Thursday, January 21, 2010

Why Performance Management Processes UNDER-Perform

Let me begin with some key findings and conclusions drawn by Bersin & Associates in their “Essential Guide to Employee Performance Management Practices” (2008). Their research, which captured responses from more than 700 HR, Learning and Development, and IT professionals (representing 30% of Fortune’s top 100 companies), included such findings as …

- 40% do not believe their current employee performance management practices play a critical role in achieving business goals and executing business strategies
- 45% say managers in their organization have difficulty differentiating between high and low performers; and
- 38% of line managers do not believe they have the training or skills needed to effectively support the process

But those interesting, likely discouraging numbers aside, the coup de grâce for me was this simple, bottom-line statement from Bersin’s research efforts in this area: “Employee performance management is one of the least liked management processes in organizations today.”

My own, albeit informal research in this area started in the mid 80’s when I was asked to automate the Performance Management Process at a 100-year old brokerage house on Wall Street. I commenced that “research” by asking some HR colleagues, a few line managers and a few employees why they thought we needed the process. My HR colleagues said “how else can you fire someone without getting sued?” My Line Manager colleagues said “how else can we back-up our compensation decisions without having HR on our backs?” The employees I spoke with generally said “frankly, we’re not sure how we benefit from this process.” True story.

One key take-away for me back then, one which I’m still waiting for evidence of its non-relevance today, is that “there’s a big difference between a Performance Documentation Process (owned by HR) and a Performance Nurturing Process (owned by the entire organization).

The typical Performance Appraisal process purports to improve performance, but the disconnect is that it typically doesn't establish or strengthen employee commitment, engagement and/or satisfaction. In the absence of having those effects, how can the process improve employee performance?

A related research finding was detailed in a Gallup Management Journal (GMJ) survey of U.S. workers conducted in 2006: Only 29% of employees are actively engaged in their jobs and 54% of employees are not engaged at all. One can only imagine how low these engagement figures are since the onset of the global financial crisis.

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