The State of Performance Management 2019
Exclusive research by HR.com
Posted on 07-17-2019, Read Time: - Min
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An effective performance management (PM) process is undoubtedly the need of the hour. However, there is no perfect PM process and it varies according to organizational and workforce needs. To understand the challenges associated with the process, HR.com’s HR Research Institute conducted a study on performance management (2019 edition). Although the underlying challenges associated with effective performance management haven’t changed much since 2018, there are signs of progress in terms of PM practices. This study was conducted with three primary goals in mind:
• to discover what most organizations are doing in regard to PM
• to learn more about where HR professionals see PM going in the next few years
• to discern what the most successful organizations are doing differently
• to learn more about where HR professionals see PM going in the next few years
• to discern what the most successful organizations are doing differently
Key Findings
• While the vast majority of organizations have performance management processes, few appear to be generating effective results.
• Most managers lack honed skills in the area of performance management, and this may be partly a case of inadequate training and top-down cynicism about the process.
• In most organizations, performance management processes include basic features such as feedback to employees, but few of those processes accurately portray employee performance.
• Most organizations have positive and forward-looking goals for their performance review process. Over two-thirds of HR professionals (68%) say helping employees learn and grow is a goal.
• Most managers lack honed skills in the area of performance management, and this may be partly a case of inadequate training and top-down cynicism about the process.
• In most organizations, performance management processes include basic features such as feedback to employees, but few of those processes accurately portray employee performance.
• Most organizations have positive and forward-looking goals for their performance review process. Over two-thirds of HR professionals (68%) say helping employees learn and grow is a goal.
How Common and Effective Is Performance Management Today?
Performance management is not universal, but it is pretty close. Nine out of every 10 organizations have PM processes. Organizations of all sizes tend to have a performance management process, though larger organizations are slightly more likely to have them.
Only 30% of HR professionals say their PM process results in the organization achieving all of its performance goals to a high or very high extent. That’s not great, but there is some good news. This represents a seven-percentage point increase over last year, when only 23% rated their effectiveness at achieving organizational goals as high or very high.
There was an improvement on the opposite end of responses, too. In this year’s survey, only 5% rate their organization’s ability to meet all PM goals as very low, compared to 15% in 2018. There is no way to know whether this is a trend or just a statistical blip, but it is heartening.
Performance management as a core HR function holds the potential to influence an organization and employees in a variety of areas. The primary goal of PM is usually to improve employee and organizational performance. However, only 28% say their PM processes are effective at improving employee performance to a high or very high extent. A similar ratio say that their PM processes improve employee engagement. Slightly more (31%) say PM leads to better employee development to a high or very high extent.
A performance management system seems more likely to succeed if managers support the system. Therefore, it’s probably a bad sign that only 33% of HR practitioners agree that managers are satisfied with the current system. That said, even this low ratio represents an improvement from the 2018 finding.
Only 30% of HR professionals say their PM process results in the organization achieving all of its performance goals to a high or very high extent. That’s not great, but there is some good news. This represents a seven-percentage point increase over last year, when only 23% rated their effectiveness at achieving organizational goals as high or very high.
There was an improvement on the opposite end of responses, too. In this year’s survey, only 5% rate their organization’s ability to meet all PM goals as very low, compared to 15% in 2018. There is no way to know whether this is a trend or just a statistical blip, but it is heartening.
Performance management as a core HR function holds the potential to influence an organization and employees in a variety of areas. The primary goal of PM is usually to improve employee and organizational performance. However, only 28% say their PM processes are effective at improving employee performance to a high or very high extent. A similar ratio say that their PM processes improve employee engagement. Slightly more (31%) say PM leads to better employee development to a high or very high extent.
A performance management system seems more likely to succeed if managers support the system. Therefore, it’s probably a bad sign that only 33% of HR practitioners agree that managers are satisfied with the current system. That said, even this low ratio represents an improvement from the 2018 finding.
Are Managers Skilled at Performance Management?
Why don’t more organizations have high-quality performance management processes? Perhaps because management lacks the skills to make those processes work. Just 27% of respondents agree or strongly agree that their managers are skilled at performance management.
Part of the blame may be HR’s. After all, only 39% of participating HR professionals agree or strongly agree that their managers are adequately trained at performance management. It’s hard to fault managers for their lack of skill when they haven’t been afforded the opportunity to learn the skills they need.
The only good news is that the 27% figure is up from 21% in 2018.
