Performance Management Review
Employees are not helped
Line managers are well regarded
Corporate objectives are not communicated
Employees diverge on satisfaction with
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Performance Management Review


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Performance Management Review

  1. 1. Performance Management Review 1 Companies must address performance appraisal to increase employees’ contribution Survey of 175,000 It’s time to review A common finding across sectors is dissatisfaction with the performance employees reveals performance appraisal appraisal system among nearly 40% (again) of employees, a significant minority that that almost 40% rises to a majority in the manufacturing are dissatisfied Even small changes in employee sector. HR leaders will want to examine behaviour can have a massive impact this and the related issues of promotion, with performance on business performance and companies careers and development. The time to appraisal regularly review how employees’ efforts address performance appraisal systems are directed, measured and rewarded.1, 2 has come again. An analysis of the ETS We define performance management as Overall, leisure sector employees are Employee Survey. April 2009. the sum of the systems, processes and satisfied with their training and career management employed to maximise the development but are unhappy with their contribution of human capital. management support. Manufacturing was generally the most poorly-regarded Performance Management Review3 is an of the sectors across management, authoritative account of private sector appraisal and promotion. The appraisal performance management based on the system is criticised in professional views of over 175,000 employees in the services firms while line managers are ETS Employee Survey, a contemporary praised for being supportive. Financial benchmark database. We’ve enriched services employees report they know the research with views from some company objectives and are favourable highly-regarded HR professionals. about promotion and careers. Dissatisfaction with performance appraisal system 53% 43% 38% 37% 34% Benchmark Leisure Financial Professional Manufacturing Services Services Source: ETS Performance Management Review. ETS plc 2009. 1. J Combs, Y Liu, A Hall & D Ketchen. How much do high-performance work practices matter? A meta-analysis of their effects on organisational performance. Personnel Psychology 2006; 59: 501-528. 2. HR believes line managers hold key to improvements in performance. IRS Employment Review 2006 abstracted by Expert HR 2006. 3. Performance Management Review: An analysis of the ETS Employee Survey. ETS plc 2009. Copyright 2009 Expert Training Systems plc
  2. 2. Employees are not helped 2 to perform at their best There are some marked differences in cultures leading to high-pressure, People Performance, says, “Our frontline views of the appraisal system by sector. demanding roles. staff can get constant feedback through Employees of professional services direct observation. and manufacturing companies are less satisfied than the all-employee benchmark. Appraisal should be an We can say ‘that was a great interaction Appraisal can encompass a wide range ongoing process, not a with the customer’ or share their mystery of activities from goal setting, through meeting shopper scores.” appraisal and coaching to reward, so reasons for this can be similarly Charlie Keeling (HR Director, Field Fisher The Group HR Director of Land Securities wide-ranging. Waterhouse LLP) sees a common error plc, Angela Williams, records how among professional services firms: investment in HR processes has resulted Dr John Mahoney-Phillips (Leadership, “A combination of too much emphasis on in healthy scores for appraisal. “All our Performance and Talent Team, UBS AG), an annual, formal process, as opposed performance measures are aligned with gives an insight: “A major source of to more frequent informal feedback, and business objectives at the individual, dissatisfaction is the clarity of objective the impact on chargeable time, lead to business unit and group level. Employees setting and the extent to which the unsatisfactory processes and systems can see that their contribution makes apraisee is involved in the setting and in this important area.” a difference.” on-going review of achievement against objectives. You only have to think about Neither is appraisal part of the daily all of the research on goal-focused process of managing a manufacturing behaviour to appreciate the importance business; it’s seen as ‘extra work’ that of goal clarity.” does not always lead to direct outcomes, according to David Bellis (HR Director, It is striking that employees of financial Johnson Matthey). He also highlights that services firms say that they are highly many managers find the formal nature motivated to achieve. This sector outper- of appraisals threatening. forms the benchmark in several of the areas reported here. These organisations In contrast, regular feedback should be are highly structured around procedures almost automatic for front-line staff at with clear