Performance Management | Leadership | Management
In many companies, performance management means KPIs, performance reviews, ratings, and bonuses.
But there is a growing problem:
Companies are spending more time managing the performance process, while managers and employees are not always seeing real value from it.
According to Deloitte’s 2025 Global Human Capital Trends, 61% of managers and 72% of workers do not trust their organization’s performance management process. Only 26% of organizations say their managers are very or extremely effective at driving team performance.
So, is the problem with KPIs?
Not necessarily.
The deeper problem is that many companies treat performance management as a process, while performance is actually created every day through people and their work.
1. When KPIs Become a Numbers Game
A company may have a well-designed KPI system:
Set goals → Measure KPIs → Review performance → Give ratings → Reward results.
But if employees do not understand why their goals matter, KPIs can easily become just numbers they need to hit.
Deloitte reports that only 47% of workers clearly understand what their organization expects from them.
When goals are unclear, people often focus on what is easy to measure rather than what creates real value.
For example:
A salesperson may make a large number of calls.
But more calls do not always mean better sales.
A customer service team may close many tickets quickly.
But faster service does not always mean happier customers.
A manager may complete many reports.
But more reports do not necessarily mean better team performance.
Measuring activity is not the same as managing results.
2. The Real Challenge: Turning Goals into Action
Effective performance management should not begin with:
“What percentage of the KPI did you achieve?”
It should begin with:
“What do we need to do differently to achieve this goal?”
This means moving from:
Annual Review → Continuous Performance
From:
Evaluation → Development
From:
Control → Coaching
And from:
KPIs → Results + Capability
Research from McKinsey also shows that effective performance management depends on factors such as clarity, simplicity, and the quality of feedback.
The message is simple:
Do not wait until the end of the year to talk about performance.
If an employee is moving in the wrong direction in January, finding out in December is too late.
3. A Better Performance Management Cycle
At LET, we see performance management as a continuous management cycle:
① ALIGN – Create Clarity
People need to understand:
What are we trying to achieve?
Why does it matter?
What does success look like?
Individual goals should connect with team goals and business goals.
② PLAN – Plan the Actions
Do not simply give people KPIs.
Managers should work with employees to identify:
- What are the key priorities?
- What actions are needed?
- What resources are required?
- What risks may arise?
- What capabilities need to be developed?
A good goal without a good action plan is still just a number.
③ TRACK – Monitor Progress
Do not wait until the end of the month to look at performance.
Create a regular rhythm:
Daily → Weekly → Monthly
But performance meetings should not only ask:
“How much have we achieved?”
They should also ask:
“Where are we compared with the target?”
“What is the gap?”
“Why does the gap exist?”
“What action should we take now?”
④ COACH – Give Feedback and Coaching
This is often the missing part of performance management.
A manager should not simply say:
“Your result is below target.”
Instead, help the employee explore:
What is preventing better results?
What needs to change?
What capability needs to be developed?
How can I support you?
Deloitte suggests moving beyond simply “managing performance” toward creating human performance in the flow of work—through better management, coaching, culture, data, and work design.
The goal is not simply to make people know more.
It is to help them think better, act better, and take greater ownership.
⑤ REVIEW – Review and Improve
The end of a performance cycle should not only be about giving a rating.
It should be a time to:
Review → Learn → Correct → Improve
When results are below target, do not only ask:
“Who is responsible?”
Also ask:
“What needs to change so we can achieve better results next time?”
This is when performance management becomes performance improvement.
4. From Managing Performance to Creating Performance
Deloitte reports that organizations that are very or extremely effective at enabling human performance are 2.08 times more likely to report positive financial outcomes than other organizations.
This suggests an important shift in thinking:
Performance is not something we simply measure at the end of a period.
Performance is something we create every day.
It comes from:
**Clear Goals
- Right Capabilities
- Right Actions
- Timely Feedback
- Continuous Coaching
- Data for Better Decisions
= Sustainable Performance**
5. Five Questions for Managers
Take a moment to review your current performance management system:
- Do employees clearly understand what they are expected to achieve?
- Do our KPIs measure real value—or simply what is easy to measure?
- Do managers talk about performance regularly, or only during formal reviews?
- Do performance meetings focus on causes and solutions, or only on numbers?
- Do employees become better after each performance cycle?
If the answers are not clear, perhaps the organization does not need another KPI form.
Perhaps it needs a better way of managing performance.
Because the ultimate goal of performance management is not:
“To identify who is performing well and who is not.”
It is:
“To create a system that helps more people perform better, more consistently, and more sustainably.”
That is what effective performance management is really about.
The LET Perspective
At LET, we see Performance Management not simply as an HR process, but as a management system that turns strategy into results through people.
Align the Direction → Plan the Action → Track the Gap → Coach the People → Improve the Performance.
Because strategy only creates value when it is executed.
And execution becomes sustainable when people and systems work together to create performance.
References
Deloitte – 2025 Global Human Capital Trends: Reinventing Performance Management Processes Won’t Unlock Human Performance
McKinsey & Company – What Works—and Doesn’t—in Performance Management
