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    Performance Management Practices Survey in China (2003) Performance Management Practices Survey in China (2003) Document Transcript

    • Performance Management Practices Survey in China 2003 Performance Management Practices Survey in China 2003 Anthony Mak General Manager, China/Hong Kong China/Hong Kong Consulting Team
    • Performance Management Practices Survey in China 2003 Contents Executive Summary 4 Background 9 Purpose 10 Limitations 11 Report Structure 12 Unit 1: Set-up of the Participating Companies’ 13 Performance Management Systems and Demographics of Survey Participants Unit 2: Findings 17 Unit 3: Comparison with other Asian 33 countries Unit 4: A Look Forward 42 Appendix A 44 Appendix B 48 About DDI 49 © Development Dimensions International, Inc. MMIII. Pittsburgh, Pennsylvania. All rights reserved under U.S., International, and Universal Copyright Conventions. Reproduction in whole or part without written permission from DDI is prohibited. 1
    • Performance Management Practices Survey in China 2003 Executive Summary Study Objectives The purpose of this survey was to investigate organizations’ current performance management practices in China and determine which practices influenced effectiveness and predicted success. The same survey methodology was used in our previous work in Singapore and Malaysia so that results from China can be benchmarked to organizations in the region. Survey results are expected to give insights on strength and priority enhancement areas in the performance management system in organization in China. This report documents the current performance management practices of organizations in China and examines the perceptions and feelings of employees towards the system. 1. Examine performance management systems and processes implemented by organizations in China. 2. Identify employee’s perceptions and feelings towards their performance management system. 3. Explore future performance management practices changes. 4. What employees feel “best” and “most frustrated” about their system? 2
    • Performance Management Practices Survey in China 2003 Coverage A total of 17 organizations and 391 respondents working in foreign owned or joint venture organizations operating in China participated in this survey. 56.6% of organizations participated in the survey are from manufacturing industries when 43.4% of organizations are from non-manufacturing industries. All participating companies are multi-national companies. It is a common practice that these companies may leverage on the existing system and support from their head offices in developing and implementing their performance management system. Selected Findings System Set-up 1. Current performance management systems and processes have been in place for an average of 3.1 years, meaning that many organizations have been paying their attention to this critical business strategy. 2. 80% of the organizations use their performance management system for all employees. 3
    • Performance Management Practices Survey in China 2003 Employee’s Perceptions and Feelings “ I am clear about what I am being expected and this helps me focus my efforts…” “ My pay is linked to my performance and that reflects my value...” “ I do not agree with my manager’s feedback, he relies on his perception and personal judgment on my performance.” “ I am not involved in the evaluation, my boss is very subjective and there is no specific data supporting his views.” 1. Most of the employees were satisfied with having at least one performance review with their managers. 2. In general, respondents were satisfied with having clear expectations on goals and behaviors set at the beginning of the performance management cycle. 3. Employees were satisfied with their direct supervisor as the key person to manage their performance. 4. Employees were frustrated that promotion was not always linked to performance. 5. Strong frustration around manager’s inability to provide accurate performance evaluation against behaviors and results. Cronyism and favoritism were practised and was considered not fair by employees. 6. Strong push is needed to enhance both manager’s and non- manager’s awareness and skills in performance management. Feedback and coaching were not adequately provided to enhance an employee’s performance. 4
    • Performance Management Practices Survey in China 2003 7. Performance evaluation is one-way most of the time and the employee was not involved in the process. This triggered an employee’s low commitment to their own performance plan. 8. A significant number of employees were demotivated after their performance review with their managers. This was due to the fact that the evaluation was not supported by facts and most of the feedback focused on the employee’s limitations and not their potential. The manager dominated the performance review process and the employee was not adequately involved aggravated the resentment felt by the employee. 9. Consistent resentment towards forced-ranking. The practice was seen as unfair, not reflecting the true performance and demoralizing. This hampers employee’s motivation to improve oneself as many of them do not see that they will get higher rating even they made their effort to improve. 10. Many managers reflected that they did not have high confidence to deliver an effective performance appraisal and provide specific behavioral data during performance reviews. Comparing survey results in China, Singapore and Malaysia in all measures of a performance management process 1. Singapore has the highest mean scores among the three countries in all measures. 5
