Friday, November 6, 2009

Study reveals weakness in most companies’ performance management practices

Although the majority of American organizations agree on the importance of performance management as a means to drive business success, only 11 percent subscribe to the best practice of providing ongoing performance feedback and measurement against goals, according to the 2009 Talent Management Processes & Practices study conducted by Workscape, Inc. and the Human Capital Institute (HCI). Workscape and HCI unveiled the results of the research study on September 30, during the 12th Annual HR Technology Conference in Chicago.

Based on a survey of 690 HCI members as well as an exhaustive search of existing materials on the topic of performance management, the study demonstrated that performance management remains bogged down in the review process. In fact, two-thirds (66 percent) of organizations admit an inability to realign employee goals to corporate goals as they change throughout the year. Nearly half of the surveyed organizations still wait until the annual performance appraisal event to define and adjust employee goals.

"According to this research, despite overwhelming agreement that employee performance management’s purpose is to drive greater organizational and individual performance, a large number of organizations (68 percent) equate performance management with a function that occurs only once or twice per year," stated Tony Marzulli, Workscape’s chief marketing officer. "In order to compete successfully in any market – especially today’s highly dynamic environment – companies need to be able to react swiftly to changes 365 days a year and not just during focal planning periods. With the right technology-based system in place, an organization can support performance and compensation decisions throughout the year – making the business much more effective during tough economic times."

According to the survey, only 21 percent of organizations use automated performance management solutions to better align corporate and individual goals. In addition, only a minority of organizations have adopted a formal performance measurement methodology. The results of the survey demonstrate that current employee performance management practices rely too much on the performance review process and, in most organizations, fail to provide a dynamic, ongoing means of keeping individual and organizational goals in synch.

"The ability to quickly recognize and adapt to fast-moving changes – such as changes in the markets or changes in a company’s business strategy – can drive how successful a business can be," Marzulli continued. "So many changes and variables directly affect a company’s ability to drive performance and retention through rewards structures. To be competitive, companies must have the right information to make compensation and performance management decisions, each and every day."

"Organizations need formal employee performance management systems in place to raise overall organizational performance," said Carl Rhodes, HCI’s chief operating officer. "In most cases, this will include technology and well-trained front line-managers—essential for driving the desired results."

Source: Workscape;