5 Challenges to face if Performance Appraisal is not customized as per Organization's Policies

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The performance appraisal is a very important part of performance management system. Traditionally the performance appraisal is an annual process managed by the HR department. The HR team creates the employee performance appraisal forms which are provided to all the managers they fill them and return them to the HR then the HR evaluate employee’s performance on the bases of the data they collected from these forms. Usually these are very long forms with tons of questions and other details which require a lot of time and the managers will have to fill it for each individual employee.

Studies have shown that most of the leader think about traditional performance appraisal as a waste of resources and time, however, every business and organization conduct a performance appraisals and that is because of its importance. The performance appraisal process is not to award employee with increments and bonuses, in fact the performance appraisal process help businesses align their resources to their organizational goals and objectives. The performance appraisal system provides a complete framework to help management monitor and track employee performance.

The traditional performance appraisal methods have started failing businesses as both managers and employees lost faith on these methods. So the businesses and organizations started adopting more advanced, technology-based digital performance management systems and software to fulfill their performance appraisal needs. The modern performance management system is basically an intuitive software which not only help businesses reduce the resources required for the performance appraisal process but also make the process more efficient and effective and enable businesses to conduct performance appraisal more frequently such as after each quarter.

The performance management systems also give rise to the agile and continuous performance management which was a great leap in performance appraisal methods. These practices have helped organizations to support their fast-paced and rapid growth as well as help them maintain a steady growth rate over the years. The modern performance management systems were also welcomed by the employees and the managers as they offer more flexibility, agility, transparency and convenience.

5 Challenges Businesses face if their Performance Appraisal is not customized as Per Organization’s Polices and Strategy

Businesses and organizations all around the world are utilizing digital performance management systems for their performance appraisal processes. When it comes to acquire a performance management system software the HR managers could easily overwhelmed by sheer volume of companies and service provider offering all sorts and types of performance management systems. Generally we can categorize all different types of performance management systems in two main categories, the COTS or commercial off-the-shelf solutions and the customized or bespoke solutions.

Furthermore there could be more sub-categories and classes of different performance management system. However, it is important to understand the difference between these two major categories. The COTS are the software solutions that are offered by a service provider and businesses acquire them as subscription plan or rental bases. They have to pay monthly or annually whatever method they prefer and the actual performance management software remains the property of the developer/vendor or the service provider, it means the business who uses the COTS software doesn’t have ownership rights over it.

The customized performance management system software are exclusively designed for the business. Usually either in-house team develop them or business outsource it to a contractor who develop the software. This also means that the business have full ownership rights of the software hence they don’t have to pay any monthly or annual fee or subscription charges. Furthermore the customized software are much better in terms of user experience, as they are designed exclusively for a particular user group hence they are tailor-made for their needs and requirements. This can have huge impact on the efficiency and efficacy of the system.

Another thing which make customized software superior is that they are exclusive and no other business will be using them hence they can offer a great competitive advantage. Whereas the COTS are designed for a mass audience and somewhere from hundreds to several thousand businesses could be using the same software application, which minimize the competitive advantage of the technology. The customized software also integrate very well with the business environment and culture, they are specifically designed to support and improve the internal processes and workflows.

However the COTS on the other hand might require businesses to make changes to their internal processes and to align with the system’s processes and workflows. This could significantly undermine the efficiency of the system. That is why the customized software are considered to be superior then the COTS. Here are key disadvantages of using a performance management system which doesn’t resonate with the organization’s policies and internal processes.

1. The Performance Appraisal System will Not Resonate with the Internal Performance Management Processes

If the performance appraisal system is not customized as per organization’s policies then it will never resonate with the existing internal processes. Every business is unique, over the time each business develop a unique culture and environment. It is that culture and environment that is a major distinguishing factor between the business and its competitors. Not only the customers but the employees are also attracted to this uniqueness. If a business wants to implement a new technological solution which doesn’t align with the internal processes, then they can never achieve the desired performance, efficiency or results they are expecting from that technology.

Similarly if the employee performance appraisal system is not aligned with the internal processes and policies of the business, then the business can never achieve the targeted goals of deploying a digital performance appraisal system. Instead it will create more problems. Employees, management and the HR everyone will have to make changes to adjust with the new system, they will have to change their internal processes, work flows and they will have to adopt new methods and processes which in itself undermine the performance and efficiency.

2. The Performance Appraisal System will Not Integrate with Other Internal Tools and Systems Properly

The core strength of digital solutions is their ability to drive automation and efficiency by simplifying the processes and reducing the efforts of the employees or users who are using those systems. Whenever a new system is deployed in an enterprise environment it have impact on other systems which will reflect on day-to-day tasks, work flows and other internal and external processes. That is why it is important that the new system that a business is acquiring should be able to integrate properly with other systems. Now when it comes to performance management and performance appraisal system, every business already have an established IT infrastructure and digital ecosystem which formed the organizational culture and help businesses implement their strategies.