Part of the blame may be HR’s. After all, only 39% of participating HR professionals agree or strongly agree that their managers are adequately trained at performance management. It’s hard to fault managers for their lack of skill when they haven’t been afforded the opportunity to learn the skills they need.
The only good news is that the 27% figure is up from 21% in 2018.
The Goals and Features of Performance Management
Performance management processes, while nearly universally adopted, tend to vary from organization to organization. Important differences stem from corporate cultures, workplace needs, industries, etc. Nonetheless, this study shows that there are certain commonalities.
Most PM processes suffer from shortcomings. Only a minority of participants describe their performance management features as “easy to understand” (42%) and “easy to use” (39%). This helps explain the low levels of satisfaction among managers.
The PM features mentioned most frequently are the discussion of goals (81%) and opportunities for both positive and corrective feedback (79%). They are at the heart of today’s performance management processes.
Over two-thirds (68%) say helping employees learn and grow is a performance review goal. The other two most widely cited goals are the desire to “help the company improve overall performance” and “to boost communication between employees and managers,” both cited by 66% of HR professionals.
Most PM processes suffer from shortcomings. Only a minority of participants describe their performance management features as “easy to understand” (42%) and “easy to use” (39%). This helps explain the low levels of satisfaction among managers.
The PM features mentioned most frequently are the discussion of goals (81%) and opportunities for both positive and corrective feedback (79%). They are at the heart of today’s performance management processes.
Over two-thirds (68%) say helping employees learn and grow is a performance review goal. The other two most widely cited goals are the desire to “help the company improve overall performance” and “to boost communication between employees and managers,” both cited by 66% of HR professionals.
Performance Management Metrics
Our study supports the argument that few organizations use of objective data, with only 22% saying they use “hard” metrics/analytics to measure employee performance. In a world in which data-driven decisions are largely viewed as a best practice, the lack of data in the performance management process looks like an area for future improvement. On the other hand, it is often difficult to tease out individual performance data in today’s team-based organizations.
How Frequent Are Performance Management Events?
Most organizations continue to work within the traditional “annual performance review” structure, with 55% of participants confirming the one-time-a-year process between managers and employees. However, a total of 38% now conduct formal reviews at least twice a year, and 12% formally review performance four times a year or more.
Formal performance reviews are often time consuming and difficult to manage. One tactic is to encourage managers to have more frequent but less formal conversations with employees about performance. In fact, 63% of supervisors and employees provide feedback more than four times per year, and 55% of respondents say conversations specifically about performance occur four or more times per year.
Formal performance reviews are often time consuming and difficult to manage. One tactic is to encourage managers to have more frequent but less formal conversations with employees about performance. In fact, 63% of supervisors and employees provide feedback more than four times per year, and 55% of respondents say conversations specifically about performance occur four or more times per year.
The Role of Technology in Performance Management
A majority (62%) use technology to facilitate performance management, but this is an area where the size of the organization matters. In organizations with 1,000 or more employees, 85% use PM technology tools. In contrast, only 59% of organizations with 100 to 999 employees use PM technology tools, and that ratio drops to 35% among organizations with 99 or fewer employees.
Generally speaking, technologies can make performance management easier and more standardized for large organizations, which may otherwise have a difficult time tracking and facilitating the process for a larger number of employees.
Generally speaking, technologies can make performance management easier and more standardized for large organizations, which may otherwise have a difficult time tracking and facilitating the process for a larger number of employees.
What’s Changing?
Has performance management been changing over the last two years? In many ways, it has. Over a quarter (28%) of HR professionals say their organizations have experienced a high or very high degree of change, and another 28% say they’ve experienced moderate change. Of course, that still leaves a large portion that report there’s been little to no change.
In contrast to the 28% who describe the extent of their PM changes as high or very high over the last two years, 43% expect a high or very high degree of change in the next two years. Some may be overestimating the future rate of change, but this does indicate that many HR professionals see this as an area ripe for change in the near future.
To learn more and to take home key tactical and strategic takeaways, we invite you to download and read the complete research report here:
In contrast to the 28% who describe the extent of their PM changes as high or very high over the last two years, 43% expect a high or very high degree of change in the next two years. Some may be overestimating the future rate of change, but this does indicate that many HR professionals see this as an area ripe for change in the near future.
To learn more and to take home key tactical and strategic takeaways, we invite you to download and read the complete research report here:
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