The Most Important Question About Performance Management: Does It Have a Business Impact?

September 9th, 2015
Written by: Elizabeth Richards

We published a post last November titled, Eight Signs You Should Revisit Your Performance Management Program, in which we cited the Society for Human Resource Management (SHRM) Foundation’s Report called, Building a High-Performance Culture: A Fresh Look at Performance Management. The report found that:

“Overall, attitudes toward performance management are consistently poor. No more than 30 percent of those surveyed reported that their performance management system effectively establishes goals, provides feedback and actually improves performance.” 

To help our clients address the realities underlying these perceptions, TPO has launched a Performance Management Toolkit based on several years of research and development. A critical part of this toolkit is taking baseline measurements on our clients’ employees’ attitudes in areas such as having an understanding of why their job exists in relation to the organization’s mission, vision and goals; knowing what they will be held accountable for in their jobs; and whether or not they and their supervisor have a shared understanding of what good and bad performance looks like.

Here’s one of the baseline data points that keeps catching our eye—in a not-so-positive way:

Q: On a scale of 1 to 3 (1 = Limited Extent; 2 = Some Extent; 3 = Significant Extent), do you think the current performance management system helps influence or drive business results?

Baseline results we’ve seen thus far range from 1.2 to 1.38. In other words, the average employee feels as though their organization’s Performance Management system helps influence business results only to a limited extent.

While this response is not pleasant to hear, the good news is that we can’t fix what we can’t see—and seeing this data will help us help our clients to implement Performance Management programs that, among other outcomes, will:

• Demonstrably and measurably become central to operating the business;
• Improve the success of recruiting, professional development, rewards, and the retention of key talent; and
• Optimize the organization’s return on human capital investments;

We will periodically share other interesting and relevant data points from both the baseline and subsequent annual follow up measurements.