August 30, 2018

Is your performance management process broken? Here’s what successful companies do right

Most companies have a performance management process, but only a fraction get great results. If you’re not actually boosting employee performance, it’s time to think about changing your process. From new research, here’s how successful organizations get performance management right.

While almost 90% of organizations have a performance management process, less than a quarter of organizations get effective or highly effective results.

That’s one of the findings from The State of Performance Management 2018, a new research report conducted by and sponsored by Ceridian.

The good news is that the majority of respondents (73%) agreed that the goal for performance reviews is helping employees to learn and grow. 

But there’s a disconnect – the report found that performance management processes need to get better at actually boosting performance. In fact, few companies said their performance management process accomplishes this – yet these companies continue with their current process.

“The question HR leaders need to ask is whether carrying on with moderately effective or largely ineffective processes in acceptable, especially if they know better alternatives are available,” the report states.

What are some of those alternatives? The report examines what the process looks like in successful PM organizations.

  • 83% of effective performance management organizations said the goal of PM is related to employee motivation and performance.
  • Successful PM organizations say that the process is focused on helping employees learn and grow, versus using it simply as a legal record for employee interactions.
  • Organizations with successful PM view it as crucial to the business, and to improving business performance.
  • Effective PM organizations are more likely to make it a year-round process, building more trust and better relationships with employees.
  • More than two-thirds of effective PM organizations use technology as part of their process.

Related: The annual performance review is dead – create a performance development culture instead

The future of performance management – change is coming

The future of performance management is focused on improving processes so that they better boost performance. While today’s practices are still in flux, the report found that almost half (45%) of the organizations in this study expect to change their performance management system in a major way in the next two years. This includes investing more in technology to support the process – the most common forthcoming change cited by organizations.

Organizations looking to improve their processes should also consider shifting to continuous development. Performance management is still an annual process for almost 70% of organizations, but the report’s findings indicate that companies are shifting to doing it more often, and with a less structured approach. In fact, successful PM organizations reported having informal conversations between managers and employees four to five times a year.

How effective is your performance management? Download the report to read more

Danielle Ng-See-Quan

Dani is the Senior Manager, Content Marketing at Ceridian.

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