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Published January 2009

The Time Is Now

 

  Leighanne Levensaler

Organizations struggle with employee performance management strategies. Processes geared toward improvement are almost always well-intended, but results are usually less than satisfactory for all parties.

However, performance management finally may be coming into its own because of two critical factors: a compelling business need for truly integrated talent management, which has been exacerbated by the current economic climate, and a variety of proven technology solutions that automate performance management and other key HR processes.

Bersin & Associates' latest research study published in October delves into performance management from two perspectives. The first part, "The Essential Guide to Performance Management Practices," examines modern performance management, with a special emphasis on how to adapt practices to specific industries and business conditions.

The second part, "The Essential Guide to Performance Management Systems," surveys the performance management market; examines adoption trends and implementation challenges; and compares and contrasts 25 leading solution providers.

Dividing the research into two parts reflects the appropriate chronology in performance management. Purchasing and implementing technology without first evaluating and refining processes puts the cart before the horse.

Technology solutions offer demonstrable benefits, when underlying processes are sound and strategically aligned with the business.

The Top Takeaways

After boiling down research findings and hours of interviews, the following major takeaways emerged:

• Traditional performance appraisals fail today's businesses. Some 41 percent of respondents don't think their performance management processes adequately support the business; 54 percent do not believe performance management processes positively impact employee retention.

Sixty-six percent of respondents said their companies are shifting from competitive employee assessments to a model based on coaching and development. Research estimates companies that do so see 50 percent greater business impact from performance processes.

Further, modern performance management isn't viewed as a stand-alone process. Best-practice companies treat performance management as the foundation of their talent management strategies, from compensation to on-boarding to succession management. With an integrated approach, companies have better information on their talent pipelines at all levels of their organizations. Twenty-eight percent of respondents said they are identifying high-potential employees for succession planning.

• Technology can bring positive business value. Eighty-five percent of companies that implement performance management systems see positive business impact. When companies implement integrated talent solutions, they see two to three times the ROI compared to companies that implement point solutions. This market likely will grow rapidly and have the largest segment of the HR technology market.