Despite an understanding that talent is a source of competitive advantage, establishing effective performance management programs remains a challenge for most organizations. According to Mercer’s 2013 Global Performance Management Survey, just 3 percent of organizations worldwide report their overall performance management system provides exceptional value. The survey includes responses from performance management leaders at more than 1,050 organizations from 53 countries.
In addition to some commonalities in performance management programs, such as setting employee goals, conducting formal year-end review discussions, and using performance ratings, Mercer’s statistical analysis identified key drivers of successful performance management. They include manager skills, executive commitment, calibration, and technology. Topping the list is the skills of managers, specifically how well they set employee goals, provide feedback, evaluate performance, and link performance to critical talent management decisions such as compensation, development, and careers. According to Mercer’s survey, 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.
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.