Performance management survey

Research
S O C I E T Y F O R H U M A N R E S O U R C E M A N A G E M E N T
Performance Management SurveyPerformance Management Survey

1
3 About This Report
4 Sponsors
5 A Message from the SHRM Foundation
6 Executive Summary
7 Survey Results
7 Overall Characteristics of Performance Management Systems
7 System Objectives: Employees Come First
8 Satisfied With Appraisals; Dissatisfied With Development
9 More Executive Support Required
9 Top Effectiveness Measures
11 System Components Are Integrated
11 Planning and Evaluation
11 Performance Planning and Evaluation: Executives Have the Edge
12 Development and Career Planning: A Need to Focus on the Future
13 Development
13 Classroom Training Popular and Preferred
14 The Fully Developed Executive?
15 Lack of Training in Feedback and Coaching
15 Rewards: Performance Pay Common At All Levels
15 Technology Industries: Champion for Non-Exempt Employees
16 The Future: More 360-Degree Feedback
18 Conclusion
19 Demographics
20 A Message from Personnel Decisions International
21 Sample Questionnaire
26 Appendix
SHRM®
/PDI Peformance Management Survey
© Society for Human Resource Management and Personnel Decisions International
ContentsContents

3
T
he Society for Human Resource Management
(SHRM), with partial funding from the
SHRM Foundation, and Personnel Decisions
International (PDI) co-sponsored the 2000 Perfor-
mance Management Survey to gather information on
performance management in today’s workplace.
The following report provides an analysis of the sur-
vey results, based on the responses of 480 human
resource (HR) professionals.
The traditional focus of performance management
systems has been on performance planning and evalu-
ation, rewards and discipline. In developing this sur-
vey, SHRM and PDI decided to focus on a more con-
temporary viewpoint of performance management. In
addition to the traditional aspects, this survey covers
development and career planning, feedback, coach-
ing, training and development methods.
The study objectives were to:
• measure current and best practices in perfor-
mance management;
• measure how organizations view the effectiveness
of their current performance management systems
overall and of specific performance management
tools; and
• forecast where activity will be shifting in the near
future.
SHRM and PDI decided to survey SHRM mem-
bers in organizations that were most likely to have
performance management systems in place–those
organizations with 100 or more employees. In July
2000, questionnaires were faxed to 2,710 SHRM
members: one-third each from organizations with
100-499 employees, 500-2,499 employees and
2,500+ employees. Respondents could choose
between two survey completion methods: paper or
online. Of the 480 HR professionals responding to
the questionnaire, 75% completed the paper survey
and 25% completed the web survey.
The survey report contains numerous tables
and charts that capture the participants’ responses.
Several comparisons based on organization size are
made throughout the report. To see key data cate-
gorized by organization size, please visit either of
the following web sites: www.shrm.org/surveys/ or
www.personneldecisions.com. In addition,
throughout the report readers are posed questions
about their own organizations’ performance man-
agement practices in order to enhance the useful-
ness of the survey results. Also, the report includes
a copy of the survey questionnaire and an appen-
dix that contains white papers relating to perfor-
mance management.
SHRM®
About This ReportAbout This Report

4
T
he Society for Human Resource Manage-
ment (SHRM) is the leading voice of the
human resource profession. SHRM pro-
vides education and information services, con-
ferences and seminars, government and media
representation, online services and publications
to more than 140,000 professional and student
members throughout the world. The Society,
the world’s largest human resource manage-
ment association, is a founding member of the
North American Human Resource Management
Association (NAHRMA) and the World Federa-
tion of Personnel Management Associations
(WFPMA).
The SHRM Foundation is a non-profit organiza-
tion established in 1966 to fund and support
applied research, publications, scholarships and
educational programs to help HR professionals and
their employers prepare for the future. The Foun-
dation’s goal is to continuously improve standards
of practice and performance for the HR profession
and to help HR leaders stay current with the latest
developments and trends.
Personnel Decisions International (PDI) is a
global human resources consulting firm. PDI has
helped client organizations meet their business
challenges through integrated solutions to human
resource needs since 1967. PDI works in partner-
ship with clients to:
• define successful performance and identify the
capabilities needed to achieve it.
• measure performance and capabilities, and evalu-
ate potential.
• develop the capabilities needed to be successful–
now and in the future.
PDI’s goal is to help clients build effective organiza-
tions and gain competitive advantage through wise-
ly choosing and effectively developing their most
important asset–people. For more information
regarding PDI, see “A Message from Personnel
Decisions International” following the survey report
on page 20.
A Report from the SHRM®
Survey Program
SponsorsSponsors

5
I
t’s a great time to be a human resource profes-
sional. Companies today recognize that people
are the competitive advantage, and HR is being
asked to play a strategic leadership role in shaping
their organization’s future. To do this, human
resource professionals will need to continually
expand their knowledge and competencies. That’s
why the SHRM Foundation is so important today.
Investing in Knowledge For Your Future
The SHRM Foundation is a 501(c)(3) non-profit
organization that promotes research and develop-
ment in the human resource field. The SHRM
Foundation advances the profession and increases
the knowledge and effectiveness of human
resource professionals through its funding of lead-
ing-edge human resource research, publications
and educational initiatives.
Sponsorship of the SHRM®
Survey Program
As a sponsor of the SHRM®
Survey program, the
SHRM Foundation is able to provide timely
research findings on important issues to SHRM
members on a regular basis. For example, the fol-
lowing SHRM and Personnel Decisions Internation-
al (PDI) survey on performance management sys-
tems offers rich insights into the importance of
employee-oriented performance systems in today’s
highly competitive work environment.
The survey findings reveal that employees today
want to know the answer to the question made
famous by Ed Koch, former Mayor of New York
City: “How am I doing?” Like Koch, employees
want feedback about their performance and what
the organization expects of them. Furthermore,
employees want information about what they need
to do to develop as leaders and to increase their
value as employees. This important survey provides
food for thought for HR professionals especially
the inclusion of development as part of perfor-
mance management systems.
Foundation-Related Research Projects
The SHRM/PDI survey on performance manage-
ment systems is part of the larger human resource
issues on productivity and career development. The
SHRM Foundation is particularly interested in
understanding more about the attitudes of employ-
ees today, especially in relationship to the organiza-
tion. For example, here are two Foundation
research projects currently underway that explore
this issue in more detail:
CChhaannggiinngg NNaattuurree ooff tthhee EEmmppllooyymmeenntt RReellaattiioonnsshhiipp: by
Lynn M. Shore, Ph.D., Lois E. Tetrick, Ph.D., and Sandy
J. Wayne, Ph.D.
In the competition for talent, it is increasingly important
for organizations to understand the changing nature of
the employment relationship. The employment relationship
refers to employees’ perceptions of what they owe the organi-
zation and what the organization owes them in return.
The proposed research examines how HR practices help
form the employment relationship, which in turn, influ-
ences organizational outcomes (commitment, performance,
citizenship, turnover).
VVoolluunnttaarryy TTuurrnnoovveerr,, WWoorrkkffoorrccee PPrroodduuccttiivviittyy aanndd OOrrggaannii--
zzaattiioonnaall PPeerrffoorrmmaannccee:: IInnvveessttiiggaattiinngg tthhee RRoollee ooff HHRR MMaann--
aaggeemmeenntt IInnvveessttmmeennttss:: by Jason Shaw, Ph.D.
This research project investigates the relationships between
voluntary turnover and organizational performance in a
survey study of 1,200 motor carriers, supplemented by two
archival data sources. Results will enhance the scientific
knowledge base and provide value for practitioners mak-
ing HRM decisions that impact bottom line performance.
For More Information
Contact the SHRM Foundation for more informa-
tion about these and other research projects by e-
mailing speyton@shrm.org. Thank you for your
support of the SHRM Foundation and your com-
mitment to excellence in the profession.
SHRM®
SHRM FoundationSHRM FoundationA Message from theA Message from the

6
T
he 2000 Performance Management Survey
showed that performance management in
organizations is evolving from a system domi-
nated by the performance appraisal to a system that
focuses on employee development. However, the
transition is far from complete. Stronger executive
support for performance management and
increased employee participation in development
activities is needed in order for performance man-
agement systems to truly become a tool to help
attract and retain talent.
Overall Characteristics of
Performance Management Systems
Respondents gave top priority to performance
management system objectives focused on
employees rather than managers.
Respondents were significantly more satisfied with
traditional system components—performance
planning and evaluations, discipline—compared
with developmental components — leadership
development, development planning, 360-degree
feedback, and coaching.
Executive support for performance management
was lacking. HR professionals reported that many
executives and senior managers did not endorse
or even use their performance management system.
Planning and Evaluation
Seven out of 10 respondents reported that their
organizations had written performance plans for
most executives. Nearly two-thirds (64%) had perfor-
mance plans for most exempt employees, and nearly
half (45%) had plans for non-exempt employees.
Seventy-five percent of participants reported that
most of their executives had performance goals
linked to operating results, compared to 36% for
exempt employees and 17% for non-exempt
employees.
Development planning and career planning efforts
were limited. Twenty-five percent of participating
organizations had written development plans for all
executives, and a mere 8% of respondents’ organi-
zations had career plans for all executives.
Development
Classroom training was the most popular method
for professional development. Eighty-six percent of
respondents’ organizations conducted in-house
classroom training and 84% had employees partici-
pate in external classroom training.
On-the-job training and in-house classroom train-
ing were rated as the most effective professional
development methods. Independent study—both
traditional and online—was viewed as the least
effective development method.
Respondents reported that a lower percentage of
executives at their organizations —compared with
exempt and non-exempt employees—participated
in most development activities.
The Future
360-degree feedback was the only specific perfor-
mance management area where companies
planned to increase their activity during the next
year. 360-degree feedback was used by only one-
third of respondents’ organizations.
Survey Program
Executive SummaryExecutive Summary
•
•
•
•
•
•
•
•
•
•

