Challenges in Implementing a Performance Management System

by Krishnan Rajendran
Chairperson, ERMA Certification Board

What is performance management?
Performance management is a process for setting up a shared understanding of what is to be achieved at an organization level. It involves the alignment of organizational objectives with the individual’s agreed measures, skills, competency requirements, development plans and the delivery of results. The focus is on performance improvement through learning and development in order to achieve the overall business strategy of the organization. Holistically, performance management integrates a multitude of elements that contribute to effective management of the human resource.

Performance management is a systematic process which a manager can use to get the team members to achieve the team’s objectives and targets, improve overall team effectiveness, develop performance capabilities, review and assess team and individual performance, and reward and motivate. Effective performance management requires:

  • Identifying tasks and accountabilities
  • Defining competencies necessary to be successful in a position
  • Ensuring that team members have the required competencies
  • Having in place a system to develop competencies
  • Providing timely feedback on how effectively the team members are applying their respective competencies to
  • accomplish their tasks and achieve the goals
  • Rewarding and motivating effective performance
  • In the event that performance does not meet established requirements, the manager must understand the
  • corrective processes and methods that can help improve employee performance.


What can go wrong in performance management?
The basic objective of performance management is to develop and improve the performance effectiveness of team members. The manager and the team member work together to plan, monitor, review and appraise the latter’s work objectives and overall contribution to achieving the organization’s goals. Various types of tools are used in this process, ranging from traits based or behavior based to result based. Both formal and informal communications are used to provide feedback. The feedback could be regular or irregular. A lot of time and energy is spent in getting the goals and measures right, reviewing performance, and appraising it. However, things could go wrong and the required effectiveness of employee performance is not obtained. Some of the major challenges in managing performance could be as follows:

1. Wrong Design
The performance management system and tools must fit with the specific needs of the organization. It cannot be a duplication of a system designed and implemented in another organization, even an organization in the same industry or the same business group. Intense consultation with various stakeholders and users of the system is necessary. User trust is an absolute necessity for the success of the system. The design should be tried out on a pilot basis before it is rolled out to the organization as a whole. All documents and forms must be in place. The system should be fair and equitable. Performance management should be viewed as a continuous process and not an activity conducted once or twice a year. The design should also include mechanisms for rewarding performance and handling poor performers.

2. Absence of Integration
The performance management system has to be integrated with the strategic planning and human resource management systems as well as with the organizational culture, structure and all other major organizational systems and processes.

3. Lack of Leadership Commitment
Leadership commitment and support is a must for smooth implementation of the system. Leaders must drive the process and make performance management an integral part of the management of the company. Leaders contribute not only in setting the strategic direction and performance measures but also in monitoring and reviewing performance across the organization. They also reinforce the performance cycle by recognizing and rewarding performance.

4. Ignoring Change Management in System Implementation
Strategic management of change is a vital part of implementing the system. Driven by the top management, it involves careful management of resistance. Communication would be a major intervention and a key tool in managing the change. Implementation milestones and schedules must be followed. Proper documents must be in place.

5. Incompetence
Competence to use the performance management system is necessary to ensure smooth implementation of the system. Some of the major skills would include:

  • Defining strategic objectives, performance indicators, core competencies and performance contracts
  • Defining performance measures that correspond to the KPIs
  • Giving and taking feedback, conducting appraisal interviews, and active listening
  • Performance coaching


The focus would be on designing and implementing training and development interventions that would help in developing the competence of various job holders. Special emphasis would be on building the behavioral dimensions of performance.