Hence the performance management and performance appraisal system that a business is implementing should also be able to synchronize and integrate within the existing digital ecosystem. This is crucial because the performance appraisal policy a business has is already formed on the bases of their existing digital resources and ecosystem. If the new performance appraisal or performance management system is not compatible with the performance appraisal policy then the perfect synchronization with other systems can never be achieved, which results in several changes in internal system, workflows and processes and will come with a hefty price tag.

3. The Performance Appraisal System will Fail to Execute the Performance Appraisal Strategy

The performance appraisal system is not meant to only determine the incentives, bonuses, increments and perks for the employees. It is designed to boost the performance of the entire organization. This requires a strong performance management strategy which is derived from performance management goals and objectives. On the bases of these goals and objectives a performance management strategy and plan of action is designed which help executing the strategy effectively and ensure the business will achieve its performance goals by the end of the performance appraisal cycle.

Each business is different form the other, regardless of the industry, even if two businesses are working in same market and same sector they could have entirely different goals and objectives. These goals and objectives have huge influence over the organizational culture, their methodologies, processes and operations. This means that each business have different performance goals and objectives too. If we take an example of a construction business, some businesses might focus on annual performance and doesn’t focus much on certain competencies.

Another construction business with a slightly different business model might focus more on the project-based performance rather than annual performance and so on. The performance appraisal system should be aligned with the business model and their goals and objectives, if it is not aligned with that the business will never be able to achieve their performance goal and they will fail to effectively execute their performance appraisal strategy.

4. The Performance Appraisal System will Fail to Collect the Desired Metrics and Performance Data

It the performance appraisal system is not customized as per the organization’s policies and performance management strategy then it could cause huge problems in collection of performance data. For any performance appraisal and performance management system the performance data is the backbone of the system. The entire performance appraisal process depends on the quality of the performance data. Every business is different form the other, some businesses could have entirely different objectives for a particular job role than the others. This difference is due to the dynamic organizational culture and the growth path they take over the time. And these difference will eventually form the policies, strategies and methodologies a business or organization adopt.

That is why it is crucial for a performance appraisal system to perfectly align with these policies and internal organizational culture. Otherwise it is impossible to achieve the desired performance objectives. For example there are two businesses both are in same industry, let say, manufacturing. Both business manufacture auto spare parts, one is utilizing entirely different production line than the other. Thus the requirements from a particular job role would be entirely different form the other, obviously there would be a lot of similarities but mostly the differences would dominate.

Same is applicable when it comes to performance appraisal, due to different job roles the performance metric would be different and along with that difference the weight assigned to a particular KPI could be different in both organizations. That is why the performance appraisal system should be customized as per the organization’s policies.

5. The Performance Appraisal System will Cause Mistrust and Require Additional Training

The HR and the management knows very well that people are very complex, this complexity make management even more complex and require a very sophisticated framework to manage the performance within the organization. Managing performance and executing performance appraisal campaign is inherently a very complex task. When a business deploy a performance appraisal and performance management system which is not customized as per the organization’s policies it can become this task even more complex and difficult. Furthermore a new performance appraisal system that doesn’t resonate with the organization’s policies it could cause mistrust and confusion among both the managers and the employees.

As the managers and the employees are already used to of the organization’s policies it become harder for them to immediately adopt to the new changes that are required by new appraisal system. This they lose trust on the system and start questioning the transparency, capability and accuracy of the appraisal process. In order to prevent this the business must require a highly effective training program which is difficult hence businesses end up conducting multiple training program to finally implement the new appraisal system. And that is only possible if the business too transform their policies and performance management system as per the new appraisal system which is not customized as per their existing policies.

And that is a very time and resource consuming feat, and it will definitely undermine the impact of their performance management strategy and it could take them several appraisal cycles to finally start getting the benefits of the new system. However, if the business adopt to a performance appraisal system which is fully customized as per the organization’s policies the business can immediately start witnessing the benefits of implementing a performance appraisal system.

Conclusion

The performance appraisal is a crucial part of performance management system. The performance management strategy plays an important role in improving a business’s operational capabilities, efficiency, productivity and outcome. Businesses in Dubai and all around the UAE are rapidly adopting modern performance management system and performance appraisal methods in order to be able to respond to the fast-paced market changes, every growing customer demands and competitive challenges. The HR department in any organization is not just responsible for hiring new talent, but it also make sure that all the employees work at their best and remain happy and satisfied of whatever they are doing. This is not a simple task, it requires HR to adopt to highly sophisticated systems and adopt to modern methodologies such as performance appraisal and performance management system.

The performance appraisal is essential to boost the productivity of the employees and a strong performance management policy help minimizing the employee turnover. When it comes to acquiring a new performance appraisal system the HR managers could easily overwhelmed with the sheer number of options available in the market. In this blog we have compare two major categories of the performance appraisal and performance management system software and we briefly discuss some challenges that a business could face if the new performance appraisal system is not customized as per organization’s policy.

RSI Concepts is a leading performance appraisal and performance management system developer in Dubai, UAE. If you want to learn more about the subject or if you want us to design and develop a fully customized and tailor-made performance appraisal system that perfectly align with your organization’s policies to let you take the full advantage of the modern performance management practices and methodologies. 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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5 Challenges to face if Performance Appraisal is not customized as per Organization’s Policies