The FINANCIAL — Despite an understanding that talent is a source of competitive advantage, establishing effective performance management programs remains a challenge for most organizations. Just 3% of organizations worldwide report their overall performance management system provides exceptional value, according to Mercer’s 2013 Global Performance Management Survey.
“In today’s challenging business and economic environment, companies are struggling to achieve important outcomes – like focusing employees on the ‘right’ things and driving them to perform at higher levels – with their current performance management programs,” said Colleen O’Neill, Senior Partner at Mercer. “And even though there is a lot of talk about workforce segmentation and innovative performance management practices, few effectively support dynamic performance and career development processes, and a minority of companies has made revisions to their practices in the last few years,” O'Neill added.
Roughly one in three organizations around the world say improving managers’ ability to have candid dialogue with employees has the greatest impact on overall company performance, according to Mercer’s survey. The two components of manager skills that matter the most are linking performance to career development and setting SMART goals (specific, measurable, ambitious but achievable, relevant, and time-bound), revealed Mercer’s analysis.
Alongside the contribution of managers, organizations with higher levels of executive commitment are more likely to have effective performance management programs. One-on-one performance discussions, formal performance planning, and team accountability are some of the more common practices executives are implementing to direct their teams and achieve desired business results.
Calibration and technology are two additional drivers of successful performance management. Organizations that practice calibration have more skilled managers, and thus, are better at determining accurate performance rating decisions, increasing talent awareness, and identifying individual employee development opportunities, Mercer’s survey reveals. More than half of organizations around the globe use calibration processes to differentiate between performance levels. And while technology (used by 40% of organizations) alone does not ensure performance management success, it allows for ready access to accurate data and actionable insights to all stakeholders.
No region or country leads the world in performance management best practices, according to Mercer's survey. In general, organizations in Asia Pacific are more likely to have tools, guidelines, and metrics in place compared to those in Europe that typically place more emphasis on career development in their pay-for-performance value propositions.
While more than half of organizations worldwide cascade goal setting to the business unit, it is more common in Asia Pacific and Eastern Europe, noted by about three-quarters of organizations. Goal setting at the country level occurs most often in South Korea and India, and least often in the United States and Canada. Organizations in India, Singapore, Japan, and Eastern Europe are more likely to demonstrate higher levels of executive commitment to performance management while organizations in Latin America, Italy, and Spain are least likely. And although the top practice of performance management programs worldwide is linking performance to pay increases, organizations in India track performance management metrics significantly more than all other countries.
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