The State of Performance Management: Some Random Facts & Observations

The recently released report, The Current State of Performance Management and Career Development 2010, from Hewitt Associates, provides us with an interesting look at current practices in this area. 

A few select observations, drawn from survey facts and statistics, that I thought were worth sharing:

Performance weighting is tipped toward results, particularly for executives

The report confirms that most organizations use a combination of goals and behaviors/competencies to measure employee performance, in an effort to balance consideration of what is accomplished as well as how it gets done.  When weighting these two sets of performance components, however, it appears that most organizations tip the scale towards results - goals - particularly for executives. 62% of respondents indicate that executives are either measured solely on results (30%) or more on results than competencies/behaviors (32%).  Only 4% of respondents indicated that executives are measured either solely on competencies/behaviors (1%) or more on competencies/behaviors (3%).  This balance shifts as we move down the organizational structure, but even at the individual contributor level only 10% of companies measure only or mostly competencies/behaviors.  At the individual contributor level, the most popular approach is 50/50, with 48% indicating they use this relative weighting.

The ratingless system, not so much yet

The ratingless performance system, often touted in books and journal articles, does not seem to have caught on yet in any meaningful way. In the performance systems of 93% of responding employers, employees do receive an overall rating - either number, letter or label.

The five point scale remains the bestseller

The five point performance rating scale, historically the most prevalent, has become even more so in recent years.  63% of respondents report using a five point scale, compared to 45% when the study was conducted in 2005.  Distant second runner up: the four point scale at 19%.

Sunshine as the best disinfectant: calibration meetings

Calibration meetings are increasingly common as a way to ensure consistency in ratings.  61% of responding employers conduct some form of calibration meeting - either to simply provide guidance to managers or to literally compare, discuss and reach consensus on employee performance ratings.

Merit increases: still the one when it comes to pay linkage

How do employee performance results link to rewards?  It's still primarily about the merit increase, but other reward links appear to be gaining traction.  63% of participating companies indicate that the performance rating drives the merit increase. Just under half (45%) say it drives variable (incentive) pay, 28% report that it drives prospects for advancement and 20% indicate that it drives an employee's access to new experiences and challenges. 

For more on current practices and trends, be sure to click through to the full report.

Comments

[Mark]

Thanks for the great post, Ann. As usual, insightful and very helpful!

Interesting that there is a lot of chatter on linkedin, etc. about how horrible PA's/5 point scales are, but they still remain in use at most companies.

[Ann Bares]

Mark:

Glad you find it helpful. Yes, we do seem to have an interesting, emotional, turbulent relationship with PA - can't live with it, can't live without it.

Thanks for reading and commenting!