Performance management is one of the most important HR processes in terms of its implications for most dimensions of organizational life: the company’s ability to activate its talents, to create a correct scale of values, to distribute the benefits by merit obtaining internal equity, recognition and encouragement of performers, employee motivation, etc. In fact, Performance Management encompasses all HR processes that can contribute to improving employee performance and is therefore not a single process but a cluster of different but convergent processes. The core of a Performance Management System is the (sub) Performance Evaluation System (SEP) (which is often limited and confused) and which is the system used by the company to measure the results (work) of its employees. In its narrowest form, in order to outline a Performance Management System, SEP must be completed with an Employee Development System (which can take various names – training, coaching, etc.) and a Performance Reward System (Comp & Ben). The purpose of a Performance Management System, however, is NOT (only) the individual performance but the company-level performance of the employees as a whole, considering that the whole represents more than the sum of the parts.

Functions of a Performance Management System

Any system is defined by its functions and the Performance Management System must fulfill a long series of functions, among which we mention the most important.

It must: It measures employee performance at the individual, team, departmental and company level Have the ability to distinguish between effort and result, SEP often confusing the effort with the result obtained ( it does not matter how many phones you give or how many offers you send but how many contracts you sign ). Of course, the effort is often the guarantee of a good result, but it should not become an end in itself Provides recognition of individual merits and contributions and sets the right but also the right reward for each employee – so as not to affect internal equity – avoids the feeling of frustration that occurs when someone works better but receives less Identify areas and areas of personal and professional development for those evaluated, not just present a (unsatisfactory) verdict on performance It provides a solid and correct decision base for the legal decisions of the respective staff for dismissals, penalties, bonuses or promotions.

Why is it difficult to replace

Naturally and normally, Performance Management evolves with the new paradigms in HR, so it is worth analyzing the direction in which it is heading. However, change is not easy and can be a touchstone for many companies. Performance Management is one of the remaining chapters in the new era of Talent! Why? Probably precisely because of its importance but also because of the complexity required to design such a system. It will take until most companies are able to migrate to the new formulas because, first of all, it is difficult to change / replace in companies that already have one. There are many reasons such as:

Performance management generates input in training programs, in the management of promotions and careers and obviously in Comp & Ben, an always sensitive area, which is better not to touch if you are not prepared. Even small variations in how performance is appreciated and rewarded can have a huge impact on a person’s income (on the part of employees) and proportionally, can impact the total payroll (respectively taxes and fees, on the part of the employer).

Another reason why Performance Management lags behind is the high degree of bureaucratization and formalization of evaluation processes, sometimes doubled by electronic ERP systems that provide the necessary input for evaluation (indicators, targets and objectives, percentages, etc.) . That is why it is easy to say: to change the processes of Performance Management, but much harder to do. Performance evaluation, is just the tip of the iceberg, is part of an ecosystem with a huge inertial mass! Those who already have a system in place must first think about the short-term impact on employees, even if, on paper, the long-term impact is positive. We can easily imagine what can happen in a medium-sized company, say with 300 employees, if at the change of the Performance Management System, a trembling of them are affected by weaker evaluations respectively by lower incomes. If people don’t agree with something, they certainly don’t agree to reduce their income! The impact of a new system must be discussed with employees, possibly with the union, if it exists and here is how from an HR process, it becomes a management problem or even a business one if the subject is not managed correctly. So, on the principle “it becomes a management problem or even a business one if the subject is not managed correctly. So, on the principle “it becomes a management problem or even a business one if the subject is not managed correctly. So, on the principle “do not give the sparrow a hand on the crow on the fence “, many rightly avoid intervening in existing systems, for a presumptive” better”

Last but not least, the degree of formalization of these systems must be considered. The direction is towards simplification and de-bureaucratization, an otherwise correct and desirable direction, only there is a limit to which one can go with the simplification and de-bureaucratization of Performance Management, namely to the limit of the connection with revenues. A company cannot leave the evaluation process of failure, unregulated, at the mercy of evaluators’ subjectivities – just for the sake of simplification – because it will get chaos. It is no coincidence that Performance Assessment Systems are among the most procedural and bureaucratic, the reason being that they are security measures aimed at creating a stable and robust system. The basic idea is that if two independent evaluations are made, the same result must be obtained (the two necessary and mandatory conditions are those of validity and fidelity of the evaluations. Otherwise the system is not correct, such a defective scale will produce wrong measurements). Again we see, it is easier said than done to throw everything away than to do it because what we put in place must be better than what we put down.

That being said, they are not an argument, of course, for organizational cowardice or inaction, progress, the need to constantly change and adapt to the new environment being obvious. The above clarifications are only a listing and an acknowledgment of the difficulties inherent in changes in Performance Management not a reason to give up.