7
I
n today’s tight labor market, the ability to
attract and retain valuable employees is a source
of competitive advantage for organizations in
every industry. One key to attracting and retaining
high-performing employees is to provide strong
support for their best performance: define and
establish clear performance goals; track progress
and give relevant, useful feedback; and develop
employees to meet or exceed the company’s goals
and their own personal career goals.
The traditional approach to providing such sup-
port has been in the form of performance manage-
ment systems. But what are HR professionals’
objectives for their performance management sys-
tems? What are the current and best practices in
performance management? How effective do
human resource professionals think that their cur-
rent performance management systems are – both
overall and with regard to specific tools? What are
the greatest challenges to improving performance
management systems? In which area of perfor-
mance management will HR professionals concen-
trate their efforts in the near future?
To answer these questions, the Society for
Human Resource Management (SHRM) and Per-
sonnel Decisions International (PDI) conducted
the 2000 Performance Management Survey. Survey
respondents shared their insights on current prac-
tices and anticipated activity in performance man-
agement. The following pages report the results of
this survey.
OVERALL CHARACTERISTICS OF
PERFORMANCE MANAGEMENT SYSTEMS
System Objectives: Employees Come First
Survey participants believed that performance man-
agement systems should focus on the employee.
Respondents were asked to place seven perfor-
mance management system objectives in rank order
based on their importance (“1” being most impor-
tant; “7” being least important). Results showed that
the highest ranked objectives for performance man-
agement systems were employee-oriented:
• Provide information to employees about percep-
tions of their performance.
• Clarify organizational expectations of employees.
• Provide information to employees about their
development needs.
Those objectives focused on providing informa-
tion to managers were ranked lower by survey
respondents. For example, documenting perfor-
mance for employee records and providing infor-
mation to managers for making promotion/demo-
tion decisions ranked sixth and seventh, respective-
ly (see Figure 1).
SHRM®
Survey ResultsSurvey Results
Figure 1: Objectives of Performance Management System
Average
Rank
Objectives
Source: SHRM®
/PDI 2000 Performance Management Survey
Clarify organizational expectations of employees
Identify developmental needs
Gather information for pay decisions
Gather information for coaching
Document performance for employee records
Gather information for promotion decisions
Provide information to employees about their performance 2.8
2.8
3.7
4.0
4.2
4.6
5.2

8
Survey Program
Satisfied With Appraisals;
Dissatisfied With Development
Respondents were asked to rate their satisfaction
with each of 10 performance management system
components and their system as a whole. Respon-
dents were significantly more satisfied with tradi-
tional performance management system compo-
nents than with developmental components. For
example, a majority of respondents were either
satisfied or very satisfied with their organizations’
performance evaluations (61%), performance
planning (51%), and discipline (51%), while only
one in three were satisfied or very satisfied with
leadership development (38%), development
planning (34%), 360-degree feedback (33%), and
coaching (33%) (see Figure 2). This may be due to
the fact that organizations have been using tradi-
tional methods for a longer period of time, and
that many organizations have only recently started
thinking about development as part of their per-
formance management systems.
This presents a gap between what HR profes-
sionals ranked as their most important objectives
for their performance management systems and
how their systems are actually working. They tend-
ed to be less satisfied with the developmental areas
— precisely those areas critical to achieving their
objectives of providing information to employees
about perceptions of their performance and about
their development needs (e.g., 360-degree feed-
back, development planning and coaching).
If employees come first, should the focus of these systems
shift ttoo development from appraisal? Or can a system
accomplish both?
One-third (32%) of survey respondents were
unsatisfied or very unsatisfied with their overall
performance management system. This dissatisfac-
tion can largely be attributed to dissatisfaction
with the developmental components of the system
— leadership development, coaching, 360-degree
Source: SHRM®
20 %
40 %
60 %
80 %
51%
61%
51% 50% 49%
47% 46%
38%
34% 33% 33%
Figure 2: System Satisfaction
Performance
Evaluation
Performance
Planning
Discipline
Informal
Feedback
Training
Overall
Rewards
Leadership
Development
Development
Planning
Coaching
360-degreeFeedback
System Components
High
Low
PercentSatisfiedand
PercentVerySatisfied

9
SHRM®
feedback, and development planning. Many sur-
vey respondents recognized that employee devel-
opment needed to be viewed as a retention strate-
gy. Employees continue working for organizations
where they feel they are: being adequately chal-
lenged, learning new skills and capabilities, sup-
ported and coached by their manager, and pro-
gressing toward their career goals.
More Executive Support Required
Clearly, executive support of performance man-
agement is critical to system success. However,
results showed that respondents believed such sup-
port was absent. In an open-ended question,
respondents were asked to list the greatest chal-
lenge to improving their performance manage-
ment system. Many survey respondents focused on
executive/management support. For example,
one in four respondents (22%) explicitly men-
tioned that their greatest challenge was lack of
support/endorsement from top management,
17% reported that their performance manage-
ment system was undervalued in the company,
and 14% stated that lack of system use by manage-
ment was an obstacle (see Figure 3).
Survey results showed that there is room for
improvement with regard to executive support of
performance management systems at respondents’
organizations. At 42% of participating organiza-
tions, executives did not review the performance
management system at all (see Figure 4). Survey
respondents recognized that executives needed to
actively use the system and publicly support it in
order for the system to have credibility.
How would a change in executive behavior toward per-
formance management improve its results? What would
you have executives do differently?
Top Effectiveness Measures
Respondents were asked in an open-ended ques-
tion how the effectiveness of their performance
management system was measured. Thirty percent
0%
5%
10%
15%
20%
25%
22%
17%
14%
13% 13%13%
11%
Percentof
Organizations
Source: SHRM®
Figure 3: Future Challenges
Lackofupper
managementsupport
Performancemanagement
undervaluedincompany
Lackofuseby
management
Difficulttocreate
performancegoals
Lackoftraining
Requirenew/upgraded
system
Requirestoo
muchtime

10
Survey Program
0%
10%
20%
30%
40%
50%
60%
Sr. Management
HR Management
42%
19%
15%
12%
52%
37%
17%
6%
Percentof
Organizations
Figure 4: Review by Management
Source: SHRM®
Frequency of Review
Not Reviewed Biennial Annual More Frequent
0%
5%
10%
15%
20%
25%
30%
35%
30%
22%
19% 18%
12%
8% 7% 7%
5%
3% 2% 2%
Percentof
Organizations
Figure 5: Measures of System Effectiveness
InformalFeedback
FormsCompletion
Comparedwith
PerformanceGoals
SurveyorFocus
Group
Comparedwith
BusinessGoals
Informal
Discussions
Turnover/Retention
ReviewRatings
Distribution
Comparedwith
Compensation
TooNewto
Measure
TrainingNeeds
Productivity
Changes
Source: SHRM®
Method

11
SHRM®
of respondents listed informal feedback and 22%
listed forms completion/timeliness of forms as the
method used to measure effectiveness of the sys-
tem. Other measures are listed in Figure 5.
System Components Are Integrated
When asked how well their performance manage-
ment system components were integrated, 44% of
respondents reported that their components were
integrated or well integrated. Thirty-eight percent
of respondents reported an average level of inte-
gration for system components (see Figure 6).
PLANNING AND EVALUATION
Performance Planning & Evaluation:
Executives Have the Edge
Seven out of 10 respondents reported that their
organizations had written performance plans for
most — at least three out of four — of their exec-
utives. Nearly two-thirds (64%) of respondents’
organizations had performance plans for most
exempt employees, and nearly half (45%) had
plans for most non-exempt employees.
A disparity between executives and non-exempt
employees existed in terms of linking perfor-
mance goals to operating results. Seventy-five per-
cent of participants reported that most — at least
three out of four — of their executives had perfor-
mance goals linked to operating results. Thirty-six
percent of participating organizations linked per-
formance goals to operating results for exempt
employees and 17% of respondents’ organizations
had performance goals linked to operating results
for non-exempt employees. While it is true that
executives often have more influence related to
reaching operating results, non-exempt employees
may feel disenfranchised because fewer of them
have stated performance goals that are directly
connected to business results.
If non-exempt employees are typically a large percentage of
the employee population and so few have goals related to
operating results, is the linkage really necessary?
Survey data showed equality across job levels as to
who has input into performance evaluations.
Approximately half of executives (55%), exempt
38%
29%
15%
14%
4%
Integrated
AverageWeakly
Integrated
Not
Integrated
Well
Integrated
Source: SHRM®
Figure 6: Integration of System

12
Survey Program
(61%), and non-exempt (53%) employees had
input into their own performance evaluations.
Across all job levels, the direct supervisor had the
most input into performance evaluations (Figure 7).
Performance plans and evaluations were largely
done on an annual basis, with 85% of respon-
dents’ organizations preparing performance evalu-
ations and reviewing performance plans/goals
annually for all employees. This leaves an oppor-
tunity for organizations/managers to review per-
formance more often than once a year to check
progress and to avoid annual “surprises” during
performance review conversations.
Are there “pockets” of success in your organization that
can be explained by the informal impact of a great man-
ager? What does this say about formalizing the review
process — is it really necessary? How can you transfer
this success to other parts of your organization?
Development & Career Planning:
A Need to Focus on the Future
According to survey results, 25% of participating
organizations had written development plans for
all executives compared with 17% for all exempt
employees and 12% for all non-exempt employ-
ees. These percentages were even lower for orga-
nizations with 100-499 employees (23% for execu-
tives, 13% for exempt and 9% for non-exempt).
Development plans were typically prepared and
reviewed annually.
Career plans were even less commonly used
than development plans. Sixty-three percent of
respondents reported that their organizations did
not have career plans for executives compared
with 66% for exempt employees and 73% for non-
exempt employees. A mere 8% of respondents’
organizations had career plans for all executives
and only 3% had career plans for all exempt and
non-exempt employees.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Executives
Exempt
Non-Exempt
93%
96%
96%
33%
49%
35%
55%
61%
53%
17%
16%
10%
14%
12%
4%
9%
13%
10%
9%
4%
5%
Percentof
Organizations
Group
Figure 7: Input into Appraisals
Supervisor
OtherManagement
Self
Peers
Reports
Customers
Others
Source: SHRM®