    • Performance Management Practices Survey in China 2003 2. China has similar ratings as Malaysia in many of the measures except in “Performance Planning” and “Outcomes”. China has a higher mean score in the performance management system outcomes and lower score in doing effective “Performance Planning” when compared with Malaysia. 3. All three countries have the lowest mean scores in the area of “Feedback and Coaching”. 4. Managers in Singapore have a higher level of confidence and comfort to conduct performance management reviews, as they are better equipped with the required skills. 6
    • Performance Management Practices Survey in China 2003 Summary The awareness of using the performance management system as a critical tool to drive business performance has grown very strongly in China in the past few years. We could see efforts were made to introduce new systems and process. Some of the organizations have experienced the benefits of using their system to enhance business results and retain talents while many of them are working hard to modify their implementations. In the journey ahead, organizations will increase their investment and efforts to help enhance the awareness and required skills to ensure performance management system and process can be implemented effectively. The role of HR professionals will be increasingly important as a strategic partner to ensure the organization’s business results could be achieved through effective implementation and monitoring of a robust performance management process. 7
    • Performance Management Practices Survey in China 2003 Background Introduction In 1993, Development Dimensions International (DDI) and the Society of Human Resource Management introduced a survey of performance management practice on 79 companies. A similar survey was conducted in Singapore and Malaysia. As companies in China have increasing interests on the subject, DDI introduced the survey in China in 2002 to examine performance management practices of companies and predict future trends. The survey result was also compared with findings in Singapore and Malaysia. 8
    • Performance Management Practices Survey in China 2003 Purpose This survey for the China region was conducted with the purpose of examining the local performance management practices and the respondent’s prediction on future practices. In addition, this survey attempted to determine which system characteristics or qualities would influence the effectiveness of performance management and employee’s satisfaction. Performance management practices were compared to survey results of Singapore in 2002 and Malaysia survey results in 2001. This study, based on 391 respondents from 17 organizations, was designed to review China’s experience in Performance Management – current and future practices, and to provide organizations with data to enhance their people management strategy for China. 9
    • Performance Management Practices Survey in China 2003 Limitations Organizations from various industries were invited to participate in this study. However, the responding organizations coincidentally were all with foreign investment. The following assumptions were made: These companies are more active in implementing performance management systems because of their existing practices from the head office or other parts of the organization. Responding organizations have more resources, like performance management system tools, processes, consultation and help from their regional or head offices to establish a performance management system. 10
    • Performance Management Practices Survey in China 2003 Report Structure This report was structured into four units. Unit 1: Set-up of the Participating Companies’ Performance Management Systems and Demographics of Survey Participants This unit provides the profile of the organizations and how performance management is met. It outlines the represented industries and the demographic data of the respondents. Unit 2: Findings The findings are presented and organized in the following three categories: Perceptions and Feelings Practices and Trends Overall Satisfaction Unit 3: Comparison with other Asian countries This unit presents the differences between performance management practices comparison between China, Singapore and Malaysia. Unit 4: A Look Forward Based on survey findings, DDI will make predictions on future trends. 11
    • Performance Management Practices Survey in China 2003 Unit 1: Set-up of the Participating Companies’ Performance Management Systems and Demographics of Survey Participants A distinct majority of the organizations (95.8%) in the survey sample currently use a company-sanctioned performance management system/approach. 79.2 % of organizations use the system for all employees and some of the organizations (12.6%) use their performance management system with only 60% or fewer of their employees. (See Table 1) Table 1: Percentage of Workforce Using the Performance Management System Percentage of Workforce Response Using the System 91% to 100% 79.2% 81% to 90% 8.3% 71% to 80% 0% 61% to 70% 0% 60% or less 12.6 % 12
    • Performance Management Practices Survey in China 2003 Data from HR respondents showed that 37.5% of organizations conducted a single yearly performance review while a majority (62.5%) had less than one review a year. In the contrary, 92% of respondents from the employee group feedback that they had their performance review with their managers at least once a year. The big difference may be due to the fact that performance reviews were not officially documented and shared with the human resources department. Therefore, there was a perception that fewer reviews were done as compared to actual situation. One performance review a year 37.5% Less than once a year 62.5% Figure 2: Frequency of Reviews as perceived by Human Resources 13
