes. Traditionally the performance of an employee is measured at the end of each year. And the managers tend to focus more on the recent events rather than evaluating the entire year progress. This is a big flaw, which eventually failed the annual appraisal process. Now a days, the markets are very vibrant and dynamic, the businesses have to adopt a proactive approach instead of reactive approach. That is why continuous performance monitoring has become an absolute necessity. Businesses in Dubai and all around the UAE adopt a variety of different performance management strategies however, there are some mistakes that are very common:
 | 1. Unstructured Process: An unstructured performance management process is one of the biggest cause of the failure of performance management strategy in present day. A well-structured performance management process monitors performance continuously which help employees to understand their goals and progress more effectively and help them to move forward in right direction to achieve their goals. |
 | 2. Ineffective Goals: One of the most accurate indicator of poor performance management system is its inability to create impactful goals and objectives. When the individual goals are selected wrongly, the employees loose interest in them. The performance management system help businesses to set up SMART goals and objectives and monitor the performance on the bases of SMART KPIs which help managers to take timely decision, fine tune goals, arrange training, solve problems and achieve higher performance. |
 | 3. Lack of Communication: With traditional performance management systems the managers are failed to communicate the goals to the employees. When the employees doesn’t fully understand what their goals are and how their performance will contribute to the high-level organizational goals and objectives, then tend to perform worst. A clear communication and understanding of what is expected from the employees and how it should be done is a key to achieve a goal. |
 | 4. Ineffective Employee Reviews: The ineffective performance reviews can have devastating effects on the performance and productivity. Usually traditional employee reviews are biased and lack transparency, and studies have shown that due to lack of trust, the employees and managers both loose trust from the performance management process. |
 | 5. Inability to Course Correct: The course correction is something that plays a crucial role in optimizing and improving the employee performance. The traditional performance management lacks ability to course correct. The modern performance management system have continuous monitoring capabilities which can be leveraged by the managers to correct the course during the performance cycle and make sure every employee puts efforts in right direction. |
 | 6. Lack of Understanding of Employee Pain Points: The traditional performance management processes lack another important aspect of the modern performance management which is the understanding of the employee pain points. The modern performance management system with real-time monitoring can alert managers as soon as a deviation occurs, which let them a chance to discuss and analyze the problem directly with employees to understand the limitations, obstacles or issues they are facing. This help mangers to rectify such problems with a proactive approach to sustain the progress and performance. |
 | 7. Lack of Trust in Reward Program: The reward programs are essential to keep employees motivated and passionate about their work. The traditional performance management system lacks transparency and lacks ability to rectify bias which eventually result in mistrust on the reward programs. As employees feel the rewards were given on unfair evaluation, so they don’t trust the performance management system and doesn’t get motivated. In fact it could have reverse impact on the employees and the other employees got demotivated when they believe the rewards were not given on fair evaluation. |
 | 8. Less Effective Personal Development Programs: The traditional performance management systems doesn’t provide enough data or understanding to clearly understand the strengths and weaknesses of the employees. When employees feel their job is unable to contribute to their personal growth, they eventually leave and cause higher turnover which also raise cost of hiring and cause other problems which have negative impact on the performance and productivity. |
If any of the above problem is present in your performance management system then you must have to revisit your performance management strategy. It is better to adopt a digital solution that can help your performance management process.
Conclusion
The Dubai and in fact the entire UAE is a very competitive market. The businesses will have to attain maximum performance in order to compete with the others. The customers always seek competitive cost, however, they are also not willing to compromise on the experience and service quality. This lead to higher competition which demand businesses to maximize their performance in order to sustain growth and progress. This is when the businesses started building and implementing performance management strategies. For that some follow traditional methods, some follow modern methods and utilize a digital performance management system. Understanding your true potential is not as that easy, sometimes when businesses implement a performance management system they witness reasonable increase in the performance, but is it the maximum limit? That is very hard to answer. In this blog we have mentioned some key aspect of the modern performance management systems along with some comparison with the traditional performance management methods.
We have also listed the key indicator which can help businesses to identify poor performance management. If you want to learn more about the subject or if you want us to help you setup a highly efficient performance management system, please feel free to contact us through our Contact Us page or leave a comment in the comment box below and we will get in touch with you soon.
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