Lincolnshire, Ill. -- In an ironic twist, a new survey by global human resources services firm Hewitt Associates reveals that while most companies use performance plans to measure their employees' success, few turn the tables on themselves to measure if these programs are successful.
Hewitt's survey of 129 major U.S. companies shows that although they rely heavily on performance plans to determine employee pay increases (66 percent) and bonuses (47 percent), few organizations measure whether these performance plans are positively impacting their business. Instead, many organizations simply measure their success by tracking whether paperwork is submitted on time (44 percent) or if their employees are satisfied with the program (36 percent). Meanwhile, nearly a third (30 percent), don't measure the success of these programs at all.
"Companies that are not measuring performance management programs in relevant ways are doing a disservice to their employees, customers and themselves," says Bob Campbell, Senior Consultant for Hewitt Associates. "These activities need to have the proper metrics in place to determine whether and how employee performance impacts the business. This should involve everything from ensuring that employee goals are aligned with company goals at the onset to surveying customers at project completion."
In addition, Hewitt's study shows that as many as 84 percent of companies don't believe their employee goals are fully aligned with their business goals. Organizations say improved managerial competency is critical in enhancing this connection. In fact, nearly three-fourths of companies believe their managers' ability to coach employees toward goals requires the greatest improvement (73 percent), followed by their ability to have effective performance-based discussions and make related decisions (72 percent). Moreover, 67 percent of companies say their managers do a bad job handling poor performance, and another 73 percent believe their managers are not skilled at building high-performing teams.
"It comes down to ownership," says Campbell. "Many managers view performance management as an HR program overlaid onto their 'real work,' as opposed to initiatives designed to advance the business. Companies need to provide today's stretched managers with practical performance management tools and support. This will lead to a real payback, as managers will be better equipped to help their teams, company and customers achieve greater success."
Hewitt's Timely Topic Study on "Making Performance Management Work" is based on 129 U.S. companies with median revenues of $2.5 billion.