    • Performance Management Practices Survey in China 2003 Responses from human resources reflected that their performance management systems have been in place for an average of 3.1 years. 25% of the organizations plan to make significant changes to their systems within the next two years whereas 70.8% of the organizations are not sure if there will be any changes. The high percentage probably because many of the responding organizations had revamped their systems in recent 2-3 years and they do not have solid plan to initiate further changes in coming two years. No 4.2% Yes 25.0% Not sure 70.8% Figure 3: Plan to Change Performance Plan significantly within the next 2 years Participating Organizations A total of 17 organizations and 391 respondents working in foreign owned or joint venture companies operating in China participated in the survey. Responding organizations were from eleven industries, including 56.6% from manufacturing and 43.4% from non- manufacturing sectors. The samples included both DDI clients (76%) and non – DDI clients (24%). (Please refer to Appendix A for responding organizations information.) 14
    • Performance Management Practices Survey in China 2003 The majority (71%) of the organizations’ size was below 1000 employees. Respondents’ Profile The two largest responding function groups are from manufacturing (18.4%) and Sales (17.4 %). Other different functions ranging from marketing, human resources to finance are listed in Appendix A. 44.2 % has joined the company for less than 3 years and 22.3% is between 4 to 5 years of tenure. Employees at all levels were asked to fill out a questionnaire on their organizations performance management practices. 41.7% of respondents is from management level and (51.9%) of them belonged to the non-management category. Unknown 6.4% Management 41.7% Non Management 51.9% Figure 4: Organizational Level of Respondents 15
    • Performance Management Practices Survey in China 2003 Unit 2: Findings The survey is set to gauge respondents’ reaction in three aspects - perception and feelings, practices and trends, and overall satisfaction. Perceptions and Feelings Respondent’s perceptions and feelings are sampled around the following 4 areas of performance management process: 1. Performance Planning An established set of goals / objectives and behaviors/skills for which an individual is hold accountable and will be evaluated against. 2. Feedback and Coaching On-going performance-related communication that reinforced behavior or help improve performance. 3. Performance Review Communication conducted in interim / at the end of performance cycle to review an individual’s performance against the set of goals/objectives and behavior/skills 4. Outcomes Results or ratings after performance review discussion 16
    • Performance Management Practices Survey in China 2003 Each area covers several questions and the average rating for each question are listed in Figures 5 - 8. The indicates the average mean of the practice is higher than the overall mean 3.5, a score judged by DDI research team as more closely resembling the desired behavior. Practices that scores lower than the overall mean is illustrated by . Performance Planning The overall mean of the rating towards performance plan is 3.59, showing that quite a number of respondents indicated that a high percentage of desired behaviors were presented in the performance planning. Respondents indicated that the performance plans included both objectives and behaviors and identifying them had significance to help focus efforts to accomplish tasks. They also pointed out that organizational values were reflected in the performance plan. This illustrates that over 61% of organizations use performance management process as a tool to help operationalize their values and behavior to achieve desired results. Areas perceived as less positive included that performance objectives were not updated despite changes in business needs; employees do not have ownership to perform plan, probably because the plans were set one sided by the organization. 17
    • Performance Management Practices Survey in China 2003 Figure 5: Performance Planning 3.5 1 2 3 4 5 I have no idea what is 3.56 I have a clear idea of expected of me. what is expected of me. My PM plan consists of 3.72 My PM plan consists of “bottom-line” results “bottom-line” results (goals/objectives) only. (goals/objectives), plus behaviors/skills. Behaviors/Skills in my 3.73 Behaviors/Skills are plan are unrelated to directly related to achieving achieving goals/objectives. goals/objectives. Identifying objectives and 4.22 Identifying my objectives behaviors is a waste of and behaviors helps me my time. focus my efforts. My goals conflict with the 3.88 My goals are aligned with goals of others with the goals of others with whom I regularly work. whom I regularly work. My manager sets my 3.32 I develop my goals/objectives. goals/objectives jointly with my manager. My goals/objectives do 3.11 My manager and I update not change during the my goals/objectives, as performance cycle. business needs change. I have no ownership of 3.13 I have strong ownership my plan. of my plan. Organizational values are 3.67 Organizational values are not reflected in my reflected in my performance plan. performance plan. 1 2 3 4 5 3.5 Overall Mean = 3.59 18
    • Performance Management Practices Survey in China 2003 Feedback and Coaching This section explores the respondent’s perceptions on their manager’s support to them in terms of feedback, coaching and performance tracking. Overall mean in this session is 3.28. This is the lowest among the four areas in the performance management process. The rating displayed that employees in China expect their managers to increase and enhance the feedback and support they need. Data shows that there is a lack of continuous feedback throughout the performance cycle where an employee is not aware of one’s performance until year-end review. Manager tends to give feedback for improvement more frequent than positive feedback. Some of the greatest frustrations revealed are that feedback given is not specific, accurate and clear. Employees were demotivated after feedback was given. Coaching is another area, which needs improvement. Data shows that only half of the respondents received coaching they needed from their managers to help them achieve goals and objectives. Another finding portrays the employee’s frustration that they did not have access to information that reflected their performance. Managers are responsible for tracking performance. This also explains the individual’s low ownership to their performance plan in former findings. 19