13
SHRM®
Organizations appear to be missing a key
opportunity to retain employees. Employees who
work for organizations that actively partner with
them to create development and career opportu-
nities are more likely to stay. This is supported by
a 2000 SHRM®
Retention Practices Survey finding that
a primary reason why employees voluntarily resign
from their positions is to pursue career opportuni-
ties elsewhere.
DEVELOPMENT
Classroom Training Popular and Preferred
Survey results showed that classroom training
reigns as the most popular method of professional
development. Eighty-six percent of respondents’
organizations conducted in-house classroom train-
ing and 84% had employees participate in exter-
nal classroom training. Coaching from managers
and on-the-job training/action learning ranked
next in terms of usage. The development method
used least by respondents was externally hired
coaches (28%) (see Figure 8). Organizations with
2,500+ employees had the highest usage level for
all development methods except external class-
room training. Smaller organizations (with 100-
499 employees) had the lowest usage level for in-
house classroom training (83%), traditional inde-
pendent study (53%), online independent study
(34%), and externally hired coaches (17%).
Respondents were asked to rate the effectiveness
of eight professional development methods on a
scale from 1 to 5, where 1 is “not at all effective”
and 5 is “very effective.” Survey respondents
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
86% 84%
76% 74%
58%
44%
34%
28%
Percentof
Organizations
Figure 8: Development Method Usage
Source: SHRM®
In-house
Classroom
External
Classroom
Manager
Coaches
On-the-jobTraining/
ActionLearning
Traditional
Independent
Study
Online
Independent
Study
Job
Assignments
External
Coaching

14
Survey Program
viewed on-the-job training and in-house classroom
training as the most effective professional develop-
ment methods, with an average 3.90 effectiveness
rating. They viewed independent study — both
traditional and online — as the least effective
development method (see Figure 9).
What keeps people from actively pursuing their own
learning through independent study?
Although classroom training is popular and
preferred, employees are not spending a signifi-
cant amount of time in the classroom. On average,
exempt employees spent 2.6 days per year in class-
room training compared to 2.3 days for executives
and 2.1 days for non-exempt employees. Employ-
ees at organizations with more than 2,500 employ-
ees spent more time in the classroom on average
compared with smaller organizations (see Figure
10).
The Fully Developed Executive?
Compared to exempt and non-exempt employees,
fewer respondents reported that executives at
1
2
3
4
5
3.90
3.60
3.30 3.27
3.85 3.79 3.78 3.77
Figure 9: Development Method Effectiveness
AverageRating
Action
Learning/
OTJTraining
In-house
Classroom
Manager
Coaches
External
Classroom
Job
Assignments
External
Coaching
Online
Independent
Study
Traditional
Independent
Study
Source: SHRM®

15
SHRM®
their companies participated in development
activities such as in-house classroom training, inde-
pendent study, coaching provided by internal per-
sonnel, job assignments, and action learning/on-
the-job training. The only development method
that executives used more than other job levels
was externally hired coaches — of the respon-
dents who do hire external coaches, 90% reported
that executives at their organizations use external
coaching as a developmental tool.
Exempt employees led the way in terms of par-
ticipating in development activities. Nearly all
respondents reported that exempt employees at
their organizations participated in the following
development methods: in-house classroom train-
ing (95%), online independent study (94%),
external classroom training (93%), coaching pro-
vided by managers (92%), and traditional inde-
pendent study (91%).
Non-exempt employees had the highest level of
participation for on-the-job training (91%), and
the lowest level of participation for external class-
room training (74%) and external coaches (26%).
Lack of Training in Feedback and Coaching
On average, approximately half of executives,
managers and supervisors in participating organi-
zations were trained in providing feedback. Three
out of four respondents’ organizations (75%)
used internal coaching, yet only one-third of exec-
utives, managers and supervisors at their organiza-
tions were trained in coaching others. The chal-
lenge for organizations is to insure that all execu-
tives, managers and supervisors are using best
practices and appropriate methods in providing
feedback and coaching.
If your managers are trained in coaching and giving
feedback, how well are they doing it? If they need improve-
ment, what will it take to help them be their best?
Rewards: Performance Pay
Common at All Levels
Most participating organizations used perfor-
mance bonus pay at all levels. For example, 86%
used bonus pay for executives, 83% used it for
exempt employees and 68% used it for non-
exempt employees. The usage level for perfor-
mance bonus pay was even higher at large organi-
zations and those in the technology industry. The
most popular types of performance bonus pay for
all levels were based on individual performance,
profit sharing, and team performance.
Technology Industries: Champion for Non-
Exempt Employees
Technology industries (e.g., finance, insurance,
high tech/computers, and telecommunications;
Organization Size
Job Level
< 100
Employees
(n=26)
100-499
Employees
(n=142)
500-2,499
Employees
(n=126)
2,500 +
Employees
(n=160)
Overall
Survey
Average
(n=454)
Executives
Exempt
Non-Exempt
15.8 hours
21.9 hours
16.0 hours
16.3 hours
19.3 hours
17.2 hours
16.7 hours
18.6 hours
14.8 hours
22.5 hours
24.2 hours
19.1 hours
18.6 hours
21.0 hours
17.2 hours
Source: SHRM®
Figure 10: Average Annual Classroom Training Hours, by Job Level

16
Survey Program
organizations producing or highly dependent on
rapidly changing technology) as a group led the
way in using performance management tools for
non-exempt employees, according to survey
results.
The technology industry group also had the
highest usage and satisfaction levels for all devel-
opment methods other than job assignments. Not
surprisingly, the biggest usage gap was in online
independent study. Fifty-seven percent of technol-
ogy organizations reported using online indepen-
dent study, compared with 41% of manufacturing
organizations and 42% of services organizations.
The technology industry group also had the high-
est average annual classroom training hours for all
levels (see Figure 11).
The Future: More 360-Degree Feedback
According to survey results, 360-degree feedback
was used by only one-third of respondents’ organi-
Figure 11: Usage of Performance Management Tools, by Industry Group
Source: SHRM®
Performance Management Tool
Technology
Industry Group
(n=99)
Manufacturing
Industry Group
(n=166)
Services/Other
Industry Group
(n=192)
Performance plans for most*
non-exempt employees
60% 37% 46%
Development plans for most*
26% 17% 16%
Career plans for
35% 27% 21%
Link performance goals to operating
results for non-exempt employees
77% 63% 53%
Performance pay for
89% 71% 53%
Online independent study 57% 41% 42%
Classroom training, average annual
hours per employee
Executives
Exempt employees
Non-exempt employees
21 hours
26 hours
23 hours
18 hours
20 hours
16 hours
17 hours
20 hours
16 hours
*Denotes at least three out of four non-exempt employees

17
SHRM®
zations for executives (32%) and exempt employ-
ees (29%), and only one-fifth (18%) of respon-
dents’ organizations for non-exempt employees
(see Figure 12). Larger organizations (with 2,500+
employees) tended to use 360-degree feedback to
determine development needs and career plans.
Respondents from mid-sized organizations (500-
2,499 employees) reported the highest usage level
for determining pay changes. Smaller organiza-
tions (100-499 employees) tended to use 360-
degree feedback to evaluate performance.
Although current usage is low, the near future
looks bright for 360-degree feedback. Data shows
it is the only specific performance management
area where organizations planned to increase their
activity during the next year. This is especially true
for smaller organizations (with fewer than 2,500
employees). Longer term, there is opportunity for
organizations to shore up their efforts in the other
developmental areas that exhibited dissatisfaction
such as leadership development, development
planning and coaching.
Executives
Exempt
Non-exempt
68%
71%
82%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
32% 29%
18%
Figure 12: Usage of 360-Degree Feedback
Source: SHRM®
Percentof
Organizations
Usage
Does Not Use Uses

18
Survey Program
Conclusion
The 2000 Performance Management Survey showed
that performance management in organizations is
in transition from a system dominated by the per-
formance appraisal to a more comprehensive
human resource management system that
includes activities such as development and career
planning, leadership development, coaching and
360-degree feedback. However, the transition is far
from complete.
The biggest challenge facing HR professionals
as they make this transition is to gain executive
support for performance management systems.
Currently, many executives are not reviewing or
using the system, nor are they participating in
development activities as much as other job levels.
Executives need to be active “role models” for per-
formance management and publicly support it in
order for systems to have credibility.
According to survey results, the most important
performance management system objectives were
employee-focused. However, HR professionals
were not satisfied with system components that
were most likely to help employees improve their
performance — coaching, leadership develop-
ment, 360-degree feedback and development
planning. This dissatisfaction may be due to the
fact that many organizations have been using tra-
ditional methods (e.g. performance appraisals, dis-
cipline) for a longer period of time and have only
recently started to use developmental tools as part
of their performance management system.
Several performance management system
aspects require additional focus, including
increased support and review from senior manage-
ment, more emphasis on formal feedback systems,
development and career planning. These aspects
will allow the performance management system to
reach its full potential as a tool to fully utilize the
potential of the existing workforce, to retain cur-
rent employees and to attract additional talent as
necessary.

