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Published June 2005

Workforce Performance Management: A Work in Progress

 

  Josh Bersin

Performance management is one of the fastest-growing areas for HR and learning and development departments. However, it is still a work in progress, and processes vary widely, with most organizations taking a somewhat piecemeal approach. While performance management systems are still in their infancy, three major phases of corporate performance management can be identified.

A Work in Progress

Bersin & Associate's performance management survey of March 2005 asked representatives from 450 organizations about their adoption of performance management processes. Preliminary responses showed that less than one-third of organizations have an enterprise-wide performance management process. In fact, almost 40 percent of responding organizations have no real standards at all, and 28 percent have enterprise standards, but are not rigidly enforcing them. (See Figure 1.)

One reason for this wide adoption range is that there is no single, clear-cut definition of or approach to performance management. To learn more about how organizations define the area and identify areas of consensus, participants were asked to list up to three characteristics of workforce performance management. The only consistent characteristic identified by participants is that individual and workgroup goals are aligned with corporate goals. (See Figure 2.) While this goal is noble, it is actually one of the hardest to achieve. Interestingly, while performance management is commonly associated with performance reviews, only 42 percent of participants linked annual performance reviews to the definition of workforce performance management.

Why do companies want to implement performance management processes? What business benefits do they truly expect? How are they building the processes and systems to drive these expected results? Study participants identified the three most important reasons for performance management from their perspectives. Significantly more than half said that individual and workgroup alignment with corporate goals was a key reason. While in most organizations the primary practical driver behind performance management is employee compensation and promotion, only 42 percent of participants rated this as a top driver. (See Figure 3.)

This seeming disconnect is highly interesting. Can a manager truly evaluate individuals on their alignment with corporate goals and also on their contributions to local business results? It likely can be done, but only if one measurement is given top priority.

In most organizations, the focus on alignment emanates from HR organizations. Line managers, who must meet specific, measurable business results, such as sales quotas, production quotas, calls per day or project deadlines, are most interested in results and see performance management as being strongly related to employee compensation and promotion. These business unit measures really drive the process, despite what HR managers may want.