    • Performance Management Practices Survey in China 2003 Figure 6: Feedback and Coaching 3.5 1 2 3 4 5 I don't have a clue as to 3.09 I receive feedback how I'm doing until my throughout the year about annual appraisal. how I'm doing. During the year my 3.38 During the year my manager never tells me strengths are clearly what I do well. pointed out to me. During the year my 3.55 During the year my areas manager never tells me for improvement are how I need to improve. clearly pointed out to me. The feedback I receive 3.23 My manager provides on my use of the feedback that includes behaviors/skills identified specific examples of how in my plan is pretty I am using general. behaviors/skills. I never get the coaching I 3.27 I get the coaching I need need during the year to during the year to achieve my goals or achieve my goals and improve my behaviors. improve my behaviors. I don't have access to all 3.15 I have access to all the the information I need to information I need to track my performance. track my performance. My manager is 3.30 I am responsible for responsible for tracking tracking my performance my performance relative relative to my goals. to my goals. 1 2 3 4 5 3.5 Overall Mean = 3.28 20
    • Performance Management Practices Survey in China 2003 Performance Review This part of the survey explores employee’s satisfaction level for the performance review they experienced in the organization. Positive data indicates that most of the respondents (94%) received performance review at least once a year and (60%) said that the review was focused on both their strengths and areas for improvement. When a review is conducted, the discussion focuses mainly on results and not enough on behaviors. Interestingly, if we refer to the findings under “Performance Planning”, data shows that both objectives and behaviors are set in the performance plan and yet, when it comes to the review, the behaviors were not adequately reviewed together with the results accomplished. That indicated that organizations are still using the results as the main focus to evaluate staff’s performance. We believe that this may be caused by an ineffective manager who is not trained in gathering and analyzing behavioral data to support their assessment of the “behaviors” required. Since “behaviors” are less tangible and not measurable in numbers, it is difficult for a manager to review effectively without specific evidence and skills. Qualitative comments extracted also show that quite a number of managers relied on impressions and personal preferences to make a rating decision. 21
    • Performance Management Practices Survey in China 2003 Another reason is that organizations in China put a higher weighting on objectives then behaviors, to the extent that behavior might only be used for learning and development. This would naturally lead to a stronger focus on objectives during the review session. A critical finding is 40% of the respondents felt that the reviews were subjective. Another frequent observation is that the manager focused on a single incident to determine the final rating but not their overall performance trend and consistency. This is an area that requires high attention as perceptions and resentment may cause employees to loose interest in the system and trust in management, leading to lower morale and turnover in the long run. 22
    • Performance Management Practices Survey in China 2003 Figure 7: Performance Review 1 2 3 4 5 3.5 In my review, my 3.21 In my review, my manger manager and I discuss and I discuss the results I the results I achieved, but achieved plus the not the behaviors/skills I behaviors/skills I used to used to achieve them. achieve them. I do not receive an 4.69 I receive a performance annual performance review at least once a review. year. My review relies on 3.63 My review relies on judgment or perception, factual supporting and very subjective. evidence, very objective. My review focuses mostly 3.70 My review focuses on what I did wrong. equally on my strengths and areas for improvement. My manager does all the 3.48 My manager and I jointly talking in the review. review my performance. 1 2 3 4 5 3.5 Overall Mean = 3. 66 23
    • Performance Management Practices Survey in China 2003 Outcomes In measuring how respondents felt after their performance review, the overall mean of this section was 3.9. Respondents are fairly satisfied by their performance management system. The two highest rated areas are that the direct supervisors are responsible for all or most of the appraisees’ performance review and performance management appraisal is done at all levels of the organization. This means that respondents are satisfied with having a manager they regularly worked with and understood their performance to assess and review their performance effectively. Findings indicate that pay was closely linked to performance (Mean = 4.02) and behavior (Mean = 3.87) but a low satisfaction on the linkage between performance and promotion. Data showing that performance did little with the promotion. Even though some systems have clearly link pay and performance together, more than half of the respondents felt demotivated after performance review. Reasons identified from frustrations expressed were that the objectives and expectations set were somehow too high and unrealistic. Managers also did not modify the goals according to business changes during the year. Consequently, employees were not able to achieve the objectives set, and the performance rating would not be met. 24