objectives and targets. Gala Coral’s casinos, betting shops and They often have high-performance bingo clubs. Helen Frewin, Head of † Financial Professional Benchmark Leisure Manufacturing Services Services I am satisfied with the performance 62% 66% 63% h 57% h 47% appraisal system I am motivated by the company 66% 65% h87% ‡ 70% 62% to do the best job I can I have enough say over how I do my work 83% 86% 87% 82% 83% The company’s procedures help h 62% 61% h77% 66% 53% me to do my work well † The scores in each section are presented for the whole survey sample (the benchmark) and for four business sectors. ‡ Scores that are five or more percentage points above the benchmark are considered strikingly better, highlighted with an upward arrow; five or more percent below are strikingly worse, highlighted with a downward arrow. In each case, the scores are the percentage of people who agreed with the question. Copyright 2009 Expert Training Systems plc
  3. 3. Line managers are well regarded 3 Employees feel well managed and supported Line managers need to Performance by their line managers. These scores are connect employees with management in among the highest in the benchmark database and are stable over time. the strategy financial services The line management of professional services Since performance improvement in most jobs “The renewed focus on firms is recognised as being supportive. is primarily a result of learning from on-the-job productivity and performance Charlie Keeling suggested that “a lot of experience, line management plays a key part within the financial services development effort has been oriented in helping individuals to understand how and sector reinforces the to this over the past five to ten years.” why they should change their behaviours.4, 5 importance of good performance management. John Mahoney-Phillips notes that employees External oversight is increasing Employees in manufacturing scored their are often less satisfied with more distant (and and so are expectations for managers rather more poorly, which David more senior) management than with their local clear performance targets. Bellis suggests may have a cultural dimension: management. “This can be linked to a greater There is a growing belief most manufacturing operations are focused awareness of their immediate manager’s that rewards need to be firmly on output and volumes, which often pressures. Also, individual employees can find much more closely related supersede the need for managerial support it difficult to see how their objectives and team to longer-term performance and appreciation. strategy link to corporate goals. While local at both the organisation managers should feel encouraged, they also and individual level, this Helen Frewin highlights the need for greater puts a premium on good consistency. In the bingo clubs and casinos have a greater responsibility to create a clear line of sight between local goals and corporate performance management with excellent general managers, the staff practices and emphasises constantly ask ‘what can I do for the customer objectives.” the importance of core today?’ but this is not yet true of all outlets. managerial skills – setting “For those moving into management positions, Helping managers to manage better can and reviewing objectives there is a variation in response about what be achieved through coaching and ongoing and giving performance being a manager is.” feedback, raising their self-awareness orientated feedback” through gathering and interpreting multi-rater Angela Williams agrees that managers are feedback. At some of ETS’ client companies, individual line managers’ engagement scores Dr John Mahoney-Phillips, very well regarded at Land Securities, but Leadership, Performance highlights the years of focused effort that are part of the performance appraisal process as are multi-rater feedback ratings. and Talent Team, UBS AG were required. “It’s to do with the amount of investment put into leadership development and about giving managers the tools to manage effectively,” she says. Financial Professional Benchmark Leisure Manufacturing Services Services h I feel that I am well managed 81% 79% 82% 85% 69% My immediate manager shows h 84% 82% 85% 87% 72% appreciation for the work I do My immediate manager gives me h h 85% 75% 84% 89% 73% the support I need to do my job well 4. CD McCauley, MN Ruderman, PJ Ohlott & JE Morrow. Assessing the developmental components of managerial jobs. Journal of Applied Psychology 1994; 79: 544-5610. 5. DT Hall & PH Mirvis. Careers as lifelong learning. In A. Howard (Ed.), The changing nature of work, 323-361. San Francisco, CA: Jossey-Bass. 1995. Copyright 2009 Expert Training Systems plc
