In HR text books, Performance Management (PM) is customary defined as a continuous process of identifying, measuring and developing the performance of individuals and teams and aligning performance with the strategic goals of the organization.
A PM system is composed of different elements and activities designed to improve employee performance including the controversial Performance Appraisal (PA). PA refers to the part of the single and formal moment during the cycle when managers and employees discuss and evaluate the past performance of the employee, based on identified performance components, criteria and/or measures. The PA is a crucial piece of the PMS and yet it is also often the weak point of the entire process, being its most emotional component.
The Performance Management System Paradox: Prevalence …..
A majority of senior executives as well as Management scholars, agree that performance management is one of the most important resource management functions, a core Human Resources Management practice, at the same time strategic and tactical. This concurs with the prevalence of Performance Management System (PMS) in companies: a 2006 survey conducted across fifteen countries showed that over 90% of multinational organisations have a formal PMS in place.
…. and Dissatisfaction
However, the level of managers’ and employees’ satisfaction with PMS is disappointing, with many viewing it as a ritual without relevance to them. According to a 2015 research, 95% of managers are dissatisfied with their PMS while close to 60% of employees consider that Performance Management reviews (and in particular the formal appraisal) don’t deserve the time invested in them. This sentiment is still prevalent, as portrayed in the recently launched MIT Sloan Management Review study ‘Performance Management’s Digital Shift.
As a consequence, in recent past years, numerous articles in the press have reported that companies disposed of their traditional PMS, often with catchy titles such as “Why Accenture is ditching performance reviews” or “Businesses should boycott performance reviews”.
So, what now?
But have things fundamentally changed? Has this been the announced “biggest shake-up that has affected the Human Resources sector in years”? Have Performance Management systems been abandoned?
It appears that some organisations have indeed tweaked their PMS, for example by eliminating some of its components – Adobe abolished its performance reviews, Microsoft stopped using forced ratings and GE made similar changes– or by reducing formality or number of steps of the system, as in the case of Cargill.
However, rather than less, it looks like companies are going for more performance management, in particular more frequent feedback, more flexible methods of delivery, more data-driven systems, more emphasis on skills development. This development is supported by employees’ preferences.
Do you wish to discuss your current Performance Management System? We’d love to hear from you!
Globe 24-7
This article was featured in Globe 24-7’s Quarterly Newsletter – Issue 3 April 2019
See more articles like this by subscribing to our Quarterly Newsletter: http://globe24-7.com/#newsletter
Contact:
Alain Pfammatter – Manager, Global HR Consulting
a.pfammatter@globe24-7.com
About Globe 24-7
Globe 24-7 (Globe) has been conducting human resources consulting and search assignments for local and international mining, power and energy companies around the world for over a decade. Globe has offices in the major markets of the world to ensure consulting assignments and search campaigns are effectively managed at both site and corporate locations and has grown internationally to now service small, mid-tier and large-scale companies through its project recruitment, search, HR consulting and HR Systems divisions.
