Performance management systems need improvement: Conference Board

Set cascading goals, link pay to performance to improve processes
||Last Updated: 06/25/2012

Almost all Canadian organizations have performance management systems and appraisals, but more than one-half are far from convinced that their employee evaluations are effective, according to a report by the Conference Board of Canada.

Almost all organizations (97 per cent) include individual goals and objectives in their performance appraisals, found Performance Management: Turning Individual Stress to Organizational Strategy. Appraisals also commonly include ratings of employees' competencies and track employees' training and development. Seventy-eight per cent of organizations link base pay to performance, and 56 per cent link their short-term incentive pay plan to performance.

"Performance appraisals can be stressful and few employees cringe more than the manager that needs to deliver the appraisal," said Nicole Stewart, research associate and author of the report. "Organizations make substantial investments — in both time and money — in their performance management systems, yet less than half are confident their systems are effective. Organizations continue to struggle with the consistency and fairness of their reviews. In increasingly busy workplaces, it is a challenge to submit appraisals on time, let alone make time for meaningful conversation."

To improve performance management systems, according to the report, organizations should:

•Keep it simple

•Communicate clearly

•Set cascading goals

•Set the tone at the top

•Ensure accountability from employees and managers

•Link pay to performance

•Provide training

•Ensure fairness and objectivity.

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