  4. 4. Corporate objectives are not communicated 4 consistently well across sectors One of the most effective ways to maximise It might be number one choice for customers Performance workforce productivity is to tell employees choosing a hotel, for example.” exactly what it is you want them to do.6 management in the leisure sector Cascade goals to get buy-in Employees of financial services and leisure companies are confident that they know and strategic alignment ”Leisure companies are so what their employers are seeking to much about customer service. achieve, but this is less true in professional Getting buy-in to objectives works better The emotional intelligence we services and manufacturing firms. There is when the communication is two-way. employ with our customers an incredible 28 percentage point difference Most people do not like simply to be told must also be applied to between the employees that consider what to do. They want to be involved in people management. themselves the least (manufacturing) and helping determine what goals make the Talking to colleagues in peer most informed (leisure). Of course, there most sense for them given the company’s companies it’s clear that is variation within industries, with Johnson strategic objectives and their personal needs we are better at managing Matthey scoring well on this measure. and capabilities.7 One technique is to use customer-facing staff than ‘cascading goals’ which allows organisational support function staff. leaders to set strategic objectives and then The key is creating the right A strong external brand makes the job of communicate these to people throughout the culture: we need our people aligning employees far easier, according to organisation. Employees can then set their managers to spend most Helen Frewin, “If employees fully understand goals based on their managers’ goals. of their time doing just that the brand, they probably know what the – managing people.” company is aiming for. Helen Frewin, Financial Professional Head of People Performance, Benchmark Leisure Manufacturing Services Services Gala Coral Group I know what the company wants h h 74% h88% h84% 66% 60% to achieve over the next year I know what the department’s h h 78% h87% h83% 73% 72% targets are for the next year About the report ETS provides HR consultancy and bespoke technology to meet the performance management, employee research and multi-rater feedback needs of The report was written by Betsy Travis, a chartered world-leading companies. occupational psychologist and senior consultant at ETS plc, where she advises clients on performance management, employee research and multi-rater ETS delivers a bespoke ‘ideal world’ solution to each feedback programmes. Dominic Wake is a director at client based on their specific needs rather than offering ETS plc and contributed to the content of the report. a series of boxed products. ETS delights its customers, a claim it can confidently make based on the results of an ongoing feedback programme. To hear these customers To contact Betsy or Dominic about this report, talking about their projects and about working with ETS, please email go to and click on ‘Customer delight’. or call +44 (0)1932 219 949. ETS would like to thank the participating companies and ETS plc, the HR professionals who have provided comments on 123 New Zealand Avenue, the findings. No conclusions from these figures can be Walton-on-Thames, drawn regarding any individual or participating company. Surrey KT12 1QA 6. EA Locke & GP Latham. Building a Practically Useful Theory of Goal Setting and Task Motivation: A 35-Year Odyssey. American Psychologist 2002; 57: 705-717. 7. EA Locke & GP Latham. A Theory of Goal Setting and Task Performance. Englewood Cliffs, NJ: Prentice Hall, 1990. Copyright 2009 Expert Training Systems plc
  5. 5. Employees diverge on satisfaction with 5 promotion and development opportunities Financial services and leisure sector Charlie Keeling accepts that promotion and Performance employees are satisfied with their careers are well catered for in professional opportunities for career development. service firms: “Advancement is fairly fast, and management In manufacturing, the picture is significantly expected, in a sector where people are much in professional different with employees frustrated about focused on developing themselves. There services promotion, training and development are still consistency issues though.” and career development. ”I believe that the whole A transparent promotion performance management Career development is as important as area is a real challenge in appraisal, asserts John Mahoney-Phillips: mechanism will gain professional services firms. “Employees consistently cite career employees’ trust The vast majority of the development opportunities as a major driver people we employ are very of engagement. We also know that research This whole topic requires transparency, bright and competent with continually points out that most development according to Angela Williams. “It’s not a high expectations. happens on-the-job. Together, this suggests question of ‘fair’ or ‘unfair’ – it’s about being Being able to differentiate that companies which create strong, open clear about the skills and behaviours needed between them is difficult internal job markets and a developmental to develop through the organisation. because of leaders’ time culture are likely to find that employees are Moreover, our managers and employees pressures, their desire to more positive about performance appraisal.” have the tools they need to succeed.” motivate good performers