Why Is Performance Management Broken?

Abstract

Although extensive research and practice have focused on understanding and improving performance management systems in organizations, the formula for effective performance management remains elusive. We propose that a significant part of the problem is that performance management has been reduced to prescribed steps within formal administrative systems that are disconnected from the day-to-day activities that determine performance management effectiveness (e.g., communicating clear work expectations, setting short-term objectives and deadlines, and providing continual guidance). We argue that interventions to improve performance management should cease their exclusive focus on reinventing formal system features. Although well-developed tools and systems can facilitate performance management, these alone do not yield effective performance management. In lieu of making further changes to formal performance management systems, we argue for devoting more attention to improving manager–employee communication and aspects of the manager–employee relationship and propose an approach we believe holds promise for improving performance management processes in organizations.