Recently, a number of valuable reports have been released related to performance management.  One of these reports, entitled:  "Wasted Human Capital:  The Looming Talent Management Crisis in Corporate America" included some worrisome findings.  The report can be downloaded at:  http://www.successfactors.com/trends/

What were some of these findings?  More than half of participating companies experienced challenges aligning employee goals with strategy, tracking progress against goals and ensuring reviews are completed on time and up to required level of quality and effectiveness.  

Since sound performance management processes are the foundation of well functioning pay for performance initiatives, these issues need to be addressed prior to linking compensation and rewards to performance.  

Other recent studies echo these findings and indicate that many organizations still do not have well adopted performance management processes.  For example, a recent study completed by Bersin & Associates entitled:  Performance Management 2006 https://crm.hr.com//en?i=1116423256281&s=&t=/Default/openExternalURL&url=aHR0cDovL3N0b3JlLmJlcnNpbmFzc29jaWF0ZXMuY29tL3BlcmZtZ3QuaHRtbA%3D%3D" indicates that only 32% of respondents have an enterprise wide-well adopted performance management process.  While a study by David Creelman http://www.creelmanresearch.com entitled "Performance Management:  The Impact of Technology" reported a significant percentage of respondents were still using paper based processes. 

Interestingly, David Creelman found that organizations using software applications for performance management reported a higher level of effectiveness than those using paper based systems.    As a result, when moving to link pay with performance, an exploration of the benefits of performance management technology makes sense.