19
SHRM®
DemographicsDemographics
NNuummbbeerr ooff EEmmppllooyyeeeess –– TToottaall CCoommppaannyy::
Fewer than 100 employees 2%
100 to 499 employees 31%
1,000 to 2,499 employees 13%
2,500 to 4,999 employees 8%
10,000+ employees 20%
No response 5%
NNuummbbeerr ooff EEmmppllooyyeeeess –– TThhiiss LLooccaattiioonn::
Fewer than 100 employees 15%
1,000 to 2,499 employees 11%
10,000+ employees 2%
No response 4%
UUnniioonniizzaattiioonn ((eexxeemmpptt eemmppllooyyeeeess iinn uunniioonnss))::
None 59%
Less than 10% of exempt
employees in unions 12%
11 to 50% of exempt
More than 50% of exempt
No response 6%
TTyyppee ooff OOrrggaanniizzaattiioonn::
Manufacturing 35%
Finance/Insurance 13%
Health Care 11%
Services–profit 9%
High Tech/Computers 5%
Nonprofit 4%
Transportation 4%
Wholesale/Retail 4%
Education 3%
Government 3%
Telecommunications 2%
Utilities 2%
Agriculture/Other 1%
No response 4%

20
A Message from Personnel Decisions
International (PDI)
In today’s workplace, “human capital” is the prima-
ry constraint in meeting organizational goals.
Attracting and retaining talented employees and
maximizing their performance have become of
paramount importance. Thus, the role of HR pro-
fessionals has never been more crucial to organiza-
tional success.
At PDI, we are committed to helping the HR
community succeed and believe that providing use-
ful information, such as the Performance Manage-
ment Survey, to HR professionals is our most
important role. We are proud and excited to co-
sponsor the 2000 Performance Management Survey
with SHRM, and are confident that the information
provided in this report has been helpful to you.
Our Performance Management Perspective
PDI is dedicated to advancing performance manage-
ment practices. We believe that a holistic approach
to performance management that focuses on defin-
ing, measuring and, most importantly, developing
capabilities is key to success. Our goal is to help our
clients to advance their performance management
processes so far that performance evaluations are no
longer needed — employees will receive feedback
and develop capabilities daily, thereby eliminating
the need for an annual evaluation.
About PDI
Personnel Decisions International (PDI) is a global
human resources consulting firm. Our services and
tools are developed out of extensive research and
more than 30 years of experience with client orga-
nizations around the world. We know our services
are effective because of our on-site, validated results
with real clients in real business situations.
We work in partnership with our clients to pin-
point their business needs, then bring together PDI
consulting, services and tools to meet those needs.
The solutions we create can be applied to individu-
als, teams and organizations. PDI solutions help
our clients to define, measure and develop capabili-
ties for successful performance.
PDI has more than 20 operating offices around
the world. Each office is staffed with consulting psy-
chologists experienced in the cultures of their par-
ticular region. Every PDI client is served by a team
of people selected from one or several offices for
the expertise required by the client’s business need.
For More Information:
Contact PDI for more information about our capa-
bilities related to performance management or
other business challenges. Call 1-800-633-4410 or
visit our web site at www.personneldecisions.com
for further information.
Survey Program
A Message from PDIA Message from PDI

SHRM/PDI
Performance Management Survey
Summer 2000
Thank you for participating in the SHRM/PDI Performance Management Survey 2000.
The objective of this survey is to understand current practices in the entire area of
performance management, including performance planning and evaluation; development
and career planning; feedback, coaching, training and development, and rewards. All
responses are confidential.
Please complete the survey by July 28, 2000 and fax back to SHRM at (703) 836-0367 or mail to
SHRM, Survey Research, 1800 Duke Street, Alexandria, VA 22314. Or you may complete this
survey online at http://www.surveyhost.com/perform/. Your password is "survey".
If you have any questions about the survey, call Tom Eckstein or Sarah Kiecker, representatives for
PDI, at 800-750-4077.
1. Overall Characteristics of your Performance Management System
1a. Using the following scale, please rate your
satisfaction with the following parts of your
current performance management system.
(Check one box per row.)
Performance planning/goal setting . . . . .
Very
Unsatisfied . .Neither .
Very
Satisfied NA
Performance evaluation . . . . . . . . . . . . . . . . .
Development planning . . . . . . . . . . . . . . . . .
360-degree feedback . . . . . . . . . . . . . . . . . .
Informal feedback . . . . . . . . . . . . . . . . . . . . .
Coaching and/or Mentoring . . . . . . . . . . . . .
Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leadership development . . . . . . . . . . . . . . . .
Rewards . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discipline . . . . . . . . . . . . . . . . . . . . . . . . . . .
Overall performance management system . .
1b. How frequently is the effectiveness of your
Performance Management System reviewed
by
Senior Company Executives? . . .
Quarterly
Semi-
Annually Annually
Every 2
Years
Not
Reviewed
Human Resources? . . . . . . . . . . . . . . .
1c. How is the effectiveness of your Performance Management System measured?
1d. In your opinion, how well integrated with each other are the
components of your performance management system
(performance planning and evaluation; development and career
planning; feedback, coaching, training and development, and
rewards)? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Not
Integrated
2 3
Average
4 5
Well
Integrated

1e. Rank the importance of the following performance management system
objectives. Place a "1" next to the objective that's most important, a "2"
next to the objective that's second most important, etc. If any item listed
below is not an objective of your organization's performance management
system, check the box labeled "NA" (not applicable) in the second column.
Clarify organizational expectations of employees . . . . . . . . . . . . . .
NA
Provide information to managers for coaching purposes. . . . . . . . . . . . .
Provide information to managers for making pay decisions . . . . . . . . . .
Provide information to managers for making promotion/demotion
decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provide documentation on performance for employee records. . . . . . . .
Provide information to employees about perceptions of their
performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provide information to employees about their development needs. . . . .
Other
2. Characteristics of Performance Planning/Goal Setting and Evaluation
2a. What percentage of employees from each of
the following groups have WRITTEN
performance or goal plans? (Check one box
per row.)
Senior Executives . . . . . . . . . . . . . .
None
<
10%
10% -
24%
25% -
49%
50% -
74%
75% -
99% All
Exempt . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Exempt . . . . . . . . . . . . . . . . . . . . .
2b. How frequently are performance evaluations
conducted for employees in the following groups?
Senior Executives . . . . . . . . . . . . . . . . . . .
Quarterly
Semi-
annually Annually
Every 2
Years Other
Exempt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Exempt . . . . . . . . . . . . . . . . . . . . . . . . . .
2c. How frequently are performance plans/goals
reviewed with employees from the following
groups? (Check one box per row.)
Senior Executives . . . . . . . . . . . . . . . . . . .
Quarterly
Semi-
annually Annually
Every 2
Years Other
Exempt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Exempt . . . . . . . . . . . . . . . . . . . . . . . . . .
2d. What percentage of performance plans for
employees in the following groups have
performance targets directly connected to
operating results? (Check one box per row.)
None
<
10%
10% -
24%
25% -
49%
50% -
74%
75% -
99% All
Exempt . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Exempt . . . . . . . . . . . . . . . . . . . . .
2e. Who has direct input into the performance
evaluation process? (Check ALL that
apply in each row.)
Senior Executives evaluations . .
Direct
Super-
visor
Other
Manage-
ment Self Peers
Direct
Reports
Cust-
omers Others
Exempt evaluations . . . . . . . . . . . . . .
Non-Exempt evaluations . . . . . . . . . .
Complete and return by July 28, 2000

3. Characteristics of Development and Career Planning
3a. Percent of employees from each group with
a WRITTEN development plan for next 12
to 18 months? (Check one box per row.)
None
<
10%
10% -
24%
25% -
49%
50% -
74%
75% -
99% All
Exempt . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Exempt . . . . . . . . . . . . . . . . . . . . .
3b. How frequently are development plans prepared
for each group? (Check one box per row.)
Senior Executives . . . . . . . . . . . . . . . . . .
Quarterly
Semi-
Annually Annually
Every 2
Years
Not
Reviewed
Exempt . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-exempt . . . . . . . . . . . . . . . . . . . . . . . . .
3c. How frequently are development plans reviewed
for each group? (Check one box per row.)
Senior Executives . . . . . . . . . . . . . . . . .
Quarterly
Semi-
Annually Annually
Every 2
Years
Not
Reviewed
Exempt . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-exempt . . . . . . . . . . . . . . . . . . . . . . . . .
3d. Percent of employees from each group with
a WRITTEN career plan for next 2 to 5
years? (Check one box per row.)
None
<
10%
10% -
24%
25% -
49%
50% -
74%
75% -
99% All
Exempt . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Exempt . . . . . . . . . . . . . . . . . . . . .
4. Characteristics of Feedback, Coaching and T&D
4a. Which of the following development methods are used in your organization?
(Check yes or no in the first two columns below for all that are used.)
4b. For each method used in your organization, please indicate which employee groups participate.
(Check all groups participating in the last three columns below.)
In-house, instructor-led classroom programs . . . . . .
Yes No
Sr.
Execs. Exempt
Non-
exempt
External instructor-led classroom programs . . . . . . .
Independent study using traditional methods . . . . . .
Independent study using online materials . . . . . . . .
Externally-hired coaches . . . . . . . . . . . . . . . . . . . . .
Internal Coaches (HR, managers or other employees)
Systematic job assignments, job rotation . . . . . . . . .
Action Learning and other On-the-Job training . . . .
4c. How effective do you believe the following development methods are as used by your organization?
In-house, instructor-led classroom programs . . . . . . . . .
Not at all
Effective .
Somewhat
Effective .
Very
Effective NA
External, instructor-led classroom programs . . . . . . . . . .
Independent study using traditional methods . . . . . . . . .
Independent study using online materials . . . . . . . . . . . .
Externally-hired coaches . . . . . . . . . . . . . . . . . . . . . . . . .
Internal coaches (HR, managers, other employees) . . . .
Systematic job assignments, job rotation . . . . . . . . . . . .
Action Learning and other On-the-job training . . . . . . . .