    • Performance Management Practices Survey in China 2003 Attention is required to ensure the objectives are realistic for appraisees. “Sky-high” objectives and expectations hamper employee’s confidence and commitment to achieve their goals. Today’s employees also want to know how the organization makes decisions e.g. on promotion. Unless promotion decisions are openly communicated and substantiated, employees will continue to feel suspicious and loose trust toward management decisions. Eventually, the employee perceives promotion decisions as cronyism and favoritism. Work motivation and commitment will be diminished. 25
    • Performance Management Practices Survey in China 2003 Figure 8: Outcomes 3.5 1 2 3 4 5 I am usually very 3.41 I am usually very demotivated after every motivated after every performance review. performance review. I see no relationship 4.02 My performance affects between achieving my my pay. objectives and my pay. I see no relationship 3.87 My behaviors are rated between my behaviors and clearly affect my pay. and my pay. Promotions have almost 3.48 Promotions clearly are nothing to do with tied to performance. performance. My direct supervisor is 4.41 My direct supervisor is not responsible for all or responsible for all or most most of my performance of my performance review. review. Performance 4.25 Performance management/ appraisal is management/ appraisal is done at select levels of practiced at all levels of the organization. the organization. 1 2 3 4 5 3.5 Overall Mean = 3. 91 26
    • Performance Management Practices Survey in China 2003 Practices & Trends This section explores how prevalent the listed 12 performance practices were perceived by respondents. By analyzing data from current practice and hopes for future practice gives us an idea of the importance of the 12 practices and the trend of changes preferred by respondents. Understanding these data gives the organizations’ ideas about how it can enhance its performance management practice. The average mean is calculated for each of the practice by using the rating of a Likert-type scale from 1 to 6. 1 = Not Used and 6 = Extensively Used. The larger the mean, the higher the frequency of the practice applied or would be applied. Table 9 illustrates practices and trends according to the highest frequency of future use. The most highly rated practice is the “Overall Rating” (4.26). Use of single rating to represent the overall evaluation of an individual’s performance remains the highest in both current and future use. Respondent expressed that the number alone could not give accurate and balanced description of performance throughout a cycle. This explained that the second rated (4.17) highest practice was that, use of essay summary statement to describe overall performance was expected to supplement the current practice in the future. 27
    • Performance Management Practices Survey in China 2003 Table 9: Performance Management Practices & Trends Future Current Change in Performance Management Practices Gap Use Practice percentage Overall Rating: Use of single rating to represent the 4.26 3.85 +10.6% 0.41 overall evaluation of an individual’s performance. Summary Statement: Use of essay summary statement 4.17 3.69 +13% 0.48 to describe overall performance. Manager Training: Use of initial and refresher training to educate managers in performance 4.13 3.33 +19.4% 0.80 management/appraisal concepts and build skills in performance planning, managing, and appraising. Numerical Ratings: Use of numbers as labels for rating 4.03 3.53 +14.2% 0.50 Scales. Non-Manager Training: Use of initial and refresher training to educate non-appraisers in performance 4.01 3.05 +31.5% 0.96 management/appraisal concepts and build skills that help them manage their own performance. Appraiser Accountability: Use of measurements/ evaluation to hold managers accountable for 3.90 2.92 +33.6% 0.98 performance appraisal effectiveness. Customer Input: Formal use of input from customers (external and internal) to assess performance of 3.89 2.80 +38.9% 1.09 individual or groups. Direct Report Input: Formal use of input from direct 3.70 2.40 +54.2% 1.30 reports to assess manager’s performance. Peer Input: Formal use of input from peers to assess 3.70 2.83 +30.7% 0.87 individual performance. Six Sigma: Use of the performance management appraisal system to support and enhance the 3.66 2.64 +38.6% 1.02 implementation and ongoing success of the Six Sigma Process. Forced Ranking: Use of a predetermined percentage of 3.57 3.59 -0.5% (0.02) ratings distribution. Team Appraisal: Team members (peers) actually set 3.55 2.24 +58.5% 1.31 goals and conduct appraisals of fellow team members. 28
    • Performance Management Practices Survey in China 2003 There was a strong realization of the need of having proper training for both manager (Ranked 3rd, 4.13) and non-manager (Ranked 5th, 4.01) in performance management in future. Qualitative data show that the greatest barrier to system effectiveness was the lack of knowledge and skills of applying performance management. There is a pressing need for organizations to align the understanding of purposes, roles and performance management system implementation for all levels. The gap between the current and future identified indicates the strong awareness of the need of practice change in the future. The most significant gaps (1.31) fall on the practices of “Team Appraisal” and (1.30) “Direct Report Input” and (1.2) on “Customer Input”. Findings show that respondents consider that involving team member, customer and third party to rate an individual or group’s performance was more effective and important as this provided more comprehensive and objective data from different sources. Another significant forecast was on the “Six Sigma”, it was encouraging to see that respondents realize that performance management system was viewed as an important business tool to drive and support important organization initiatives. Out of the 12 practices surveyed, 11 of them showed an increase for usage in the future. The only one that showed a slight decreasing trend was “Forced Ranking” (the use of predetermined percentage of rating distribution among all staff). Forced ranking has been repeatedly described as demoralizing and unfair practice to rate individual’s performance and was the major cause of resentment towards the performance management system. Table 9 illustrates the gaps between current and future practices, the practices were listed according to the degree of future use. 29
