A recent McKinsey & Company survey found that only 30 percent of employees feel that they benefit from performance management systems within their organization. The original study was intended to identify the outcome of employee performance solutions and how effectively they manage incentive and compensation management programs – basically, how well performance management data was transformed into actionable results for employees within the organization. Moving beyond how managers rate employees or manage projects, the survey wanted to see how many employees actually benefited from feedback based on these applications.
Generally, when people first think about performance management solutions, they tend to think of financial or sales oriented solutions. The fact is that performance management can be used for a much broader spectrum of performance-based areas within the organization, including HR or employee performance management. In these cases, employee performance is measured based on a set of metrics based on various project milestones, goals achieved, etc. In the case of sales staff, it may be matching or exceeding targets identified. Unfortunately, these solutions fall short, explaining the reasons that benefits are estimated so low.
Measuring performance and setting metrics for sales, marketing initiatives, customer experience programs, etc. can be evaluated quite rationally. Employee performance, on the other hand, is not that straightforward. Aside from requiring communication of expectations and agreement on common goals, the fact remains that there will always be additional factors like interpersonal communication and intellectual capital that is harder, and in some cases, almost impossible to measure in a consistent way across the organization. Consequently, organizations will have to find ways that combine performance management with other tools to develop a full set of criteria for managing performance.
Overall, organizations starting to evaluate the benefits of performance management solutions should start with more traditional applications – for example managing cash flow or month end financial processes, or alternatively sales performance to identify current performance levels and where improvements can be made. Even though the McKinsey survey was focused on employee performance management, assumptions can be made that in other circumstances, satisfaction rates may be low as well because organizations do not always set and/or manage their metrics appropriately.
Click here for more information about the survey and for suggestions on how to effectively develop and maintain an employee performance management solution.
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