Performance management (PM) is an essential process in any organization, designed to ensure alignment of employees’ work with the company’s goals and future development efforts. However, it’s often seen as a cumbersome task, loathed by many managers and misunderstood by employees. Public sector agencies, in particular, can face challenges when implementing a performance management process due to their non-commercial focus. These organizations typically have a wider range of stakeholders and complex internal reporting structures, making it difficult to evaluate individual performance. Additionally, since the customers of these agencies do not usually pay directly for the services they receive, gauging metrics such as customer satisfaction, cost, value, or impact of implementations can be challenging. Assessing the overall performance of a public sector entity is complex, and as a result, performance data is often not available as a benchmark to set team and individual targets. Let’s explore further why performance management is frequently met with disdain, what organizations have traditionally gotten wrong, the importance of performance management, and how it can be improved.

A Bad Rep– Why Do Most Managers Loathe PM?

It’s not news that most workers dislike performance reviews. In a recent study, Leadership IQ surveyed 48,012 employees, managers, and CEOs to find out what they thought of their annual performance management process. Only 13% of employees and managers think their organization’s performance appraisal system is useful. This is not because performance reviews are seen as unnecessary, but rather due to poor implementation.

One of the main reasons managers loathe performance management is the fact that the process requires a unique skill set to deliver feedback effectively. Providing constructive feedback with both candor and care is challenging and not often a skill managers are properly trained in. Effective feedback delivery requires emotional intelligence, active listening, and an ability to balance positive reinforcement with constructive criticism. Without proper training, managers may feel unequipped to handle these conversations, ultimately resulting in feelings of frustration toward performance management.

Additionally, the process is time-consuming. To do it right, managers must invest significant time and effort into understanding their employees’ performance. Readying for a performance conversation requires managers to observe behaviors, gather data, and prepare for feedback sessions. Given the myriad of responsibilities managers already have, performance management can feel like a burden rather than a critical function.

What Organizations Have Traditionally Gotten Wrong

Historically, organizations have made mistakes in their approach to performance management:

• Lack of Objective Measures or Alignment to Competencies: Performance reviews can become subjective without clear, objective metrics. This inconsistency in the process frequently leads to employee dissatisfaction and mistrust. Objective measures are crucial because they provide a fair basis for evaluation and help identify areas for improvement. However, many organizations fail to develop and implement these measures effectively, due to the amount of frontend work required to develop a competency framework.
• Annual Reviews: Conducting performance evaluations only once a year can lead to a lack of continuous feedback, making it difficult not only for employees to improve, but also for managers to track progress effectively. Annual reviews often focus on past performance instead of future development, which can demotivate employees and limit growth opportunities.
• Failure to Cascade Goals: When organizational goals are not broken down and aligned with individual and team objectives, employees may feel disconnected from the company’s broader mission. This runs the risk of disengagement. Cascading goals from the top down ensures that every employee understands how their work contributes to the overall success of the agency.

Why Is Performance Management Needed?

Let’s talk ROI– despite its challenges and required effort, performance management is crucial for public sector agency success. According to Reflektive Research Brief by the Brandon Hall Group; “The ROI of Performance Management”, effective performance management processes can lead to significant positive outcomes:

• Reduced Turnover: Organizations with strong performance management systems are five times more likely to see reduced employee turnover. Regular feedback and clear development plans help employees feel valued and supported, reducing the likelihood of them seeking opportunities elsewhere.
• Improved Customer Satisfaction: Companies with effective performance management are 3.5 times more likely to report improved customer satisfaction. Engaged and motivated employees provide better service, leading to higher customer satisfaction levels. In the public sector, this may appear as higher satisfaction among the patrons of the communities they serve.
• Increased Productivity: Effective performance management can triple productivity rates. By setting clear expectations and providing regular feedback, employees can focus on the most critical tasks and continuously improve their performance.
• Financial Growth: Organizations with structured performance management systems are three times more likely to experience financial growth. Aligning individual performance with organizational goals ensures that every employee contributes to the company’s success. For public sector agencies, this financial growth can translate to enhanced resource utilization, ultimately benefitting the communities they serve.
• Higher Engagement: Companies with a robust performance management process in place are 50% more likely to have managers who hold daily or weekly check-ins with employees. Not only does this regular communication foster stronger relationships, but it also ensures continuous feedback and drives higher engagement.