    • Performance Management Practices Survey in China 2003 Overall Satisfaction This section is designed to measure the overall satisfaction of the respondents towards system and appraisal effectiveness. The overall effectiveness of current performance management system was rated as 3.16 and the effectiveness of appraisal received was at rating 3.17. Data showing that the performance management practices and tools are highly desired to be enhanced in order to make the appraisal effective. Respondents with responsibilities for appraising were asked to answer three more questions on the appraisals they conducted. Managers were not comfortable to deliver appraisals; the rating 3.42 indicated that managers need strong support in terms of knowledge and skills about system and process. They also felt uneasy (3.36) to provide behavioral data in the appraisal to support the rating. Manager was also not effective to include organization values in performance discussions. The manager’s ability to explain and communicate desired behaviors; observe, diagnose and make sound judgment on employee’s behavior, ability and motivations for reinforcement and improvement is critical for day-to-day leadership. This essential competency is one of the key factors that determine the success of the system and process. Respondents repeatedly indicated that manager’s inaccurate performance evaluation was one of the major causes of resentment. This is an area that requires strong attention from organizations. Data in this section reaffirms that current performance systems organizations are on the right track and still need to strive to ensure the detailed tasks are performed effectively. 30
    • Performance Management Practices Survey in China 2003 Figure 10: Overall Satisfaction Ineffective Effective Rate your current performance management/appraisal system in terms of its overall effectiveness as a tool to help you be 3.33 effective in your job. (1 = Ineffective; 5 = Highly Effective) Rate your impression of how the appraisals you received over the past three years have helped 3.36 you be more effective in your job. (1 = Ineffective; 5 = Highly Effective) Rate your degree of overall comfort and confidence in the appraisals you have delivered over the past 3.42 three years. (1 = Not Confident; 5 = Highly Confident) Rate your ease/skill level of providing behavioral 3.17 data in appraisals. (1 = Very Uneasy; 5 = Very Easy) Rate your inclusion of organizational values in performance discussions and appraisals. (1 = 3.16 Ineffective; 5 = Highly Effective) 1 2 3 4 5 31
    • Performance Management Practices Survey in China 2003 Unit 3: Comparison with other Asian countries Perceptions and Feelings Singapore had In comparing employee’s perceptions, feelings and the highest manager’s overall satisfaction towards internal mean score in four areas and performance management process, employees in China came second. Singapore indicated higher ratings in all aspects, showing that there were higher percentage of desired behavior presented in their performance management process. Findings from China are very close to Malaysia’s findings. In the areas of performance review and outcomes, Chinese employee’s reflected a higher mean score than Malaysia. Managers in Singapore indicated higher overall satisfaction and were the most confident group in implementing effective performance management process with required skills. Managers in China came second followed by Malaysia. Setting objective Among the findings, highest mean score was on goals and behaviors are “Performance Planning”. This illustrates that specific widely practiced. objectives and goals to guide employee’s actions and behaviors were commonly practised in these three countries. 32
    • Performance Management Practices Survey in China 2003 Lower mean The lowest mean scores for all three countries related score in to same area, which is the “Feedback and Coaching”. coaching All 3 countries had scores lower than 3.5, meaning that Performance there was inadequate coaching and feedback across management process is more the whole region. This would probably be caused by ready than skills required. manager’s development needs in skills, and lack of awareness of the importance of coaching and feedback. Asian managers and employees also tend to be more subtle and most of them will practice coaching and feedback when it is extremely necessary. It is interesting to see that even though China started to apply formal performance system in a later stage than other 2 countries (based on both commercial and industrial development process), she came up very quickly in terms of employee’s perceptions, feelings and expectations towards performance management. This could be explained by earlier data, the performance systems has only be in place for 3.1 years on average. This showed that many of the responding organizations realized the importance of performance management system and has started to revamp the process a few years ago. With the support from external resources support from headquarter, process and planning were clearly identified and established, whereas manager’s skills in conducting the process and discussion were not yet ready and required lots of effort to enhance. 33
