Survey and Research Data

Performance Management techniques

Respondents reported using the following performance management techniques in a 2006 US HR Focus performance management survey [15]:

• Manual non-computerised evaluations by supervisors (69.4%)
• Annual performance reviews only (61.1)
• New hire reviews after initial probation period (58.3)
• Pay for performance (48.6)
• Continuous feedback (38.9)
• Mentoring (36.1)
• Increased training compared to previous 12 months (31.9)
• Online evaluations by supervisors (30.6)
• Twice yearly performance reviews (23.6)
• Ethical standards as part of performance review (22.2)
• 360 degree feedback (20.8)
• Strategic learning (11.1)
• Other (9.7)
• Forced ranking (8.3)

Performance Management and goal setting

The following data was reported via a 2006 Workforce Management survey [16] of 218 US HR leaders concerning performance management:
1. In response to the question "which of these best describes how performance management is executed in your organisation today?" The following percentages of respondents replied that they were either, "extremely satisfied", or "somewhat satisfied":

• Identifying top performers (66%)
• Goal Setting (65%)
• Identifying weak performers (45%)
• Provides relevant feedback (48%)
• Succession planning (30%)
• Enables reward systems (45%)
• Effective fro retention (37%)
• Ease of Use (41%)
• Overall Satisfaction (44%)

2. In response to the question "For each of the following talent related functions, how integrated are these with performance management in your organisation?" The following percentages of respondents replied that they were either, "extremely satisfied", or "somewhat satisfied":

• Recruiting (47%)
• Succession planning (53%)
• Learning/development (70%)
• Compensation (79%)
•  Career planning (61%)

Performance management leads to higher market values

Cornell University reported on performance management practices of Law and medical firms having 125 or fewer employees. It was found that firms that implemented HR practices with a high commitment toward individual employees had market values between US $16,000 and US $40,000 more per employee than their industry peers that did not do so. High commitment towards HR was defined as the promotion of employee engagement in at least the following four key areas:

• Training and development
• Recruitment and selection
• Motivation, and
• Performance management.

The researchers found that firms that did this achieved higher levels of discretionary effort and customer orientation on the part of support staff than those not using this method. The study found that the 48 law firms that practiced `commitment HR` outperformed other firms by as much as 22%. Even the smallest firms (5 to 39 employees) surpassed others by 15% [17]

Performance Management - underperformance costs 84 days a year.
 
The following highlights are from 2005 research by the Future Foundation [18] concerning performance management:

• American managers spend 13% of their time managing poor performers and 14% of their time correcting the poor performers` mistakes. This translates into an average of 84 days per year in dealing with underperformance.
• American employees admit that 68% of the mistakes they personally make never come to their managers` attention. In organisations having over $8.5 million in annual revenue managers spend approximately 8 working weeks per year, or 41 days, on managing poor performers.
• United States is estimated to spend $105 billion a year correcting problems associated with poor people management and hiring practices. This represents some 1% of the total U.S. gross domestic product.

 Performance management challenges 

In a 2005 study by Synygy [2] concerning performance management (PM) some 60% of the 414 participating organisations graded their companies a substandard `C` or worse in terms of PM effectiveness. The data below represents the percentages of participating companies using the PM techniques listed; top performing and lowest performing (in brackets) companies are shown:

• Managers meet to review assignments 49% (41%)
• Individual assessment are not compared to others 37% (39%)
• Forced rating distribution 29% (28%)
• Forced ranking 20% (14%)
• Challenges facing the top and lowest performing (in brackets) companies were reported as:
• Resistance to performance management in general 20% (29%)
• Lack of buy in by line managers and employers 20% (29%)
• Lack of executive ownership at top of organisation 16% (39%)
• Lack of performance driven culture 4% (16%) [2]

Performance Management - management support critical
 
The following outlines the results of a survey of 278 US businesses concerning the use of Performance Management Systems [19]:

• Performance management (PM) systems were in use at 91% of organisations
• 74% used PM for at least 70% of their employees
• 40% conducted performance reviews at least twice a year
• 34% were using forced ranking systems
• 21% used online or software-based performance management systems
• 74% reported a strong link between performance data and compensation
• 68% reported that compensation discussions did not occur at the same time as performance reviews
• 19% used input from peers, or customers, for performance evaluations
• Half said that management support via training, development planning, and accountability was a critical component of an effective performance management system.

360-degree feedback needs clear objectives

101 large Canadian organisations responded as follows to a 2002 survey by Concordia University, Montreal concerning 360-degree feedback:

• 43% were using 360-degree programmes
• 9% intended to do so
• Reported advantages were perceived fairness and the dissemination of performance standards within organisation.

The following challenges were also noted: 

• More time and effort were required versus traditional systems.
• Processes were complex requiring user training, analysis, and explanation of results
• Accountability and anonymity were contentious issues
• The lack of fit with organisational goals/objectives was a difficulty.

63% of the organisations that reported successfully using the methodology also used feedback facilitation, and had the clearest objectives for using the process. [20]

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