MANY organisations have performance management systems that exist only on paper and add no real value to the business.
Over the years, I have seen companies struggle with ineffective performance management, filled with flaws that make the process frustrating rather than useful.
The problems are plenty: goals that have no connection to business strategy, vague or trivial targets, and an obsession with vanity metrics that make reports look impressive but fail to drive results.
A major issue is that many employees do not know how to set proper goals. They are often given performance targets that seem important on the surface but do not actually contribute to the company’s success.
In many cases, goals are assigned arbitrary weights without a clear understanding of their true impact. Even worse, employees are burdened with too many goals, making it impossible to focus on what really matters.
The result? A performance management system that looks comprehensive on paper but fails to improve actual performance.
Another common problem is secrecy around performance management. Employees are often left in the dark about what is expected of them and how they are progressing.
Performance assessments are treated like a mystery, and ratings are often based on personal judgment rather than solid evidence. This leads to frustration, disengagement, and a lack of trust in the system.
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Employees who do not know where they stand cannot improve, and without clear feedback, they are forced to guess what their managers expect.
No wonder so many people see performance management as nothing more than an annual box-ticking exercise.
Linking performance to strategy
Fixing this broken system requires a shift in thinking. The first step is ensuring that every goal is directly linked to the company’s strategy.
Performance management cannot be a disconnected human resources (HR) process — it must be a tool that helps the business achieve its most important objectives.
This starts with the CEO and cascades down through the organisation. The CEO’s key goals should influence the goals of senior managers, which in turn should shape middle managers’ and employees’ targets.
Each level should have a cause-and-effect relationship with the level above it. If an employee’s goals do not align with the company’s strategy, then they are either working on the wrong things or the strategy is not being properly communicated.
Organisations should also simplify goal-setting. Instead of long lists of tasks, employees should focus on a few high-impact goals that drive real results.
The fewer, but more challenging the goals, the better. For example, a CEO should have no more than eight major goals, senior managers should have six, and employees should have four.
Performance contracts should not try to cover everything an employee does; instead, they should highlight the most critical priorities that deserve top attention. When people are clear about what truly matters, they can focus their energy where it will have the biggest impact.
Simplifying performance ratings
Many organisations make performance ratings unnecessarily complicated. Lengthy rating scales and detailed scoring systems create confusion without adding real value.
A simple and effective rating system should answer one fundamental question: Did the employee meet their targets? The best approach is to use three clear categories: Target exceeded, target met, or target not met. Anything more complex only adds unnecessary layers of bureaucracy.
Transparency is also key. Performance assessments should not be secretive or hidden away in HR files. Instead, every employee should be able to see what their colleagues are working on and how they are performing.
When performance data is made public within the company, it creates accountability and motivation. People work harder when they know their efforts are visible to others, and managers become more objective when they know their ratings will be open to scrutiny.
Feedback
One of the biggest failures of performance management is poor feedback. Too often, feedback is vague, generic, or delivered too late to be useful.
Employees hear things such as “You need to be more proactive” or “You’re doing great,” but such statements provide no real guidance. Feedback must be specific, evidence-based, and balanced.
It should highlight exactly what an employee is doing well and where they need to improve, with clear examples.
Negative feedback, if not handled well, can linger in an employee’s mind for years. This is why it must be delivered carefully. Instead of making it personal, managers should focus on behaviours and results.
For example, instead of saying, “You don’t work well with others,” a manager should say, “On the last project; there were delays because the team did not have the information they needed from you. How can we ensure better collaboration next time?”
Constructive feedback helps employees grow instead of leaving them feeling demotivated.
Performance
When done right, performance management is not just an administrative process — it becomes a powerful tool for business success. It ensures that everyone in the organization is working toward the same goals, that employees know what is expected of them, and that progress is measured in a meaningful way.
Companies that fix their performance management systems see major improvements in engagement, productivity, and business results.
Employees are more motivated when they understand how their work contributes to the company’s success. Managers become better leaders when they provide clear expectations and useful feedback.
Organisations should move away from wasting time on vanity metrics and focus on what truly drives performance.
The key to success is keeping it simple, transparent, and linked to strategy. If organisations stop treating performance management as a routine exercise and start using it as a real business tool, they will unlock its true potential.
Performance management should not be about paperwork and scoring — it should be about driving meaningful results, building a high-performance culture, and helping employees succeed.
- Nguwi is an occupational psychologist, data scientist, speaker and managing consultant at Industrial Psychology Consultants (Pvt) Ltd, a management and HR consulting firm. — Linkedin: Memory Nguwi, Mobile: 0772 356 361, mnguwi@ipcconsultants.com or visit ipcconsultants.com.
