Performance Management

Top 7 Performance Management Mistakes to Avoid for Companies

By on October 13, 2022

Managing the performance of its employees well is essential for any organization to be successful, yet the processes related to it are ad hoc, confusing, and even downright harmful. Targeting employee engagement and aiming to improve their motivation and drive is essential, but performance management errors creep up while trying to streamline the process. Some essential pointers that undermine employee engagement and performance management reviews are listed here.

Robust employee engagement & performance management reviews

1. Not being prepared

Since the performance management process is about evaluating employees, it might seem baffling that some organizations fail to paint the bigger picture and describe their employees’ needs for the performance management process. When employees know what precisely their performance ends up contributing to, their efforts are going to be more focused. They feel empowered and invested in a common purpose and are aligned with the organization’s overall strategy and long-term goals.

Performance management mistakes happen even when the intentions are good, and organizations should articulate their plans to avoid confusion. But for that to happen, the organization’s leaders should know what direction the company is moving in and should set goals that move them towards the same. When employees can understand and interpret those goals according to their job profile, their motivation will be higher because they can see what needs to be achieved. This provides a sense of togetherness, a joint mission that links individuals, teams, and departments to work together and achieve the goal.

2. Micro-managing and controlling with performance management tools

Employees feel more trusted when they know what they’re working towards. They have the freedom to assume authority and take accountability and are equipped to manage their performance. When they don’t, it is easy to feel like performance management is a one-way ticket where employees have to reach a specific target no matter what (or how). Focusing too much on numbers and not on people can lead to such performance management mistakes, and such environments vacuum up motivation and employee performance.

According to a survey, 68 percent of respondents who were micromanaged experienced a decrease in morale, while 55 percent of those micromanaged said that it hurt their productivity. 

This doesn’t mean micromanaging is completely bad – instances like training new team members or trying to help an employee understand a complex deployment need micromanagement but within well-defined boundaries. It is easy to tell someone what to do and leave – the difficult task is to help them understand why it needs to be done (and how it can be accomplished). There is a difference between overseeing all aspects of a project and controlling them – demanding constant progress updates can add to an already stressed workforce.

3. Being Biased

Some biases creep in no matter how impartial humans think they are. Not knowing them can hinder managers’ growth, leaving their team members disgruntled. Some of the preferences that managers should be aware of, especially in performance management scenarios, are:

Biases to be avoided by managers
  • The horns/halo effect refers to the tendency to give extra weightage to positive or negative incidents. 
  • Recency bias deals with the effect of performance immediately before the review. Since the last version is fresh in memory, its positive or negative stature can undo a lot of achievements and failures from the employee’s side. The problem becomes intensified when the evaluations are less frequent.
  • Leniency bias is usually seen in non-confrontational characters – managers give satisfactory ratings to all team members even if their performance isn’t up to the mark.
  • Central tendency bias refers to people going for the ‘safe’ option. In performance management, it means managers choose a neutral option on a scale, if available, presumably to avoid judgment on employee performance.
  • Identity biases include racial or gender biases that are implicit in the system. 

Left unchecked, these biases will bring down any performance management system. Keeping the primary purpose of performance management in mind aligns managers and team members on the appropriate activities and identifies high performers.

4. No Employee Involvement

Many organizations and managers believe performance management to be best conducted as annual reviews for employees to verify the progress against various metrics and set targets for the following year. Employees are passive participants in such processes, where all they can do is try to meet the expectations. Involving them in the goal-setting process ensures employee engagement, a better understanding of the needs and asks, and a transparent atmosphere where every team member is invested in the overall growth of the team (that includes individual team members).

5. Avoiding the negative performance feedback

Under-performers need to be handled with more care than those performing well – this is especially true if the underperformance happens after the employee has been productive for a reasonable amount of time. The hybrid work environment adds more stress to the everyday life of employees, and it is understandable if managers feel the need to avoid a negative conversation. Avoiding such discussions can be one of the worst performance management mistakes. Keeping quiet or highlighting only the good parts in performance management reviews won’t be of any help to anyone:

  • The individual employee is denied an opportunity to learn and grow.
  • Other team members can resent the manager for favoring a laggard.
  • The organization suffers as a whole since multiple resources are underperforming. 

6. Focusing on the process, not the individual

Managing under-performance is a tricky task – it is often swept under the rug and ignored until it can’t be anymore. The sad part is the organization, and the managers could have benefitted immensely from it. Many business leaders think they have everything covered because they have various performance improvement systems and tools. This can be a dangerous way of thinking, encouraging stagnation. The best kind of employee performance management isn’t about fancy tools, rigid systems, and tick-boxes – it’s about creating a culture of continual improvement.

Improved performance rather than chasing targets can help individuals and teams focus on something tangible. Extra focus on the numbers may mean individuals can present only the information that looks like they’re achieving all the goals. Hence, goals should be set to create a high-performance work culture that strives to achieve the organization’s broader goals.

7. Bundling appraisals and pay discussions

The hue and cry for better performance management processes are because current ones don’t provide learning opportunities for employees to be on track with changing industry trends. Continuous feedback based on qualitative information gives employees the tools to take ownership of their and their team’s achievements and growth. 

Avoiding mistakes and establishing a robust performance management process

Making employees a part of the performance management process requires a lot of work from organizations and managers. There are plenty of goal-setting frameworks that allow team members to plan their course of growth e.g. OKRs (Objectives and Key Results) are used by many to enable their employees to set their own goals. 

OKRs require the organization or team to have an aspirational vision that reflects the organization’s values and culture. An organization that is thoroughly organized and research-oriented shouldn’t aim to be the ‘quickest’ to results, but aiming to provide ‘the most accurate results in the shortest possible time is a goal the employees can understand and work towards. These goals are then distilled down to determine objectives for individual departments, teams, or people – where the entities set the goal and then agree on key results with their manager. Performance is then assessed based on how well the individual and the team achieved their goals, which are apparent to everyone involved because of the critical results. 

By giving employees clear instructions on what they need to do to perform to their best abilities, managers give them the autonomy to achieve it as they please. Managers can step in and help or coach the team on handling the issue. OKRs also require frequent meetings between managers and team members to check progress and raise flags if anything seems off. OKRs also require the performance and compensation aspects to be decoupled to focus on growth first. Employees must also provide performance feedback to managers, creating a self-correcting loop that helps the whole team to learn and grow.  


Establishing robust performance management processes enables transparency, but doing so without a specialized tool can be tedious. With Upraise for Employee Success, setting OKRs is as simple as creating a Jira ticket. Managers can track the progress of OKRs from their Jira instance and assist team members from there too. The intuitive, easy-to-use nature of the tool allows managers to track interactions with their team members and keeps detailed performance data to identify the strengths and weaknesses of their team members. With the information, managers can provide targeted support, reduce bias, and empower their team members to progress faster than their peers in other organizations. Seeing a clear record of their growth can enable employees and significantly improve employee engagement and company culture.

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