4d. Percent of employees from each of the
following groups who are trained to provide
feedback to others? (Check one box per
row.)
None
<
10%
10% -
24%
25% -
49%
50% -
74%
75% -
99% All
Managers . . . . . . . . . . . . . . . . . . . . . . .
First-Line Supervisors . . . . . . . . . . . . .
4e. Percent of employees from each of the
following groups who are trained to coach
or mentor others? (Check one box per
row.)
Senior Executives . . . . . . . . . . . . .
None
<
10%
10% -
24%
25% -
49%
50% -
74%
75% -
99% All
Managers . . . . . . . . . . . . . . . . . . . . . . .
First-Line Supervisors . . . . . . . . . . . . .
4f. Average number of hours of overall classroom
training provided per year for each employee group?
Senior Executives . . . . . . . . . . . . . . . . . . . .
None
< 10
hrs.
11 -
20 hrs.
21 -
40 hrs.
41 -
60 hrs.
> 60
hrs.
Exempt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Exempt . . . . . . . . . . . . . . . . . . . . . . . . . . .
4g. What percent of the following employee
groups receive formal 360-degree
feedback? (Check one box in each
row.)
Senior Executives . . . . . . . . . .
None
<
10%
10% -
24%
25% -
49%
50% -
74%
75% -
99% All
Exempt . . . . . . . . . . . . . . . . . . . . .
Non-Exempt . . . . . . . . . . . . . . . . .
4h. How is 360-degree feedback used
for each group? (Check all that
apply.)
Senior Executives . . . . .
Evaluate
performance
Determine
development
needs
Determine
pay changes
Determine
career plan Do not use
Exempt . . . . . . . . . . . . . . . .
Non-Exempt . . . . . . . . . . . .
5. Characteristics of Rewards
5a. What basis does your organization use for performance bonus pay for the following employee
groups? (Check all that apply per row.)
Senior Execs. . . . . .
Individual
Team
Performance
Competency
or Skill Profit Stock None Other
Exempt . . . . . . . . . .
Non-Exempt . . . . . .
5b. Describe other performance bonus pay methods used.

6. Future Activities
6a. Using the following scale, please rate how much emphasis your
organization will place on the following parts of its performance
management system in the next year.
Performance planning/goal setting . . . . . . . . . . . . . . . . . . . . . . . . . 1
Less
2 3
About
the same
4 5
More
Performance evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 3 4 5
Development planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 3 4 5
360-degree feedback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 3 4 5
Informal feedback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 3 4 5
Coaching and/or Mentoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 3 4 5
Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 3 4 5
Leadership development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 3 4 5
Rewards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 3 4 5
Discipline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 3 4 5
Overall performance management system . . . . . . . . . . . . . . . . . . . . . . 1 2 3 4 5
6b. What do you believe is the greatest challenge to improving your organization's current performance
management system?
7. Organization Characteristics
7a. Number of Employees
in This Location
Less than 100
100 - 499
500 - 999
1,000 - 2,499
2,500 - 4,999
5,000 - 9,999
10,000 and over
7b. Number of Employees
in Entire Organization
Less than 100
100 - 499
500 - 999
1,000 - 2,499
2,500 - 4,999
5,000 - 9,999
10,000 and over
7c. Percent of Employees in
Unions
None
Less than 10%
11 to 50%
Over 50%
7d. Primary Industry
Computers, components and
software
Manufacturing - non-durables
Manufacturing - durables
Telecommunications
Transportation
Utilities
Wholesale/Retail
Finance
Insurance
Health
Services -- profit
Services -- non-profit
Education
Government
Other:
8. Optional
Name: Company:
Phone:
May we contact you if we need to
clarify any of your answers? . . . . . . . . Yes No
Please fax your responses to 703-836-0367 or mail it to SHRM, Survey Research, 1800 Duke Street,
Alexandria, VA 22314 before July 28, 2000.
Results will be available in October, 2000. SHRM members may obtain the report summarizing survey
results at no cost at www.shrm.org or may purchase a copy from the SHRM Store.
Thank you for your time and experience.

26
C
ompetition abounds in the business market-
place as well as in the talent marketplace.
CEO after CEO calls for increased individual
and organizational performance, while at the same
time organizations wage campaigns to win the
hearts and minds of employees and candidates.
With this increased emphasis on performance
improvement, competition for employees, and
intense drive for increased retention, one would
think that organizations would get better at perfor-
mance management which is one of the primary
organizational processes that can result in real, tan-
gible improvement in performance, attraction, and
retention of employees. Yet, performance manage-
ment retains its untapped potential because organi-
zations continue to limit it to an HR administrative
system which remains surprisingly unrelated to the
current or future business needs and continue to
focus much of the performance management
process on activities which actually serve to demoti-
vate employees.
Strong, effective performance management systems
are one key to attracting and retaining high-value
employees. Employees perform best – and stay with
their employer – when they receive the proper sup-
port from management, and when they know that
their efforts will be rewarded. In an effective per-
formance management system, goals are clearly
defined, progress is tracked, feedback is provided
regularly, performance is evaluated fairly and equi-
tably, and career and development opportunities
are available.
Despite its heightened importance, many compa-
nies fail to provide strong performance manage-
ment systems. PDI believes that organizations can
dramatically improve the effectiveness and rele-
vance of their performance management processes
by creating the foundation of the system in the
organization’s competitive strategy and considering
that performance management actually begins
before employees even join the organization.
PDI’s Talent Pipeline (Fig. C) illustrates that by
aligning the business and human capital strategies
of the organization from the start, a company
increases its ability to identify the right people,
make a compelling offer, develop a talent-building
culture, and implement a strategy for maintaining
great talent.
With the Talent Pipeline in mind, two major factors
point toward the problems in today’s performance
management systems:
• Few performance management systems are linked
to the overall organization’s strategy or objectives.
For example, if a company’s goal is to develop digi-
tal commerce capabilities, it’s vital for employees’
individual performance plans to include develop-
ing their personal digital commerce abilities.
Unless this connection between personal and com-
pany goals exists, employees can easily feel that they
don’t make a difference to the overall goals and
success of their employer.
• Too many performance management systems are
focused on measurement rather than development.
Emphasizing evaluation and expectations rather
than personal development puts employees on the
defensive and demotivates them to participate
actively in the process.
Survey Program
PERFORMANCE MANAGEMENT SYSTEMS:
A Vital Key to Retention
By Diane Marentette
Courtesy of Personnel Decisions International
A PDI White Paper

27
SHRM®
There is a better way to get the most from a com-
pany’s human capital and develop a culture in
which employee training and development is
linked directly to the organization’s goals. But
knowing what is wrong with today’s performance
management systems and fixing them are two dif-
ferent things. To help find the way, we first need
to explore the weaknesses of traditional perfor-
mance management systems.
Traditional Performance
Management Systems
A common blueprint for performance manage-
ment systems includes four phases: performance
planning, ongoing coaching and feedback,
appraisal of accomplishments, and identifying
areas for improvement. Typically, these elements
follow an annual cycle.
The cycle, as illustrated here (Fig. A), begins with
a planning process to set expectations for both the
employee and employer. Throughout the year, the
employee’s performance is guided through ongo-
ing coaching and feedback. Toward the end of the
cycle, the employee’s performance is evaluated.
Finally, this evaluation is shared with the employee
to help improve his or her performance.
But something crucial is missing from this blue-
print: This traditional system is not configured to
directly support the employers’ overall goals and
expectations. Beginning employee performance
planning without understanding an organization’s
strategy is like pouring concrete for a new build-
ing’s foundation before the blueprint is finished.
Securing a strategic foundation will not only build
employees’ confidence in the relevance of the
process, it will also make it possible to link the
achievement of employees’ performance goals
directly to the organization’s operating results.
Currently, this isn’t happening very often, even in
the upper echelons of organizations.
To lay the foundation properly, PDI contends a
company must identify its strategic business goals,
THE TRADITIONAL PERFORMANCE MANAGEMENT SYSTEM
Performance
Planning
Identifying areas Ongoing coaching
for improvement and feedback
Appraisal of
Accomplishments
Figure A

28
Survey Program
translate them into business plans, and incorpo-
rate them into a “Performance Model” that
defines the performance needs required to
achieve the organization’s expectations and goals.
(See Fig. B)
This performance model will spur top manage-
ment to recognize the needs of the organization
in human capital terms and understand the
demands the organization will place on its employ-
ees. For example, if the organization’s business
goal is to grow aggressively in a highly competitive
market, performance models should emphasize
cultivating business development skills that the
company doesn’t yet have. The performance
model will also identify resources that must be
acquired or developed to reach those perfor-
mance expectations–this allocation of resources is
the true beginning of the performance manage-
ment cycle. In addition, linking organizational
goals with staff development will help attract exec-
utive support for performance management sys-
tems.
Performance Planning
The traditional system begins with a planning
process intended to reveal and clarify perfor-
mance expectations of both the employee and the
employer. Most organizations have a very struc-
tured planning process, with written goals for each
employee.
When done well, the goals laid out in the perfor-
mance plan are specific and comprehensive
enough for employees to truly understand the
organization’s needs. Often, performance plan-
Performance
Planning
Identifying areas Ongoing coaching
for improvement and feedback
Appraisal of
Accomplishments
Figure B
AN IMPROVED PERFORMANCE MANAGEMENT SYSTEM
Strategic Business Business
Goals Plans
Performance Model

29
SHRM®
ning is not done well, however. Overall, this
process can do well at clarifying expectations of
both employees and the employer. However, two
glaring problems complicate most performance
planning processes:
1. If a performance model doesn’t exist, individ-
ual employee goals may not be linked to the
performance needs of the organization. The
goals set during performance planning should
extend from the organization’s performance
needs as outlined in the performance model.
2. These goals are often simply handed to employ-
ees with little discussion of how achieving them
will fulfill the organization’s needs. Therefore,
employee buy-in to accomplish these goals may
be low, leading to limited enthusiasm to do the
work.
Ongoing Coaching and Feedback
Once goals have been established, the typical per-
formance management system requires the man-
ager to hold performance reviews with the employ-
ee periodically and to provide ongoing coaching
and feedback. This frequent communication also
supplies opportunities to revisit the goals and con-
sider any changes that should be made to reflect
changed circumstances.
Surprisingly, coaching and feedback aren’t often
regarded as very important. Few managers cur-
rently provide regular coaching and feedback, and
some simply don’t do it at all. And, even many
human resource professionals don’t consider
coaching to be an important objective of a perfor-
mance management system.
Appraisal of Accomplishments
Toward the end of the cycle, the employee’s per-
formance is evaluated. This information can be
used to benefit both the company and the employ-
ee, such as:
• to recognize employee accomplishments
• to make compensation decisions
• to determine development needs
But consider the sensitivity surrounding evalua-
tion. While it is important for employees to under-
stand their level of performance, it is human
nature for people to feel that they are doing a
good job–perhaps even a great job. It can be very
wounding for the ego should the performance
evaluation find differently. Feeling one’s efforts
are unappreciated–compounded by the compa-
ny’s failure to provide help for improvement
through coaching and development–demotivates
employees and can perpetuate subpar perfor-
mance.
Identifying Areas for Improvement
Typically, performance evaluation information is
shared with the employee to improve his or her
performance, usually through the use of a devel-
opment plan. Like performance planning, devel-
opment planning is often dictated by the manag-
er, whose suggestions for improvement are expect-
ed to be acted upon whether the employee
believes in it or not. Yet without the employee’s
agreement that improvement in a specific area is
necessary, it is very unlikely that any real improve-
ment will happen. What’s more, if these areas of
improvement are not linked closely to organiza-
tional goals, the employee will see even less reason
to work to improve.
Overall, there are two main weaknesses of the tra-
ditional performance management system. First,
employees are often not clear how their perfor-
mance goals link to the companies’ needs and

