Creating effective performance management programs is a significant challenge for most businesses and organizations, according to a new Mercer survey.
Only three per cent of organizations worldwide reported that their performance management program provides exceptional value.
The survey identified key drivers of successful performance management, including manager skills, executive commitment, calibration and technology. A manager’s skills — particularly in regards to how she sets employee goals, provides feedback and evaluates performance — was the top driver of successful performance management.
High levels of executive commitment are also a key driver, particularly in initiatives like one-on-one performance discussions, formal performance planning and team accountability. The use of calibration and technology also drive a successful performance management program, the survey said.
“In today’s challenging business and economic environment, companies are struggling to achieve important outcomes – like focusing employees on the ‘right’ things and driving them to perform at higher levels – with their current performance management programs,” said Colleen O’Neill, senior partner at Mercer. “(Even) though there is a lot of talk about workforce segmentation and innovative performance management practices, few effectively support dynamic performance and career development processes, and a minority of companies has made revisions to their practices in the last few years.”
No region or country emerged as a clear leader in performance management best practices, the study found.
Generally, organizations in Asia Pacific are more likely to have guidelines and tools in place, while those in Europe are more likely to emphasize career development in their pay-for-performance value propositions.
Organizations in India, Singapore, Japan and Eastern Europe are most likely to have high levels of executive commitment, while those in Latin America, Spain and Italy are least likely.
Cascading goal-setting to the business unit is most common in Asia Pacific and Europe. Tracking performance management metrics is most common in India.
Overall, people management skills were identified as the most important driver of successful performance management, the survey found. Setting SMART goals (specific, measurable, achievable, realistic, timely) as well as linking performance to development planning are the most important skills for managers.
Having candid performance discussions with staff was identified as the most effective way to impact employee performance, particularly across Canada, the survey found.
Mercer’s Global Management Performance Survey examined responses from leaders at more than 1,050 organizations of all sizes from 53 countries.
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