    • Performance Management Practices Survey in China 2003 5 4.02 3.87 4 Average Mean 3.59 3 2 1 China 2002 Singapore 2002 Malaysia 2001 Figure 11 Performance Planning 5 4 Average Mean 3.28 3.48 3.25 3 2 1 China 2002 Singapore 2002 Malaysia 2001 Figure 12 Feedback and Coaching 34
    • Performance Management Practices Survey in China 2003 5 3.66 3.88 4 3.58 Average Mean 3 2 1 China 2002 Singapore 2002 Malaysia 2001 Figure 13 Performance Review 5 3.91 3.94 Average Mean 4 3.41 3 2 1 China 2002 Singapore 2002 Malaysia 2001 Figure 14 Outcomes 35
    • Performance Management Practices Survey in China 2003 Practices and Trends All three countries predict that they will increase the future use in 11 practices out of 12. Particular increase will focus on training managers and employee in performance management process and skills. In terms of evaluating performance, direct report and customer’s input will be increased significantly. Hopefully, this could help provide more comprehensive data to make a fairer performance evaluation conclusion. 36
    • Te a m Te am 1.00 2.00 3.00 4.00 5.00 Ap p 1.00 2.00 3.00 4.00 Ap 5.00 D ra D pr ire ct i sa ire ai R l ct sa l ep R o ep rt or countries In t In C p ut C pu us to us to t m m in 3 countries er er In In pu p t Ap ut Ap Si Si pr x pr a x ai Si is Si se gm e rA gm rA a cc a cc N ou N ou on n on nt -M ta -M ab an b ilit an ilit y ag y ag e rT er T ra ra in in in i ng g Pe Pe e er M rI np M In an u an p ut a ge t ag rT er N ra Tr um in N ai in um ni er g ng ic er al ic Su R al m at R m in Figure 15: A comparison of the current practices Figure 16: A comparison of the future trends in 3 Su gs m at in ar y m gs St ar y at Performance Management Practices Survey in China 2003 St em at em O en t en ve O ra t ll ve R ra at ll Fo in R rc g at ed Fo in r g R ce an d ki R ng an 37 ki China 2002 China 2002 ng Malaysia 2001 Malaysia 2001 Singapore 2002 Singapore 2002
    • Performance Management Practices Survey in China 2003 Overall Satisfaction China Singapore Malaysia 2002 2002 2001 1. Rate your current performance management/appraisal system in terms of its overall effectiveness as a tool to 3.16 3.51 3.05 help you be effective in your job. (1 = Ineffective; 5 = Highly Effective) 2. Rate your impression of how the appraisals you received over the past three years have helped you be 3.17 3.45 3.02 more effective in your job. (1 = Ineffective; 5 = Highly Effective) 3. Rate your degree of overall comfort and confidence in the appraisals you have delivered over the past three 3.42 3.64 3.42 years. (1 = Not Confident; 5 = Highly Confident) 4. Rate your ease/skill level of providing behavioral data in 3.36 3.58 3.20 appraisals. (1 = Very Uneasy; 5 = Very Easy) 5. Rate your inclusion of organizational values in performance discussions and appraisals. (1 = 3.33 3.53 3.19 Ineffective; 5 = Highly Effective) 3.19 Malaysia 2001 5 3.53 Singapore 2002 3.33 China 2002 3.2 4 3.58 3.36 3.42 3 3.64 3.42 3.02 2 3.45 3.17 3.05 1 3.51 3.16 1 2 3 4 5 38
    • Performance Management Practices Survey in China 2003 Summary This study reveals that over 95% of the survey participating organizations in China have structured performance management systems implemented throughout the whole organization. It is encouraging to find that organizations have paid much effort and attention to review and change their systems in the past few years. This shows that these organizations have heightened their awareness of using performance management system as a business strategy to drive results. In general, a significant portion of employees is satisfied with their performance management practices. Some of the organizations have started to experience the benefits of performance management systems while some of them are still enhancing their system or working on implementation. Data shows that more than half organizations surveyed are effective in: 1. Structuring specific performance plan that contains work objectives and behaviors to help focus employee’s efforts. 2. Reviewing performance with employees at least once a year. 3. Linking the performance to pay 4. Holding the direct supervisor accountable for evaluating employee’s performance. 39
    • Performance Management Practices Survey in China 2003 From the analyzed data, areas that organizations need to continue to work on are: 1. Develop the appraiser in performance management concepts, roles and skills. An appraiser needs to: understand the roles in performance management, particularly in feedback and coaching along the process. share performance data openly to help employees gauge the direction for improvement. develop skills and knowledge to evaluate performance in a fair manner to avoid cronyism, favoritism and bias. 2. Review approach to differentiate employee’s performance Consistent data showing that employees are frustrated by the unrealistic “performance standard” and “average mark” set for different ranking. Resentment aggravated by the pre-determined distribution of employee’s performance (Forced-Ranking), which perceived as “not fair”. Increase employee’s involvement in performance data input Organizations have introduced performance management system and process but appraisers and appraisees still have to improve their skills. A strong drive from Human Resources is required to ensure a robust, comprehensive and effective process could be implemented thoroughly to achieve results and impact targeted and support organization’s success. 40