30
Survey Program
expectations — whether because no performance
model was created or because the link was not
explained to the employee. And secondly, not
enough value or effort is given to supporting the
employee’s ability to perform at their best.
A Better Way–PDI’s Talent Pipeline
While most traditional performance management
systems don’t even start to engage employees until
after they’ve been on the job for months, PDI
believes that optimizing employee performance
begins even before the person is hired.
Managers, co-workers and the general work envi-
ronment all affect employee performance. The
Talent Pipeline outlines five specific junctures that
have a critical impact on how well employees per-
form.
Attract
As soon as the performance model identifies a
need to fill or create a position, the company must
identify its current and future expectations for
that position. This will help the company define a
compelling value proposition for candidates and
market that message to the right audience.
The company needs to communicate that it
expects its employees to be constantly learning
and growing so they perform well in their current
and future roles. In return, the company offers its
employees the opportunity for continuous learn-
ing and the chance to grow into new, more inter-
esting and rewarding roles.
Select
Screening and pre-employment testing processes
can help determine if the candidate has the skills
and personality traits that match the company’s
expectations. Then, for much the same reason,
those expectations should be discussed with the
candidate during the interview process. The inter-
view is an opportunity for candidates to share what
motivates them and what they expect from their
career and their employer. This communication is
critical for finding the right person — someone
who possesses the required competencies, has the
ability to adapt to changes in expectations as future
requirements become necessary, and who is a likely
fit with the organization’s culture and values.
The employee must clearly understand the expec-
tations of the job — or at least have a “realistic pre-
view” — in order to decide whether he or she is a
right fit for the company and the position. Align-
ing the company’s needs with those of the poten-
tial employee is critical to maximizing the perfor-
mance of each new employee.
Business
Strategy
Human
Resource
Strategy
PDI’S TALENT PIPELINE
Performance Model
Attract Select Mobilize Develop Retain
Figure C

31
SHRM®
Mobilize
Once an employee is hired, he or she needs to be
mobilized to do the job and meet or surpass
expectations. This means the company and the
manager need to communicate clear and accurate
expectations. The employer must orient the
employee to the organization and his or her new
role, and provide the training needed for the
employee to perform the job.
The culture of the organization and context of the
work will greatly affect how successful the employ-
ee will be. Along with day-to-day information about
how to use the fax machine and where to pick up a
paycheck, companies must help the new employee
begin to understand the unwritten rules of working
within the organization’s culture – those things
that can’t be understood until they are experi-
enced. The company must take care to integrate
new employees into company activities, group
meetings and social events to help them under-
stand the organization’s culture and heritage, what
it stands for and how it operates. Lessons learned
and mindsets locked in during this acclimation
process can last the entire tenure of a person’s
employment, affecting the performance and suc-
cess of both the employee and the organization.
Mobilizing requires ongoing evaluation, feedback
and adjustments, and is frequently the driver
behind traditional performance management sys-
tems. However, key characteristics of successful
mobilization are: 1) the regular clarification of
performance expectations, and 2) the ongoing
feedback and coaching provided to help the
employee perform at his or her best immediately
and consistently.
This is not a one-sided process. The manager and
the employee must work together to ensure buy-in
and even enthusiasm for meeting expectations,
being open to feedback, and regularly exchanging
ideas about how everyone involved can achieve
their best and the company’s best. PDI developed
the GAPS Model (Fig. D) to highlight the critical
information needed during the mobilization
process.
GGooaallss aanndd vvaalluueess:: The only way to ensure people
will perform their best is to understand what moti-
vates them. Managers should not assume they
know what matters to employees – they must ask
them. Regular conversations about what gets
them charged up, what they like to do, and what
they care about will help the manager understand
what drives their behavior. The more that is
known about an employee’s personal interests, val-
ues, desires, work objectives and career aspira-
tions, the better prepared the manager is to talk
about their performance.
AAbbiilliittiieess:: Managers must explore the employee’s
view of his or her own capabilities, style and per-
formance – especially in relation to important
goals, values and success factors. This provides
great information about how employees see them-
selves compared to how others see them.
PPeerrcceeppttiioonnss:: Managers should share with employ-
ees how others perceive their capabilities, style,
performance, motives, priorities and values. Oth-
ers’ perceptions aren’t necessarily true, but they
do represent a slice of reality. It is the manager’s
role to help the employee understand the reality
created by identified perceptions and to help
them decide whether they can be successful in
that setting. This can be the basis of change, once
an employee understands how his or her own
goals may not be met successfully without his or
her attention.

32
Survey Program
SSuucccceessss ffaaccttoorrss:: Managers must clarify what mat-
ters to other people in the organization, including
the manager as well as others important to the
employee’s success, such as senior management,
peers and direct reports.
Once the dialogue between the manager and
employee has strengthened to a point where infor-
mation is available to both in all “cells” of the
GAPS model, related and important conversations
can take place.
• Is there a gap between what the organization
expects of the employee (success factors) and
what the employee wants to do (goals and values)?
• If so, is it possible for both to be accomplished?
• If not, is this job or even organization the best
place for this employee to be successful?
• Is there a disconnect between what the employ-
ee thinks he or she is good at (abilities) and what
others perceive (perceptions)?
• What impact is that having on the employee’s
ability to accomplish his/her own goals?
Throughout the mobilization process, these conver-
sations deepen the commitment to high levels of
performance, as well as help the manager and the
employee understand the constraints to achieving it.
Develop
Because evaluation and feedback are part of mobi-
lizing an employee, it is important to follow up
with opportunities for the employee to develop in
the areas where he or she needs or wants to
improve. An employee who is encouraged and
enabled to develop his or her skills will be much
more satisfied and loyal to the employer. Also,
GAPS
Where the
person is
Where the
person is going
The
Person’s
View
Other’s
Views
ABILITIES
How they see
themselves
GOALS & VALUES
What matters to
the person
PERCEPTIONS
How others see
the person
SUCCESS FACTORS
What matters
to others
Figure D
Copyright © 2000 Personnel Decisions International Corporation. All rights reserved.

33
SHRM®
increasing an employee’s versatility, adaptability,
and effectiveness for future assignments and chal-
lenges will make him or her a more valuable and
valued employee.
The organization’s culture is critical to develop-
ment. The Successful Executive’s Handbook (PDI,
Oct. 1999) lists ten characteristics of an environ-
ment that supports employee development:
• Open discussions with people about perfor-
mance and development needs are common.
• People feel like they get honest feedback.
• People feel responsible to focus and meet their
objectives.
• Leaders encourage others to take appropriate
risks to pursue learning.
• People are willing to try new things.
• New ideas and fresh perspectives are welcomed.
• People can challenge the status quo.
• The culture encourages people to do new things.
• People are held accountable for meeting objec-
tives and delivering on commitments.
• People trust their leaders to walk their talk.
Enhancing the organization’s culture to support
development has a tremendous impact on enhanc-
ing performance of individual employees. When
employees can expect honest, candid feedback on
all aspects of their performance, they will work
harder to avoid unpleasant feedback and generate
positive feedback. If employees are encouraged to
be curious and challenge the barriers that stifle
their performance, they are more likely to
improve their ability to overcome those barriers.
Finally, if employees are held accountable for
enhancing their performance, the organization
will see the support of development throughout
the culture.
Retain
Employee turnover costs companies both hard
and soft dollars. It is expensive to interview, hire
and train someone. Plus, an employee’s departure
can cause poor customer service, reduced morale
and employee uncertainty. The time and energy it
takes to hire a new employee pays off only if the
employee was right for the job in the first place
and stays with the company.
Many elements affect retention, including the
level of compensation and benefits, work environ-
ment comfort, relationship with co-workers and
boss, feelings of being appreciated, and personal
factors that are completely uncontrollable by the
company. However, the connection between
enhancing performance and retention is strong —
when people are actively and passionately pursu-
ing being their best, they are less likely to leave.
By the time the employee is being provided with
development, it should be clear which employees
are not a good fit with the position or the organi-
zation. Releasing with dignity those who don’t fit
and helping them find other opportunities is not a
punishment. In fact, it is just one more step neces-
sary to help them achieve their best performance
and be personally successful.

34
Survey Program
Enhancing Performance
Employees perform at their best when their
employer’s strategic goals, human capital deci-
sions and individual employee goals are aligned –
and when employees are given the support they
need to achieve those goals.
Sticking with a performance management system
that regularly reminds employees of their inability
to satisfy some organizational need can reduce
performance and may even cause the loss of a
potentially good employee. In today’s tight labor
market, that lost employee represents lost dollars
and lost opportunity.
Human resource professionals and their compa-
nies should ask some hard questions about what
they are accomplishing with their performance
management systems. What will it take to improve
the system for the betterment of employees and,
in turn, the company? Do not assume the answer
to these questions will be too hard to implement
or too expensive. It costs too much not to provide
the support that will drive employees, and their
employers, to the best performance possible.

