1. Time of review cycle: The timing of the review cycle. For example, if a major installation or process improvement is achieved near to review cycle, the manager under influence of the latest work award the team/person involved in this project. This leaves a space for the dissatisfied team member who has contributed in project which is good in longer run.
2. Personal Likes:  The personal likes play a major role in the performance appraisal cycle. Sycophants get an advantage over the performers if the review process has certain gaps.
3. Prejudice: Another contributor to the wrongly decisions as reviewers might be influenced by prejudice about an individual based on certain history. In this scenario Organization will be at lose as its reward process might not be smooth.
4. Tools: Most of the organisations use excel or some custom made tools for performance review. This makes the whole process cumbersome, opaque and exposing it errors.
5. User Ownership: Manager does not want to take the ownership of the rewards he is delivering to team members.

To overcome above challenges, it is recommended that HR team should role out a Performance Management HCM Tool also referred as HR ERP. The system should have certain bare minimum properties as explained below:

1. Self Service: System should enable users for a self-service based goal setting for the review cycles. Now whether it is 360 or 180 degree review, user himself should be able to update the records in the system.
2. Pre Defined Templates: To provide ease of entering KRA/Goal setting and competencies, system should allow defining the templates as per position/profile of the individual. This will help the user for faster entry and clear directions about goals.
3. Flexi Goal Definition: Tool should provide flexibility to enter the user defined field in the Goal/KRA setting.
4. Organization setup: A detailed hierarchy including position hierarchy shall be supported by the application or tool.
5. Ease of Use: To drive the ownership it is most important that application or tool shall be user friendly. Which enables self-navigation without much of the hassles?
6. SOA/Integration: Technology of development of the application shall be SOA (Service Oriented Architect), which makes it more usable by extending the integration to the existing applications.