Performance management programs need improvement Watson Wyatt, Worldatwork survey shows

When it comes to practices that improve employee performance, companies and workers themselves agree there is room for improvement. This finding is based on a survey of 265 large U.S. companies across all industries and a complementary survey of 1,100 workers conducted by Watson Wyatt and WorldatWork.

In designing their performance management programs, most employers have adopted best practices ó including providing a formal yearly review (98 percent), helping poor performers improve (96 percent) and offering coaching and feedback (91 percent) ó but they have been less successful in implementing them. For example, while 92 percent of programs are designed to link pay to performance, only 79 percent of employers say that managers at their organization are moderately or greatly effective at it. Employees see even more room for improvement with only 52 percent indicating that their managers tie pay to performance.

ìWithout improving the implementation of their programs, employers will have difficulties with aligning the performance of their workforce with business results,î said Laura Sejen, director of strategic rewards consulting at Watson Wyatt. ìIn fact, companies with strong performance management programs post significantly better financial results than those with weak programs.î

Managers also struggle with providing formal career development and planning. While the vast majority (82 percent) of performance management programs are designed to include career development, only 37 percent of employers say that managers at their organizations are at least moderately effective at providing it. And only 31 percent of employees say their companies offer career development.

One step toward improving managersí effectiveness may be to provide them with the appropriate training. Only 36 percent of organizations have a formal training program to enhance managersí ability to manage rewards. However, managers at companies that offer such a program are more effective at providing coaching and feedback, providing formal periodic performance discussions and helping poor performers improve.

ìManaging employee performance is more than just tactical; it requires skills and practice,î said Sue Holloway, senior compensation manager at WorldatWork. ìFormal training helps managers develop and hone those skills.î

Additional findings:

-- Providing formal goal-setting linked to business objectives is a design component of most (91 percent) performance management programs, but only 74 percent of companies say that their managers are moderately or greatly effective at it. Additionally, only 48 percent of employees report that a link to business objectives is provided.

-- Fewer than six in 10 employers (57 percent) think that managers at their organization are moderately or greatly effective at providing coaching and feedback to employees throughout the year; 48 percent of employees report that this is the case.

Distributed by HR Marketer.com