35
O
ne of the critical human resource issues of
the 21st century is an organization’s ability
to refine and develop mechanisms to pro-
vide meaningful job performance feedback to all
employees. A positive and coherent understanding
between the employee and supervisor as to what is
acceptable job performance is essential for all
employee and management work relationships to
survive.
Optimum development and proper utilization of
each employee is essential to the success of any
organization. “How am I doing?” is often one of
the most urgent questions on an employee’s mind
today. Providing factual, candid and objective
answers to this question is an effective means of
enhancing employee development and sustaining
a sound employee relations program.
The enhancement of understanding can be
accomplished in two basic ways:
JJoobb DDeessccrriippttiioonnss
All employees must understand what is expected
of them in the performance of their jobs. Behav-
ioral research data clearly indicates that many
organizations throughout a global economy today
continue to persist in assuming the employee
“knows” what is expected without ever discussing
the expectations of the job to be performed.
PPeerrffoorrmmaannccee AApppprraaiissaall
Employee opinion survey data indicates the need
for employees to be given continuous perfor-
mance feedback in a constructive, coaching, men-
tor relationship. Management creates a high per-
centage of its problems by totally ignoring the
“need” to inform the employee how he/she is
doing, thus creating a high level of uncertainty,
anxiety, low productivity and in many cases the
loss of a loyal and productive employee.
Appraisal has been defined as the act of the judg-
ing quality and value. Performance appraisal with-
in the organizational context is the supervisor’s
judgment of how well an employee performs
his/her job based on established job measure-
ment criteria. Note that it is job performance
which is being appraised and rated. A perfor-
mance appraisal that focuses primarily on employ-
ee personality traits does little to enhance produc-
tivity or identify training, career developmental
needs, potential promotability, and contributions
an employee is making toward meeting organiza-
tional objectives.
Why Have A Performance Appraisal Program?
Volumes have been written on the subject of
employee performance appraisal. The arguments
for and against formal appraisal systems continue.
The increased demand for accountability by gov-
ernment agencies and related legislation, which
we will address later, including legal challenges of
human resource decisions, have made perfor-
mance appraisal systems almost a necessity rather
than a luxury for all organizations.
The human resource professional must direct a
performance appraisal system for many reasons,
not the least of which is a well documented
method that can be accepted as a valid defense in
litigation proceedings. The Equal Employment
Opportunity Commission’s Uniform Selection
Guidelines have literally forced performance
appraisal systems into being.
There are many other valid reasons to conduct
employee performance appraisals and many
potential uses for the information generated.
Decisions related to promotability, advancement,
selection for training, salary administration, disci-
pline and even potential termination may flow
SHRM®
PERFORMANCE APPRAISAL AS AN
EMPLOYEE DEVELOPMENT TOOL
by Howard M. Pardue, Ph.D., SPHR
An SHRM® White Paper

36
Survey Program
from the results of an objective performance
appraisal process.
What Elements Make A Good Performance
Appraisal System?
Ideally the ingredients of an effective state-of-the-
art performance appraisal program should be
designed to ensure:
1. That all employees are periodically interviewed
regarding their career progress to assist them in
developing to the fullest.
2. That a systematic measure of an employee’s
overall value to the organization is recorded.
3. That essential information concerning the
strengths and weaknesses of all employees in rela-
tion to career development including potential
for advancement and suitability for other posi-
tions and training is recorded.
The major underlying principles of a truly partic-
ipative, performance oriented appraisal program
are as follows:
1. The appraisal of a subordinate’s job perfor-
mance is a part of the normal day-to-day responsi-
bility of every supervisor and relates directly to
his/her responsibility for planning and assign-
ment of work.
2. Criteria for job performance must be related
to the job itself. Sufficient flexibility should be
maintained so that achievement measures can be
set to reflect accurately and realistically the
unique requirements of different positions, levels
of assignment and operating conditions.
3. Improvement in job performance can be
accomplished most effectively if the employee
participates directly in establishing the achieve-
ment measures for his/her job. To do a better
job, the employee should know what is expected,
how he/she is doing on the job and where assis-
tance can be obtained when needed.
4. Employees are inclined to accept suggestions
for improving and/or maintaining their perfor-
mance when they are provided feedback on a
continuing basis.
5. The supervisor’s prime responsibility is to
coach and collaborate in an individual’s develop-
ment. Two major forces in an employee’s devel-
opment must be given full consideration to
achieve maximum results:
a. The employee must recognize and under-
stand the responsibility of his/her immediate
supervisor as that of an active partner and coach
in providing career and job related assistance.
b. The supervisor must recognize and be con-
cerned with the employee’s personal aspirations,
motivation and career growth needs.
6. An effective performance evaluation system
requires supervisors to communicate job stan-
dards and other expectations to employees
before the evaluation period begins. By doing so,
employees know what constitutes good perfor-
mance and the supervisor can then more objec-
tively assess performance.
7. Effective compensation systems must link per-
formance achievements to salary increase consid-
erations. Even the best compensation plan is diffi-
cult to administer if performance is not the major
determining factor in granting salary increases.
8. Frequent feedback sessions must be conducted
with employees throughout the evaluation peri-
od. Periodic “mini-session” reviews, held perhaps
monthly helps minimize the employee from
being surprised at appraisal time, and helps
maintain focus.
9. Career pathing and counseling must be a part
of the performance review cycle. By focusing on
performance accomplishments, more precise
guidance can be given to employees about career
options with the company, and the achievement
of agreed upon milestones.

37
SHRM®
Performance Appraisal Legal Issues
Earlier mention was made of the need to design
appraisal programs that will meet legal guidelines.
Defending performance appraisals has attracted
increased attention in the last few years, especially
since most organizations are now aware that
human resource decisions based on performance
appraisals can affect employment conditions for
protected employee groups.
The seriousness of this problem is underscored by
the fact that several million employees have their
job performance appraisal annually for purposes
of salary review, promotion consideration, human
resource development progress, and potential cor-
rective action items.
Although several articles which have appeared in
human resources literature since the mid-70’s
have been useful in highlighting specific legal
issues involving performance appraisal, few have
articulated the relative importance of the various
factors that explain how organizations can effec-
tively develop and successfully defend their perfor-
mance system before the Equal Employment
Opportunity Commission or in the courts.
All organizations must understand how vulnerable
their performance appraisal programs are to litiga-
tion and whether they are likely to be successful in
defending their programs in the event of an official
complaint. In the event the employer fails to show
that its performance appraisal program was
designed and administered on the basis of the Uni-
form Selection Guidelines established under the
authority of Title VII of the Civil Rights Act of 1964
as amended, the court may render the employer
liable for back pay, court costs, specific management
training programs for and/or promotion of protect-
ed group employees as part of the case settlement.
An analysis of recent court decisions reveal that
circumstances involved in a successfully defended
performance appraisal programs are described as
follows:
1. Supervisors were given specific written instruc-
tions and training on how to complete the
appraisals.
2. Job content was used in developing the basis of
the appraisal instrument.
3. Appraisals were behavior oriented rather than
personality trait oriented.
4. The results of the completed appraisal were
reviewed with the employee appraised and the
employee was given the opportunity to comment
and submit written comments if appropriate.
In addition, privacy legislation has been intro-
duced or enacted in numerous states since the
early 90s. In 1996 the Privacy Protection Study
Committee released a report titled “Personal Pri-
vacy in an Information Society.” Among the 34
recommendations made by the Commission was
the suggestion that an effective privacy protection
policy must provide employees access to records
relating to their qualifications for promotion, pay
raises or to records relating to discipline and
potential termination.
Beyond the direct and potential legal implications
relating to employee access to their records, there
are other strong reasons for allowing such access.
First is the issue of employee confidence in the
performance appraisal system’s reasonableness
and fairness. If the results of performance
appraisals are withheld, uncertainty and suspicion
will surely result. Second, if appraisals are to influ-
ence performance in a positive way, results must
be communicated. Third, access to results pro-
vides an opportunity for an individual to chal-
lenge judgments or to correct simple mistakes

38
Survey Program
which are inevitable in any system. Finally, access
to such information is essential if the due process
rights of employees are to be assured.
In the final analysis, the integrity, the effective-
ness and the legal defensibility of a performance
appraisal system will depend on its legitimacy as a
tool for making employment decisions.
Employers should attempt to reduce the possibili-
ty that an employee will be able to establish a
prima facie case of discrimination if for example
there is a disproportionately small percentage of
females and minorities in the top four EEO cate-
gories by establishing affirmative action goals. Sec-
ond, the employer must be certain that the con-
tent of the performance appraisal system is based
on job content and that performance measures
are job related, and are not based on general
traits that lend themselves to opinion, subjective
judgment and rater bias. Third, in administering
the program detailed and clearly written instruc-
tions must be given to each manager. Finally, the
manager must be required to discuss the rating
results with each employee to ensure appraisal
sessions are productive and contribute to employ-
ee effectiveness. Each manager must be trained in
how to rate employee performance and how to
provide feedback in a positive fashion.
Conclusion
The 21st century promises a more demanding and
visible role for all human resource professionals.
This role requires developing a futuristic strategic
plan which articulates human resource programs
which address a myriad of issues. Creating and
maintaining viable performance appraisal pro-
grams is essential to organization growth. Yet, even
more significant initiatives will be developing a
visionary human resources agenda that is integrat-
ed into the organization’s mission and to correlate
specific programs such as compensation issues,
performance appraisal and job evaluation process-
es conceptually and operationally.
In the 21st century continued changes will occur
in terms of who works in organizations, why they
work and what they do. A major part of the human
resource professional’s responsibility will be to
coach operating managers and supervisors to real-
ize that the manner in which they manage key HR
decisions such as promotion and termination is of
interest to several parties, to include one or more
federal regulatory agencies. Senior executives
must be prepared and encouraged to implement
strategies for managing employees in ways that are
fair and ethical and will meet government and
public scrutiny standards. Clearly, supervisory
management development must move from a one
time orientation session to regular developmental
programs to update, enlighten and expand basic
management leadership skills. Designing effective
performance appraisal programs to meet the
needs of the organization and its employees
requires substantial effort, dedication and commit-
ment from the CEO down through all levels of the
organization.
Thanks to Howard Pardue, PhD., SPHR, for contribut-
ing this article. Many of the suggestions and philosoph-
ical views in this article were inspired by cumulative
experiences as a practitioner and consultant in coordi-
nating the implementation of organization-wide
appraisal programs in a variety of industry segments
and cultures. This paper is intended as general infor-
mation, and is not a substitute for legal or other profes-
sional advice.
For more information on this subject, send an e-mail to
the SHRM Information Center at infocen@shrm.org

