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The Pros and Cons of Using Performance Management in Your Dealership

Performance management is designed to help managers and employees better work together to achieve organizational goals. Successful performance management starts with planning objectives with the employee, then monitoring how well these objectives are getting accomplished and finally reviewing the employee’s performance and overall contribution to the organization.

Performance management is more than just an annual review, it is an ongoing process of setting objectives, assessing progress and providing feedback along the way. Performance management should be as much about employee development as it is about reaching organizational goals.

performance management

In the information age, performance management is incomplete without data. Fortunately, there are management systems available that automatically gather and track the key performance indicators (KPI) used to establish an employee’s level of performance. The hard part is knowing what data is important and how to interpret it.

With more organizations using performance management systems, the real question is whether performance management really works in the dealership environment.

Pros:

Streamline Dealership Objectives – A major advantage to a performance management system is the ability for managers to evaluate and compare employees. A performance management system can divide workers into competent performers, under-performers, and over-performers. This can easily help to identify which employees need more development and which employees are performing well.

Clear Performance Comparison – Favoritism and nepotism are less likely to thrive if performance is evaluated in objective terms. When goals and objectives are clearly defined, employees should be able to know where they stand against their own objectives at any given time, and managers will know how each employee compares to the others, making promotions and other rewards easier to dole out.

performance managementEmployee Development – Performance management is an excellent format for helping employees set goals, monitor progress and make corrections. With better objectives and better feedback on performance, employees can follow a clearly defined development path which adds value to the dealership and to themselves.

Cons:

Using the Wrong Measuring Sticks – It can be difficult to determine what criteria are the most important to monitor. When the wrong criteria are used to determine an employee’s performance, the results can be negative. While it is important to track metrics like the number of phone calls, does the metric take into account the quality of quality of the action taken, or the value of the result?

Inhibited Creativity – Performance management forces employees to focus on specific performance indicators, and achieve certain production numbers. If the performance management evaluation criteria are too strict, it can limit creativity, resulting in employees that function more like drones than humans.

Unhealthy Competition – Performance management should be about getting the most out of each employee and reaching dealership goals more effectively, but the focus can quickly shift to unhealthy competition between employees, if not managed correctly. This is especially a problem in a dealership where there are more under-performers than there are performers or over-performers. In this scenario, employees tend to focus more on tearing down the guy ahead of him or her than about achieving their own objectives.

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Ken Strong
Ken Strong
Retail automotive veteran and writer for CBTnews.com

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