Performance management systems, which are designed to help low-performing employees
improve, often don't work, according to a recent survey of U.S. workers
asked by Watson Wyatt. The survey reports that just 30 percent of respondents
say their performance management system helps them improve their performance.
Performance management systems are an extension of a company's performance
appraisal program. Employees answering the survey believe the system is valuable
for assessing employee performance, at least as far as they are concerned --61
percent agreed that their performance appraisal was accurate. However, fewer
than 2 in 10 employees agree that their company's program helps poor performers
Part of the problem may be a lack of understanding of performance guidelines,
either by the company itself or by the employees. Just 35 percent of survey
respondents agree that their program establishes clear performance goals, leaving
65 percent disagreeing.
"Performance management programs represent a lost opportunity for most
companies," says Scott Cohen, Ph.D., national director for talent management
at Watson Wyatt. "These systems, if designed and implemented properly,
can have a strong, positive impact on individual performance and financial results --our
studies suggest possibly a 20 percent improvement on shareholder value."
Cohen has some advice for companies that want to make changes to their performance
management system. First, he says, eliminate HR lingo. Rather, he suggests using
the language of the business to communicate with employees. Second, Cohen says
you must make the tough decisions by recognizing star performers and confronting
poor performers as soon as possible. And third, Cohen recommends that you lose
the paper forms tied to your performance management system. Automation is more
user-friendly, and means your system will be better, faster, and cheaper. "A
company's success is contingent on the success of its employees,"
Cohen says. "In the end, the companies that make the needed changes to
their performance management process will generate significant competitive advantages
and create more value for shareholders."