and their apparent Many companies benefit from an online This view is echoed by John Mahoney-Philips, unwillingness to recognise resource that allows managers to search CVs “The way that appraisal data feeds into the elite group of great and allows employees to see available roles. promotion decisions is too often opaque. performers. My own feeling This improves the perception and visibility of Employees probably do not expect a linear is that the higher performing career opportunities. Leading companies relationship but rather some transparency professional firms will be have created a ‘My Profile’ area in their around standards and expectations and those with regular, informal performance appraisal system or on their factors outside of the performance appraisal. feedback processes.” intranet so that every employee can record Companies need to think as much about their career history, qualifications, mobility process transparency and communication as Charlie Keeling, and career aspirations. they do about the performance review itself.” HR Director, Field Fisher Waterhouse LLP In leisure firms, opinions on careers and David Bellis points to the wider socio-eco- promotion vary depending on whether nomic dimension to these issues. Since many employees have an operational or support manufacturing roles tend to be less skilled, role. Helen Frewin explains, “If you’re working individuals may feel less likely to be developed in a betting shop, the career path is to shop and get promotion. “The limited number of manager, area manager, then regional manufacturing job opportunities in the wider manager. You know the training programmes employment arena may influence these and promotion criteria on the career path. perceptions,” he notes. In support functions across the industry it is a lot less clear how it works.” Financial Professional Benchmark Leisure Manufacturing Services Services h I believe that the promotion system is fair 59% 61% h71% 61% 44% I am satisfied with the training & development h 70% h79% 74% 69% 63% I have received from the company l am happy with my opportunities 67% h76% 71% 66% h 55% for career development Copyright 2009 Expert Training Systems plc
  6. 6. Conclusions 6 1. There is a clear disparity between The differences between For others, it may owe more to the experiences of people working employees valuing their managers’ scores to different questions in different sectors. Broadly, financial efforts which they personally services employees are happier with are highly suggestive experience. many dimensions of performance of underlying trends: management than employees of 4. Finally, doubts persist about whether manufacturing companies. 2. Employees are dissatisfied with the the promotion system is fair. From Financial services firms are familiar ways in which their contributions the views presented here, the roots with audited processes and may are appraised. This suggests that of this dissatisfaction are a lack of be more used to working within companies need to re-visit this topic transparency, limited opportunities a performance system. These to explore issues, perhaps with for career development and companies have high-performance paper-based processes or an online inconsistent managerial support. cultures focused on the individual. system. Research suggests that The solutions to this challenge may companies which automate their lie in greater support for individuals Given the serious economic difficulties performance management are more and their managers, clearer career in most countries today, it may seem than twice as likely to be satisfied paths and a culture of empowered unusual to present financial services with their current process than employees. This could be facilitated as exemplars of performance companies that have not done so.8 by a common technology platform management. However, you can Also, the link is far clearer between for employees to publish their infer that the process delivered automation and greater corporate profiles, access careers and exactly what was intended (i.e. performance (including lower costs).9, 10 see open roles. short-term gains) and the lesson We recommend companies review is to be careful what you ask for this option. ecause you might just get it. The factors leading to individual survey 3. Employees are enthusiastic about scores are complicated and dynamic; the support they get from their line they can’t be neatly summarised. managers. Does this suggest that To uncover the key issues and identify we have developed a managerial improvements in performance class whose teams have confidence management practice will require in their leadership? For some, every company to interpret their own it highlights effective investment data against sector and all-company in leadership development. benchmarks. 8. The Employee Performance Management Benchmark Report: Managing Human Capital for a Competitive Edge. Aberdeen Group 2006. 9. Employee Performance Management and Talent management in mid-size companies and larger enterprises. Aberdeen Group 2007. 10. Managing employee performance. Aberdeen Group 2008. Copyright 2009 Expert Training Systems plc