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Would the U.S. Lose the Employee Performance Management Olympics?

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U.S. Performance Management Practices. Not impressed.We've heard the constant drumbeat of discontent from American companies. Employee performance management as we know it is ineffective. It takes too long to complete the process. It doesn't really bring about any change in performance. Employees think it's a sham because of negative features like forced ranking. Supervisors think it's a bureaucratic waste of time. A U.S. author suggests companies just scrap the process. Create something better. Shinier. More sophisticated.

Perhaps so. But as the Summer Olympics wind down we can't help but wonder: is the discontent merely a U.S. centric sentiment?

Recent research shows that if employee performance management became an Olympic sport, the U.S. would likely lose by an embarrassing margin. A new report from i4cp compares performance management processes and practices in the U.S., Brazil and Russia, and the data highlights some startling differences. The report details a story that contrasts two countries intent on doing things right, with one consistently demonstrating what's wrong.

Titled Performance Management: A Comparison of Brazil, Russia and the U.S., the report starts by looking at the various levels where performance management (PM) principles and practices are applied, and immediately finds some important differences. A majority of organizations in both Brazil and Russia included executives in their performance management practices, yet less than half of U.S. firms said they did. What's more, the percentage of firms in Brazil and Russia also exceeded the proportion of those in the U.S. in applying PM practices to business units, project teams, work teams and board members. The U.S. did, however, have the largest percentage of firms applying PM principles to the individual employee level.

In U.S. organizations, as Ed Lawler, Distinguished Professor of Business at the University of Southern California Marshall School of Business, recently wrote, it appears that "All too often in traditional organizations, the performance appraisal is something the top tells the middle to do to the bottom."

And what the bottom complains about is often the inconsistency in the process. One of the more popular i4cp studies, The 9 Keys to Performance Management, highlighted the importance of training managers in how to give an effective performance review and reduce inconsistency. But in comparison to Brazil and Russia, the U.S. is failing miserably at this. The percentage of firms offering supervisory training in Brazil and Russia easily exceeded the U.S. percentages.

And U.S. companies don't even have Russian judges to blame.

While the Olympics provide us clear winners and losers, success in employee performance management may be harder to judge. Firms in Brazil look primarily to employee satisfaction and individual goal accomplishment. Those in Russia also chose individual goal accomplishment as their top measure of success.

The U.S., as usual, is different. "Completion rates" is what the majority of firms cited as the primary metric.

Sounds like grounds for disqualification.

These overall findings hint at why U.S. organizations are discontented with employee performance management. Supervisors are unprepared. Employees are rushed through a superficial process. And getting it over with is the primary objective.

But the problems don't end there. Adding to the futility that employees must feel was this discovery: U.S. organizations were the least likely of firms in the three countries studied to take meaningful action for employees in the lowest quartile of employee performance management ratings. This included being less likely than firms in Brazil or Russia to use targeted development plans, probationary measures or terminations for employees whose performance was lagging. Such inattention to nonperformance can affect the morale, engagement and retention of higher-performing employees.

These findings serve as a needed wake-up call to firms that are focusing on organizational performance. The desire to gain business momentum through increased productivity must be supported by an employee performance management process that spans top to bottom. Here are some recommended actions that organizations can take based on the insights provided by Performance Management: A Comparison of Brazil, Russia and the U.S.:

  • Use a broad brush in applying performance management principles, not just vertically from the board to executives to all levels of individual employees, but also laterally to project teams and other work groups with an obligation to produce.
  • Invest in providing supervisors with specific training on how to develop meaningful goals with their employees as well as in the art of holding appraisal meetings and giving performance feedback to others. Model a coaching environment.
  • Address low-performing employees by creating targeted development plans designed to improve performance. If and when the situation warrants it, use probationary measures or terminations.
  • Measure the success of an employee performance management program in a manner that reflects accomplishment. Each individual's performance feeds into the department's, the business unit's and, ultimately, the organization's performance and success.
Although this report uncovered some factors that didn't represent U.S. organizations at their gold medal best, i4cp always drills down to discover what high-performance organizations (HPOs) are doing to differentiate themselves. The next report in this series will reveal the practices of those firms designated as HPOs through i4cp's Market Performance Index.

It appears that those HPOs in the U.S. are ready to go for that performance management gold.

Donna Parrey is a senior research analyst for i4cp and the lead researcher for the i4cp Global Talent Management Exchange and the Executive Leadership Development Exchange. She has an extensive background in human resources as a business partner, director and generalist prior to joining i4cp.

Comments

Great post! It really hones in on a core problem: reducing people-related performance development down to simply completing a standardized form. At some point decision makers have to realize that the work that needs to get done, the goals that need to be met, and the results that need obtained all require people. And people need a little more attention than machines to help them reach their potential. It's not that complicated, but bringing a little humanity (as opposed to the superficial) back to the process would be a good start.
We should not be surprised that so many employers have so many problems with so many employees. Employers hire the wrong people to be their managers and then they wonder why they have so many employee problems. Stop hiring the wrong people and the employee problems will go away.

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