39
I
n the 21st century, we cannot continue to emo-
tionally abuse our most valued assets (employ-
ees) with the annual bloodletting called
Performance Evaluation. In today’s business envi-
ronment where competitive advantages are deter-
mined by price, speed and quality, we need an
evaluation process that promotes the corporate
goal of Continuous Improvement on an individual
level. We need to replace Performance Evalua-
tions with Process Evaluations!
SStteepp ##11 -- TThhee PPrroocceessss--OOrriieenntteedd JJoobb DDeessccrriippttiioonn
Let’s start with the basics - the Job Description. In
reviewing the garden-variety job description, aside
from the standard sections for ADA compliance,
reporting lines, KSA requirements, etc., there is a
section that describes the job with the heading
Activities, Responsibilities, Duties, or Tasks. This
section is supposed to be representative of the job
to be performed. However, it typically only pro-
vides a cursory list of activities such as:
• Prepares a variety of reports
• Handles customer complaints
• Provides accurate and timely information
• Establishes and maintains close liaison with
clients.
This section of the job description should identify
the core activities of the job along with the most
significant process steps for an activity and the
quantitative standards for each process step. For
example, the above activity, “Prepares a variety of
reports,” can be broken down into the specific
reports to be completed with process steps and
outcomes for each report as follows:
SHRM®
Change Performance Evaluations to Process Evaluations
By Richard J. Lukesh
An SHRM® White Paper
TASKS/DUTIES PROCESS ACTIVITIES & INPUTS STANDARDS & OUTPUTS
PROCESS-ORIENTED JOB DESCRIPTION
Completes
monthly Sales
Report.
Collects Sales Rep Monthly Territory
Worksheets via fax or e-mail.
Calls Sales Reps about missing Work-
sheets & information missing from the
Worksheets.
Inputs Worksheet data on Excel
spreadsheets.
Prints & proofs Sales Report.
Delivers completed Sales Report to VP
of Sales.
By 5:00PM on the last workday of
each month.
By 11:00AM on the 1st working day
of the new month.
Zero misspelled words & financial data
must balance with Region Summaries.
Between 9:00AM & 11:00AM on the
2nd working day of the new month.

40
Survey Program
An entire job description written in a process-ori-
ented format accomplishes the following:
• A manager can identify the major process steps
and outcomes for which an employee will be held
accountable.
• An employee will have a clear understanding of
the expectations of each activity.
• A manager can monitor changes in the number
of core activities along with the time commit-
ment and costs of process activities as those activi-
ties increase or decrease with business volume.
• The employee and manager can jointly and
objectively review process steps and outcomes
that affect departmental performance.
By developing a Process-Oriented Job Descrip-
tion with an employee, the manager has laid the
foundation for Continuous Improvement on an
individual level.
SStteepp ##22 -- TThhee PPrroocceessss EEvvaalluuaattiioonn
In today’s customer competitive environment,
companies are installing Customer Relationship
Management (CRM) systems as a way to individu-
alize product and service offerings to the specific
needs of each customer. Can we in management
afford to do any less with our employees?
The days of the “one evaluation form fits all” are
long gone. If we are going to reduce accelerated
depreciation (turnover) of our people assets, we
need to respond to the day-to-day issues of the
job (the processes) that affect the quality of work
life for each employee. A Process Evaluation rep-
resents a major tool for improving quality of work
life. However, the format of a Process Evaluation
becomes critical to its success.
If a Process-Oriented Job Description is properly
developed, then 99% of the Process Evaluation
form is complete. To finalize the Process Evalua-
tion, a manager simply adds three columns next
to the Standards & Outputs column with the
headings:
• Falls Below Standard
• Meets Standard
• Exceeds Standard.
These three choices to the outcome of a given
process step parallel the concepts used in process
control charts to determine whether a process is
“in control.” In Statistical Process Control (SPC)
terms, a process is described as “doing its best”
and “in control” (Meets Standard) when the
process outcomes behave with random variability
within the Lower Specification Limit (LSL) and
the Upper Specification Limit (USL) of the
process. Employee performance (process out-
comes) can be thought of in the same terms and
even plotted on control charts to determine if the
outcomes are stable and predictable, or whether
the outcomes represent excessive variation thus
signaling the presence of “special causes.”
In essence when a Process-Oriented Job Descrip-
tion is developed correctly, the manager simulta-
neously creates a position specific Process Evalua-
tion form. At the time of the Process Evaluation
(NOT Performance Evaluation), the employee
and manager discuss the processes and outcomes
of the position and jointly review strategies to
improve quality, reduce cycle time and lower
process costs. This process review simply analyzes
the three dimensions of competitiveness (quality,
speed, price/costs) on a micro level that the
organization should be analyzing on a macro
level. Additionally, the Process Evaluation
updates the job description yearly.

41
SHRM®
For an executive who is assigned strategic goals
such as “Improve market share by 10%,” the
process-oriented format works equally well. A
process-oriented goal would require an executive
to identify the process steps and benchmark stan-
dards for each step. A goal, such as improving
market share, may have 25 significant steps, many
of which are highly interdependent on other
areas such as suppliers, manufacturing, market
research, advertising, recruiting and training of
new sales reps, etc. These steps must be precisely
orchestrated to achieve the desired output; oth-
erwise, the year-end evaluation results in execu-
tive finger pointing and excuses. It is the orches-
tration of these steps, as well the outcome of each
step, that an executive should be measured
against, not just the end result.
The Process Evaluation creates a collaborative
employee/manager environment where the
Process-Oriented Job Description becomes the
driving element of a company’s Continuous
Improvement effort and the job description
becomes a work-in-process rather than a once
and done event.
SStteepp ##33 -- TThhee BBeehhaavviioorr AAsssseessssmmeenntt
Question: “Can an employee ‘meet the standard’
on every process output and be fired for poor per-
formance?” Answer: “No!” However, the employee
can “meet the standard” on every process output
and be terminated for unacceptable behaviors.
There seems to be an unwritten rule in business
that suggests we hire people for their hard skills
such as degrees, achievements and experience,
but we terminate them for lack of soft skills such
as ability to work in a team, misplaced emotion,
inability to change, inconsiderate treatment of
subordinates or customers, etc.
The truth is that employers have a right to expect
employees to exhibit certain positive behaviors or
at the very least not exhibit certain negative
behaviors. On the other hand, employees have
the right to know what behaviors the employer
will reward and punish.
If a manager has an employee who “meets the stan-
dard” on all process outputs, but is a disruptive
force within the organization, the manager has an
obligation to confront the employee with the
errant behavior and develop a plan to minimize or
eliminate the behavior. If the behavior does not
change, the employee may be terminated.
Simply stated, an employee must meet the behav-
ior expectations of his/her manager. Despite the
fact that two separate managers may have differ-
ent behavior expectations for the same depart-
ment, employees must satisfy the behavior expec-
tations of the person in charge. For example, an
individual who manages a Collection Agency may
demand that employees present themselves to
delinquent accounts in a very demanding and
confrontational manner. Another person manag-
ing the same Agency may require Collectors to
use a “soft-sell” consultative approach. In either
situation, employees who may have been rising
stars under one manager are now examples of
unacceptable behavior to the other manager.
This example illustrates the need for a manager
to develop a representative list of behaviors that
he/she considers exemplary of successful/top
performers and those behaviors considered typi-
cal of unsuccessful/low performers. By creating
this list of behaviors, the manager can objectify
many of his/her subjective behavior expecta-
tions. This behavior list can then be distributed
to employees, reviewed with the employees and

42
Survey Program
should be part of an employee-manager discus-
sion disassociated from a Process Evaluation. It is
imperative that the Manager reviews this behav-
ior list with Human Resources to avoid any dis-
crimination problems as a result of identifying
behaviors that represent ethnic/cultural differ-
ences.
The behavior list forms the basis of a Behavior
Assessment in which the manager engages an
employee in a discussion about the manager’s
observation of positive and negative interperson-
al skills exhibited by the employee. Clearly, this
exercise is very subjective compared to the objec-
tive Process Evaluation. However, the manager is
paid to maintain a productive and cohesive team.
With every team there are rules of behavior
designed to maximize the output of the team or
at the very least minimize disruption to the team.
When an employee does not play by the man-
ager’s rules, despite how subjective the rules may
be (Caveat: the rules must be legal), the manag-
er, as the team’s coach, is obligated to “bench the
player,” regardless of the exemplary individual
output of the person.
By separating Behavior Assessment from Process
Evaluation, a manager separates any errant
behaviors from outcomes of the job. If however,
the behavior is a factor that truly affects a process
outcome, then the specific behavior needs to be
addressed in the Process Evaluation as a “special
cause” that affects the variability of the process
and causes the process to be “out of control.”
For example if an employee were frequently late
for work but “meets standard” on all outcomes, it
would be inappropriate to commingle an
exchange about this behavior at the Process Eval-
uation, as this may tend to hinder the employee’s
full participation in the discussion of process
steps and outcomes. However, in the case of a
Collection Agency employee who falls below the
LSL of the Collection Ratio for the Agency
because of an abrasive phone presence, the
Process Evaluation would be an appropriate set-
ting to review this behavior as a “special cause” of
variation in process output. In this latter situa-
tion, the employee and manager would brain-
storm a list of “special causes” that could affect
the process outcome (Collection Ratio) to which
the manager would add his/her observations of
the employee’s abrasive telephone mannerisms.
An action plan would then be developed to mini-
mize or eliminate all of the “special causes”
affecting process outcomes.

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