Traditional performance management systems are useful for viewing and assessing a company, and the employees therein, on an annual, or bi-annual basis. Then, said the annual or bi-annual review will show that a certain area or group of employees is lacking, resulting in training for that group. Little to the knowledge of the one deciding on the training, there are multiple employees far more competent than their peers in the aforementioned group, but now they have to undergo training with their counterparts, which seems as if the skilled employees are being punished due to the weaker links in the company chain.
Studies have shown that many employees actually dislike the traditional performance management systems due to this reason. They feel as if they are being punished as part of the herd, never allowed to shine, despite their skill and competency in performing the scope of their duties. This is where real-time performance management systems would shine.
A performance management system is paramount to a company's success given its ability to assess overall and individual performance, therefore allowing a company to coach an employee to competency if said employee is falling under the desired rating. However, there is also a downside to this, especially with the traditional system. One downside is that this is either an annual, or bi-annual system, which means that an employee who is deemed incompetent has been incompetent for at least 6 months to 1 year before anything has been addressed. Then, of course, there is training and an attempt made at overall competency, instead of focusing on the employee individually.
Competent employee's morale will be lowered in part to the coaching of overall competency, in part due to the fact that their competency and hard work went without recognition, and in part because of possible resentment stemming from the lack of competency found and directed at the cause, which is a fellow employee. With traditional performance management systems, competent employees will not receive the praise, nor the recognition that they so diligently apply themselves towards. This, in itself, is one of the major issues that arise from traditional systems of gauging performance. This and the lack of transparency shows employees that they are simply small parts of something on a more grandiose scale.
Competent employees should be receiving the praise and recognition they deserve. They should be commended for their service, and for their desire to succeed. For them to be competent they must be focused on their duties, and instead of the positive acknowledgement being given, they are actually punished with the incompetent. This creates a "Why should I even apply myself?" mindset, along with a mentality that is more along the lines of 'do my job and get my paycheck'. This creates stagnancy in the work environment and employees that are skilled at their job but no longer applying themselves due to not gaining recognition or being commended for the application of their skills for the betterment of the company.
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