Vast majority of organisations set individual targets and conduct formal year-end review discussions. FILE PHOTO | NMG
What you need to know:
In early 2013, 1,056 companies globally shed light on global performance management practices by getting involved in Mercer’s Global Performance Management Survey.
The findings of the study revealed while there are some notable differences in performance management across regions, globally, overall design of the process looks nearly the same.
The vast majority of organisations—95 per cent of them, set individual targets and conduct formal year-end review discussions.
In an article appearing on Mckinsey and Company website, someone recently wrote, “the worst-kept secret in organisations has long been the fact that the yearly habit of evaluating (and sometimes rating and ranking) the performance of employees epitomises the absurdities of corporate life.”
It could not have been captured better because the headache of performance evaluation for the modern CEO and HR manager is all too real. Apparently, the appraisee, the managers and staff alike, too often view performance management as time consuming, excessively subjective, demotivating, and ultimately unhelpful, the article observes.
In such cases, it does little to improve the performance of employees. It may even undermine their performance as they struggle with ratings, worry about compensation, and try to make sense of performance feedback. But is this the best approach to inspire, engage and improve employee output?
In early 2013, 1,056 companies globally shed light on global performance management practices by getting involved in Mercer’s Global Performance Management Survey.
The findings of the study revealed while there are some notable differences in performance management across regions, globally, overall design of the process looks nearly the same.
The vast majority of organisations—95 per cent of them, set individual targets and conduct formal year-end review discussions. Despite the commonalities in performance management process around the world, only three per cent of the companies reported that their overall performance management system delivers exceptional value. Most aspects of organisation’s performance management approach were evaluated as ineffective.
Most corporate performance-management systems do not work today, because they are rooted in models for specialising and continually optimising discrete work tasks. These models date back more than a century.
Getting rid of ratings which demotivate and irritate employees and adopting employee performance management programme as researchers Bob Sutton and Jeff Pfeiffer have shown, makes sense. Such a system creates an approach for assisting the performance of the employees to improve rather than a grading system that highlights the employee flaws.
Who feels inspired to try harder when they just learned of all the things they are doing wrong? Negative feedback does not inspire positive results.
There are companies, such as GE, Gap, and Adobe Systems, who have done just that in a bid to improve performance. They’ve dropped ratings, rankings, and annual reviews, practices that GE, for one, had developed to near perfection in previous decades.
Mercer’s periodic surveys reveal that the key drivers of performance management success are manager skills, executive commitment, technology, and calibration. These skills include capabilities such as setting goals, providing feedback, evaluating performance, and linking performance to critical talent management decisions such as compensation, development and careers.
In addition to managers’ skills, executive commitment has a strong impact on the likelihood of performance management success. Companies reporting a higher level of executive commitment are more likely to report effectiveness in performance management.
Nine out of 10 companies indicated that their highly committed executives provide regular coaching and feedback to direct reportees and hold their direct reportees accountable for doing the same with their own teams.
Technology and calibration are also major drivers. Mercer noted that calibration among managers to discuss employee performance has many benefits, including reaching more accurate performance rating decisions, increasing talent awareness, and identifying individual employee development needs and opportunities. Technology on the other hand can afford key benefits, such as ready access to accurate data and actionable insights to all stakeholders.
Performance management systems that are fully integrated into other HR and financial systems, maximise the ability to leverage performance management data to better allocate rewards, improve recruiting, and enrich career planning.
