Performance management and wellbeing at the workplace

Performance management systems can be a source of stress and anxiety, and yet they can also provide clarity and focus, which are both factors that have positive effects on wellbeing at work. Employee wellbeing is essential as it has been shown to enhance organizational performance and employees’ quality of life. These paradoxical results represent a challenge for organizations when designing performance management systems. In this chapter, we examine current research on the relationship between performance management practices and employee wellbeing and formulate a conceptual framework elucidating the conditions under which different wellbeing results are likely to occur. The purpose of our work is to help organizations design performance management mechanisms that account for and foster employees’ wellbeing as well as raise awareness regarding the situations that can deteriorate it. We conclude by highlighting the importance of managerial philosophies and organizational goals definitions, recommending the adoption of a enabling or a hybrid set of performance management mechanisms to better accommodate the complex nature of wellbeing and other organizational goals.