Performance Management: Limitations And Positives Analysis

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Within this essay, there will be an exploration of performance management with both its limitations and positives critically analysed. These limitations include how performance management can be time-consuming, employees can become demotivated and misleading information can affect reviews. Even though many authors suggest that if performance management is poor it can lead to these disadvantages, it can also bring advantages if carried out correctly and this will be discussed throughout the assignment.

Firstly, performance management can be defined as “identifying, measuring, and developing the performance of individuals and teams” and ‘aligning performance with the strategic goals of the organisation” (Aguinis, 2013, pp.2-3). Additionally, it is often viewed as “a way to develop employees” (Aguinis, 2013; Cascio, 2014) and it involves a process in which ensures a company is meeting its goals and objectives within an effective manner. Specifically, this collaborative process requires a company’s employers and employees to monitor individual long-term goals. Many businesses use this management process to ensure each individual is contributing to the success of the company and continuously developing and improving their skills. Additionally, the feedback process links to this as employers explain to employees’ certain areas that they are lacking in and how they can improve so they can contribute to the creation of more successful business results. This will allow employees to feel more valued and will increase their motivation, however, poor performance management will bring opposite results, and this will be explained in more detail throughout this assignment.

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Moreover, performance management is generally viewed as a system, to which states, involves ‘planning work in advance”, ‘monitoring progress and performance continually”, developing the employee’s ability to perform through training”, ‘rating periodically to summarise performance” and “rewarding good performance”. This most definitely portrays an effective system in which will help improve employee morale and motivation as they improve their skills. Additionally, this shows employees that they are valued and noticed within the workplace and their attitudes and abilities will affect business results. However, this process does come with potential limitations.

One major limitation, in which various authors have mentioned, is that performance management can be extremely time consuming. Managers say that “the process is too time-consuming and burdensome, taking them away from real work.” (Mueller-Hanson and Dorsey, 2017). Ultimately, performance management is an ongoing process where there is continuous monitoring, reviewing and improving. Therefore, it is often described as a time-consuming process in which can create major problems for companies that are carrying it out in a poor manner. For example, for smaller businesses, it can take away their focus from their main priorities such as making profits and generally staying in business. For some, this could be seen as a waste of time and money if it fails.

In addition, performance management involves conducting “extensive training, retraining and career development” for “every division and employee level” (NirupamaA, 2017), to which indicates that this long and expensive process requires a vast amount of attention. This process will take focus away from business goals and objectives with the chance that employees will develop and improve their abilities. This could be described as risky as if not carried out correctly, it will only result to a competitive workforce that are all greedy for rewards and praise. Also, if the system is poorly managed, businesses would lose a vast amount of money in which could have been put towards more effective things such as new products or promotional strategies. On the other hand, it could be argued that if carried out effectively, productivity levels are likely to increase which “has been proven to be valuable to many organisations” (Huprich, 2008).

Moreover, another major limitation that can result from poor performance management is poor employee morale and demotivation. Ultimately, employees are more likely to feel undervalued and unwanted if they are continuously receiving negative feedback along with no recognition or rewards. Also, they may feel as though they are not contributing to the success of the business as they are portrayed to be under developing and underachieving by employers. Thus, these employees will become demotivated and lazy within the workplace. They will lack focus, confidence and may feel like they are not valued and so all aspects of the business will be negatively affected by this. With poor employee morale comes poor quality services and products, thus it is vital that employers carry out effective performance management.

Moreover, it is important that “others are held to similar standards” and the feedback is based more on “objective results than on subjective judgements” (Mueller-Hanson and Dorsey, 2017) if the feedback is to be valued and accepted by employees. It must be delivered in a professional manner with both positives and negatives fairly discussed. If employees sense any biased views or poor judgements, the entire process becomes fruitless. This is due to the fact employees have lost the motivation to develop their skills and abilities as this is not recognised by employers.

Furthermore, Aguinis (2005) gives an example of a poorly managed performance management system in which “resulted in a $1.2 million lawsuit”. This was regarding a female employee who “won her sex discrimination lawsuit” in “emotional distress and economic damages”. In summary, she was a hugely valued employee, until new management “ignored her” and she did not receive the “same support or opportunities”. This portrays a low-quality and poorly managed system in which resulted in a huge loss of money. It is vital that within these systems, employers are fair with all employees with regards to opportunities and feedback because if they are careless, employees may be pushed to take action and this will lead to damaging consequences for businesses not only with a loss of money but a damaged reputation and potential loss of employees also.

Furthermore, another major limitation that can result from poor performance management is misleading information. This means that false information is used within the feedback process, painting an inaccurate image of how an employee is developing within the workplace. Ultimately, if employees feel that they are receiving incorrect feedback and unfair treatment within reviews, this will demotivate and discourage them from working hard and in turn, they will produce poor quality services and products. Additionally, they may look elsewhere for employment opportunities to which offer fair treatment and a more effective performance management system. According to Workfront (2019), there is “no way to determine what is true” without “performance data to back up the appraisal”. If this is the case within a company, this will certainly lead to unfair feedback and false information. Thus, all businesses should have accurate data to back up their feedback.

Although there are many limitations that have been highlighted by various authors, it is also evident that there are some positives when performance management is carried out effectively and accordingly. According to Natural Hr (2019), “regular feedback and reviews allow employees to raise and resolve any issues, therefore “increasing employee retention”. In addition, continuously monitoring employees, this is enabling employers to discover their skill strengths and weaknesses, highlighting what needs to be improved on through training.

Moreover, other positives that occur through performance management include how employees are continuously developing and are being pushed to improve and succeed, thus boosting motivation and employee morale. However, these positives will only occur when performance management is carried out effectively. Aguinis (2005) highlights how effective performance management systems can “help improve employee acceptance of wider goals” and data collated through these systems can “help document compliance with regulations”, for example, Race-related Acts or the Sex Discrimination Act. This indicates that performance management can truly direct change and improve development within the workplace, however, the system must be of high quality and professional.

In conclusion, performance management has its limitations and positives. Generally, it depends on how it is carried out and whether or not the company is giving honest reviews and creating positivity within the workplace. If there are only negative, biased reviews along with poor monitoring and lazy feedback, this process will be viewed, by many, as a waste of time as no improvements are being made. Ultimately, if the performance management process is carried out improperly, the previously stated limitations, as well as others, will most likely occur. Additionally, these limitations will lead to deeper consequences in which will damage a business further. Huprich (2008) says these consequences include “increased turnover”, “lowered self-esteem” and “damaged relationships”. Therefore, companies must be mindful of these potential limitations and ensure they are making improvements. Personally, I agree with the statement, however only when the process is managed poorly as it can bring various positives when properly managed.                       


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