How Performance Management impacts an organization – Mary T. O’Sullivan

By Mary T. O’Sullivan, MSOL

“The only difference between one organization and another is the performance of its people.” – Peter Drucker

Performance Management critically impacts each employee and the outcomes expected by the organization. What if the performance management system is broken?

Performance Management which is not aligned strategically with company goals, or strategic congruence permits more latitude among managers for “crony” hires and plum assignments to “suck ups” and “yes men”.  The result: it leads to lower self-esteem among employees, damaged relationships as well as wasted time and money. In the one case, the first task of a new HR team was to align the corporate strategy with individual goals so that business goals would translate into individual goals. In another case, specific strategic objectives were used to change the culture to a more customer focused approach. In both cases, the company’s bottom line improved with better goal alignment at all levels.

When the Performance Management system is not consistent in allocating rewards, recognition, and compensation the wrong people are rewarded for specific work. “Credit hogs” go unchecked. This point speaks to the validity, acceptability and fairness and identification of effective and ineffective performance. This can lead to increased risk of litigation and exemplifies an unclear rating system as well as varying and unfair standards. One company faced a sex-discrimination lawsuit because a female employee’s salary was reduced along with a demotion. The company lost the suit with a $1.2M award to the employee. In another case, the manager simply gave every employee the exact same rating, because the existing Performance Management system did not tie employee ratings to compensation or rewards since these were seniority based.

One company’s Performance Management System mirrors an ideal system almost identically. However, because the overall company strategy may contain a values component not embraced by all levels of management, the values piece is not flowed down effectively throughout the organization. Without focusing on values and behaviors, individual commitment to implementing organizational change and performance improvement can be difficult to achieve.

Therefore, employees sense that managers do not “walk the talk”, and cynicism, burn-out and decreased motivation become symptoms of a poorly implemented Performance Management system. Employee improvement becomes a self-motivated activity, benefiting those with an inborn drive to achieve. Ironically, the company’s formal learning opportunities as well as a generous tuition reimbursement program seem to be designed for those who choose to seek the programs individually. Each department can offer varying degrees of learning opportunities, ranging from a handful of courses to hundreds. 

Therefore, due to the efforts of an individual manager, the Performance Management system has helped many employees to improve on an individual, personal level, however, without much impact on the entire organization.

“The future of Performance Management lies in placing ownership in the hands of employees, and teaching managers to coach rather than police”. – Culture Quote


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Mary T. O’Sullivan, Master of Science, Organizational Leadership, International Coaching Federation Professional Certified Coach, Society of Human Resource Management, “Senior Certified Professional. Graduate Certificate in Executive and Professional Career Coaching, University of Texas at Dallas.

Member, Beta Gamma Sigma, the International Honor Society.

Advanced Studies in Education from Montclair University, SUNY Oswego and Syracuse University.

Mary is also a certified Six Sigma Specialist, Contract Specialist, IPT Leader and holds a Certificate in Essentials of Human Resource Management from SHRM.

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