November 20, 2015
As the economy recovers and the so-called ‘war for talent’ increases, there is a renewed focus on performance management, with 87 percent of companies in the latest research from Towers Watson, saying it is their primary method for aligning individual performance objectives with strategic priorities. However, only a third (36 percent) of companies actually consider their performance management process to be effective, and one in three managers and employees are shown to be dissatisfied with their process. According to the survey, 45 percent say managers don’t see the value in it and 53 percent say managers don’t have the time to do it well. Under 10 percent of companies have scrapped performance management altogether, or plan to do so, and though 30 percent of companies are considering eliminating performance ratings or scores, just 7 percent have already taken the step to do this.
Radha Chakraborty, Director at Towers Watson said: “These findings will not surprise many people, but they do highlight the important gaps that companies will need to address if the effectiveness and perceptions of performance management are to improve. It’s clear that a fix is required, particularly if we consider the importance of the process to business performance.
The research shows that most organisations in the UK will continue to evolve their performance management approach through targeted changes including automating the process through technology.
‘Traditional’ approaches to performance management are still dominant with over three quarters of organisations in the research operating a once or twice-yearly process and 66 percent cite the primary outcome of the process being a single rating or score.
Chakraborty continued: “Performance management has hit the headlines recently with several organisations announcing changes to their plans. However, this research suggests although some organisations are making more significant changes to their existing approach, these changes are not necessarily on the scale, or in the direction anticipated by recent articles on the topic.”