Summary of the Global Performance Management Report 2023

The report found that while performance management is a near universal process, its purpose is not always clear. 95% of companies have a performance management process in place, but only 53% of employees are satisfied with it. This suggests that many companies are not using performance management effectively.

The report also noted that leaders often lack the capability to execute performance management. Only 12% of leaders can provide high quality coaching and feedback, and just 23% can set challenging goals. This lack of capability is fundamentally undercutting the ability of performance management to deliver higher performance. Similarly, companies are redesigning their performance management processes frequently. Around 88% of companies have redesigned their performance management process in the last 4 years, and 50% have redesigned it in the last 2 years alone. This suggests that companies are not satisfied with the results that their current processes are delivering.

The report went on to provide a number of recommendations for improving performance management, including:

• Clarify the purpose of performance management. What do you want performance management to achieve? Once you know the purpose, you can design a process that is aligned with it.
• Invest in training for leaders. Leaders need to be trained on how to set goals, provide feedback, and conduct performance reviews effectively.
• Simplify the process. Performance management processes should be simple and easy to use. Avoid complex processes with multiple steps and layers of bureaucracy.
• Focus on goal quality. It is more important to have a few well-written goals than to have a large number of poorly written goals. Help leaders to write goals that are specific, measurable, achievable, relevant, and time-bound.
• Cascade priorities through the organization. Every employee should know the few big things that they need to deliver to their organization this year/quarter and why.
• Use universal goals to accelerate progress on company-critical initiatives. Universal goals can be used to align employees around common goals, such as Six Sigma, DE&I, or engagement.

The Top 10 findings of the report are:

1. Performance management is a near universal process with 95% of companies having this in place. Of the 5% without one, more than half plan to implement it in their next year.

2. When the process doesn’t apply to everyone, those not included are front-line, hourly, unionized and those covered by a works council. Curiously, a few responses mentioned that senior leaders or executives did not follow the same process as others.

3. Not even 20% of companies rated their process as highly or very effective at providing high quality feedback and coaching, increasing individual performance, accurately reviewing performance or developing individuals. Just over 20% said that goal setting reached that standard.

4. Only 12% of leaders can provide high quality coaching and feedback. Just 23% can set challenging goals. The theme that emerges is that leaders’ lack of capability is fundamentally undercutting the ability of performance management to deliver higher performance.

5. 88% of companies have redesigned PM in the last 4 years and 50% in the last 2 years alone.

6. The overwhelming majority of companies have a formal process to set goals or objectives. Those few companies that do not are primarily smaller organizations (2,500 employees or fewer).

7. Most companies set goals once a year. This annual process could suggest that goals are getting stale or dated as the year progresses. However, companies report that they stay agile in goal-setting as we show in a few pages.

8. While a few organizations don’t allow goals to be changed, most allow changes but rarely see changes made.

9: Nearly 80% of responding companies stated that goals need to be recorded in a technology platform. Of the 10% that do not require this, all but one are smaller companies.

10: About 2/3 of responding companies use goals or objectives to structure what work will get done. Less than 10% use OKRs exclusively.

The research also had an interesting perspective on performance appraisals:

Performance appraisals are an important part of any performance management process. They provide an opportunity for managers and employees to discuss the employee's performance, set goals for the future, and identify areas for development.

However, many employees are not satisfied with their company's performance appraisal process. This is likely due to a number of factors, including:

Unfairness: Employees often feel that their performance appraisals are not fair. This can be due to a number of factors, such as bias on the part of the manager, or a lack of clear and objective criteria for evaluating performance.

Lack of support: Many employees feel that their performance appraisals are not helpful for their development. This can be due to a number of factors, such as a lack of specific feedback, or a lack of clear goals for the future.

Recommendations for improving performance appraisals:

There are a number of things that companies can do to improve their performance appraisal process:

Provide training to managers on how to conduct performance appraisals. This training should teach managers how to set clear and objective criteria for evaluating performance, how to provide specific feedback, and how to develop goals for the future.

Make sure that the performance appraisal process is fair. This means that all employees should be evaluated using the same criteria, and that there should be no bias on the part of the manager.

Make sure that the performance appraisal process is helpful for employee development. This means that managers should provide specific feedback and help employees to develop goals for the future.

Conclusion

Performance appraisals are an important part of any performance management process. However, many employees are not satisfied with their company's performance appraisal process. Companies can improve their performance appraisal process by providing training to managers on how to conduct performance appraisals, making sure that the process is fair, and making sure that the process is helpful for employee development.

For more information and further reading:

https://talentstrategygroup.com/global-performance-management-report-2023/