Fall 2010 Report of Results from the 2010 Study on The State of Performance Management Conducted by WorldatWork and Sibson Consulting

Abstract

There has been much written lately concerning the value that performance management brings to an organization. To gather information about the current state of performance management effectiveness and outcomes, WorldatWork and Sibson Consulting collected feedback from a sample of WorldatWork members through participation in a confidential online survey. This report presents the results of the WorldatWork/Sibson 2010 Study on The State of Performance Management, which reflects responses from 750 individuals, primarily senior-level human resources (HR) professionals.

The study found that while organizations still consider performance management as a means to achieve business objectives and differentiate high performers from low performers, there seem to be many challenges that impede an organization's ability to achieve effective performance management.

The following are among the study findings:

  • The top goal of performance management is differentiated distribution of rewards based on individual performance.
  • The most common method used to encourage differentiation of individual performance ratings is an audit of ratings by HR.
  • Half of organizations include the achievement of goals and objectives as at least one of the criteria for performance evaluation.
  • Alignment between individual goals and organizational goals is strongest at the senior-management level.
  •  At the majority of organizations, individuals have input in setting their goals.
  • At almost three-quarters of organizations in the study, employees complete self-assessments.
  • More than half of respondents reported that their organizations use a five-point scale for rating employee performance.
  • In the majority of organizations, managers or line leaders are responsible for approving individual ratings.
  • The top challenge faced by organizations is managers' inability to have difficult performance discussions.
  • Performance management is much more likely to be linked to merit increases than to either short-term or long-term incentives.
  • Only 30 percent of the study respondents reported their employees trust the performance-management system.
  • More than half of the respondents gave their organization's performance-management system a grade of "C" or below.
  • The perceived effectiveness of performance management is influenced by support from senior management.

Improvement in performance management is needed in many organizations. The organizations getting the most impact from performance management are those that have strong leadership support and that execute well in differentiating performance and giving performance messages.

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