    • Performance Management Practices Survey in China 2003 Unit 4: A Look Forward Traditional performance management process refers to once-a-year appraisal, a routine discussion to talk about how manager and employee “feel” about employee’s performance. The generic discussion does not help much to individual and company as there is no specific direction, objectives and measurements that can help individual continue to grow. As a result, it became a formality and routine process that required by human resources department. Today, performance is a live system, characterized by understanding the linkage between business success and individual’s performance plan, mutual ownership, setting specific and concrete objectives that contribute to organizational success, continuous feedback and coaching, comprehensive performance data and effective interactions. Effective performance system helps individual to see how one’s contribution links to business success. Organization can use her performance management system to communicate the business objectives and required behaviors with individuals. Helping employee with direction, road map and indicators to achieve set goals and objectives. Performance management is a business strategy that drives organization success. 41
    • Performance Management Practices Survey in China 2003 Organization will increasingly use performance management system to support and enhance business process. To enhance system effectiveness, organization indicates that they will highly increase the formal use of direct report’s and customer’s input for performance evaluation. Training and development opportunities for both manager and non-manager on performance management will be increased in order to enhance practice effectiveness and remove application difficulties and barriers. Organizations also understand that having manager hold accountable is a drive for skill application and behavioral changes along the implementation. Obviously, organizations are trying to re-evaluate and try different new methods to manage performance better. These new practices means new opportunities to succeed and organization will need to continually re-examine the system alignment, employee’s satisfaction, tracking and monitoring the effectiveness and modify the system to accommodate the changing needs and demands. 42
    • Performance Management Practices Survey in China 2003 Appendix A: Demographic Data By Industry Unidentified Communications Manufacturing/ Heavy Industry Technology/IT Health Care Wholesale/Retail/ Trade Nonmanufacturing Manufacturing Construction/Mining Utilities/Oil and Gas Transportation Respondent’s Functions Accounting/Finance Service/Support Sales Research/Development Quality Assurance Purchasing Marketing Manufacturing Information Systems/Data Processing Human Resource/Personnel Distribution Engineering Administration Others Unidentified 0.0% 5.0% 10.0% 15.0% 20.0% 43
    • Performance Management Practices Survey in China 2003 Company Size 50.0% 41.2% 40.0% 29.8% 30.0% 20.0% 13.7% 10.4% 10.0% 2.2% 2.7% 0.0% 1-500 500-999 1000- 2500- 5000 or Unknown 2499 4999 greater Organizational Level of Respondents Unknown 6.4% Management 41.7% Non- Management 51.9% 44
    • Performance Management Practices Survey in China 2003 No. of Years with Current Company 50.0% 39.2% 40.0% 27.3% 30.0% 22.3% 20.0% 7.2% 10.0% 4.0% 0.0% < 1 Year 1-3 Years 4-5 Years > 5 Years Unidentified No. of Years Using Currect Performance Management/Appraisal System Unknown < 1 year > 5 years 1-3 years 4-5 years 45
    • Performance Management Practices Survey in China 2003 How often has the performance managemnet/appraisal system changed during your tenure? 4.2% 10.9% 23.8% Unknown Never Don't know 20.8% 1 time 10.9% 5 or more times 4.2% 15.1% 9.9% 4 times 2 times 3 times 46
    • Performance Management Practices Survey in China 2003 Appendix B: Participating Organizations ABB (China) Limited AT & T China BASF JCIC Neopentylglycol Co. Ltd. Beijing Havi Food co. Ltd. China PepsiCo Foods Ltd. Cognis China Eli Lilly Asia Inc. GEM Electronics Shanghai Kodak Lucent Technologies Pharmacia & Upjohn China Ltd. Philips (China) Investment Co., Ltd. Rich Products Shanghai General Motors Shanghai McCormick Foods Co. Ltd. Warner-Lambert (Guangzhou) Co. – Adams Division Wyeth China 47
    • Performance Management Practices Survey in China 2003 About DDI Development Dimensions International (DDI) is an international human resources company that specializes in helping clients improves their business performance by aligning people strategies with business strategies. DDI works closely with clients to assess their organization and people, develop and implement practical strategies, and achieve measurable improvements in organizational and individual performance. The company now includes more than 70 offices and affiliates and more than 1,000 employees. DDI’s international presence and expertise make it possible for its multinational clients to link hiring, training, and performance management across cultures in 60 countries. DDI’s leadership programs build specific, job-critical competencies and promote positive behavior changes that lead to better job performance. Its training materials are highly customizable and suit both manufacturing and service/professional environments. Multiple languages and delivery options are available. More than 400 of the Fortune 500 have used DDI’s leadership programs. 48
    • Performance Management Practices Survey in China 2003 The Americas Europe/Africa Asia-Pacific World Headquarters— Düsseldorf Hong Kong Pittsburgh 49.2159.91680 852.2526.1188 412.257.0600 London Singapore Monterrey (Mexico) 44.1753.616000 65.6226.5335 528.152.3200 Paris Sydney Toronto 33.1.41.9686.86 61.2.9466.0300 416.601.5500 Other major offices in Other major offices in Other major offices in Atlanta, Capetown, Durban, Bangkok, Brisbane, Chicago, Dallas, Detroit, Los Johannesburg, and Warsaw Jakarta, Kuala Lumpur, Angeles, Montreal, New York, Manila, Melbourne, Perth, San Francisco, Santiago, São Seoul, Taipei and Tokyo Paulo, and St. Louis For more information, visit our web site at www.ddiworld.com. Or email us at info@ddiworld.com