U.S. Workers Give Performance Management Programs a Failing Grade

Only three out of ten U.S. workers agree that their company’s performance management program actually does what it’s intended to do: improve performance. And only two out of ten workers say their company helps poorly performing workers improve, according to a recent survey by Watson Wyatt, a leading human capital consulting firm.

“The survey results clearly indicate that corporate America’s performance management systems need fixing,” said Scott Cohen, Ph.D., national director for talent management at Watson Wyatt and an expert in performance management. “Unfortunately, too many organizations view their performance management programs as ‘organizational wallpaper.’ They exist in the background and aren’t expected to add value.”

While performance management programs do somewhat better at more traditional functions such as appraising performance and assisting with pay decisions, they are not successful in improving performance. The survey of 1,190 workers found that 61 percent of employees feel their performance appraisal was accurate and 54 percent say employees with better reviews get better raises and bonuses. However, only 30 percent of employees give their performance management system good marks in helping them to improve their performance. In addition, less than 40 percent say the system establishes clear performance goals, generates honest feedback or capitalizes on technology to streamline the process.

Workers’ Views on Performance Management

Aspect of Performance Management ----- Strongly Agree/Agree

  • Program helps poor performers improve 9%
  • Program has helped me improve my performance 30%
  • Program establishes clear performance goals for current year 35%
  • Program does a good job of giving honest feedback 36%
  • Program uses technology to streamline performance
  • management process 38%
  • Program rewards better-reviewed employees with better raises/bonuses 54%
  • I was evaluated accurately in my recent performance appraisal 61%

The survey also found that only 54 percent of workers say their company sets high performance standards and only 44 percent feel that people are held accountable for their performance. Nineteen percent of all workers say their company deals effectively with poorly performing employees.

“Performance management programs represent a lost opportunity for most companies. These systems, if designed and implemented properly, can have a strong, positive impact on individual performance and financial results — our studies suggest possibly a 20 percent improvement in shareholder value,” said Cohen.

To effectively confront the pitfalls of the performance management process, Cohen advises managers and leaders to do the following:

  1. Get rid of the HR-speak and make sure the performance management processes use the language of the business
  2. Make the tough decisions. Recognize star performers and confront poor performers as soon as possible but no later than their next formal review.
  3. Burn paper forms. User-friendly automation is better, faster and cheaper. Best of all, it helps re-engage managers and employees who have grown weary of burdensome PM systems.

“A company’s success is contingent on the success of its employees,” said Cohen. “In the end, the companies that make the needed changes to their performance management process will generate significant competitive advantages and create more value for shareholders.”

Copies of the survey are available by clicking here

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