Is Performance Management Essential?

Performance management is necessary but a difficult system to implement. From my sixteen years management experience, my general position is that it ought to be applied effectively, efficiently and consistently or forget it.

Dominant positive aspects of performance reviews are that they are (1) a training tool to make sure that everyone in the organization completes tasks individually for the collective efficiency; (2) a productivity tool because the management of human capital calls for increased individual productivities; (3) a cost containment tool because poor performances cost money; (4) a communication tool to make sure the reviewee and the reviewer are on the same page; (5) a succession planning tool because if you need to fill a position suddenly vacant, you would require to know in advance who is the best capable to fill it.

Dominant negative aspects of performance reviews are that they (1) are poorly administered because performance appraisers need to be trained too; (2) risk personality conflicts between reviewer -often the immediate supervisor- and reviewee cloud the objectivity of the review process; (3) could carry halo effects, whereby we tend to over rate and overlook a good employee's shortcomings and, excessively under rate and overlook a bad employee's positive results, are counterproductive; (4) flawded with stigmas. For most people, the process is cause of anxiety, discomfort and fear of being terminated as a result of a poor evaluation; (5) are disruptive because they take time away from regular duties. And if you are supervising a dozen people, this could easily take the whole week.

So to directly answer the question, I would say 'yes' but if you should decide to do it then do it right. If the company's culture is not favorable to the process, then you ought to start from there first.