2014 performance-managment
- 1. SHRM Survey Findings: HR Professionals’ Perceptions About Performance Management Effectiveness In collaboration with and commissioned by the National Center for the Middle Market (NCMM) October 21, 2014
- 2. • How often do organizations conduct formal employee performance appraisals? Almost three-quarters (72%) of organizations conduct performance appraisals annually, and 16% semi-annually. Only 3% of organizations reported they did not conduct formal performance appraisals. • How much of a priority is performance management compared with other business issues? Nearly one-third (30%) of HR professionals reported that performance management would be a top priority at their organizations in the coming year, and two-thirds (65%) indicated that some attention and resources would be given to performance management, though other business issues were a higher priority. • From the perspective of HR professionals, are organizations doing a good job managing performance? More than one-half (53%) gave their organizations a grade between C+ to B, another one-fifths (21%) chose a C, and only 2% gave an A in performance management to their organizations. • Are managers pulling their weight in performance management? Although almost one-half (46%) of HR professionals said they agreed with the statement that managers at their organizations “did an effective job of differentiating between poor, average and strong performers,” about one-third (32%) had some level of disagreement with this statement. Similarly, although two-fifths (42%) agreed that managers at their organization were “willing to ‘make the tough calls,’” another 38% disagreed. SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014 2 Key Findings
- 3. Annually 72% Do not conduct 3% Semi- Annually 16% Other 8% Grades given for the effectiveness of performance management SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014 3 Key Findings 30% 65% Top priority Some attention and resources given Frequency of performance appraisals Priority organization places on performance management Managers at my organizations did an effective job of differentiating between poor, average and strong performers. 46% agree 32% Disagree Managers at my organization are willing to “make the tough calls”. 42% agree 38% Disagree 21% C 53% C+ to B 12% B+ to A
- 4. What do these findings mean for the HR profession? • HR professionals’ opinions are mixed regarding the effectiveness of performance management in their organizations, although the vast majority did say that performance management would either be a top priority or receive some attention in the coming year. And although there has been increased scrutiny lately on the benefit of conducting annual performance appraisals for employees, identifying strengths and weaknesses among workers has become particularly important for compensation strategies. • Research has shown that many employers are placing less emphasis on blanket merit salary increases for their staff and are now channeling more resources toward incentive programs and variable pay structures in order to reward top performers who consistently meet goals. Conversely, low performers are seeing smaller increases in pay. Performance management analysis has consequently become a key component of compensation reviews. • Overall, the data suggest that many more firms should make performance management a priority and ensure that their HR capabilities are developing at a pace that can keep up with the growth of their business. • Even those organizations that currently report high levels of satisfaction with the way their performance management systems are working will need to continuously monitor and assess their effectiveness to stay ahead of the competition. SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014 4
- 5. Typically, how often do employees within your organization undergo formal performance appraisals? Every other year or less frequently Annually Semi-annually (twice a year) Quarterly Monthly As needed (e.g., when individual performance problems arise) By request of employee or his/her supervisor Ad hoc Other My organization does not conduct formal employee performance appraisals Note: n = 391. Percentages do not total 100% due to rounding. 2% 72% 16% 3% 0% 2% 0% 0% 1% 3% SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014 5
- 6. If you were to give your organization a “grade” based on its overall effectiveness with performance management, what grade would you give? SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014 6 n = 359 2% 10% 27% 26% 21% 10% 3% 1% A A-/B+ B B-/C+ C C-/D+ D F
- 7. How much of a priority will performance management be in the coming year compared with other business issues? SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014 7 n = 332 30% 65% 5% Performance management will be a top priority at our firm Some attention and resources will be given to performance management, but other business issues are a higher priority Performance management will not be a priority in the coming year at our firm
- 8. If you were to give your organization a “grade” based on its overall effectiveness with performance management, what grade would you give? Comparisons by Priority of Performance Management • HR professionals who indicated that performance management would be a top priority at their organizations (see Slide 5) were more likely to give a higher grade (i.e., A or B grade) when assessing their organization’s overall effectiveness with performance management. HR professionals who indicated that that some attention and resources would be given to performance management, but other business issues would be a higher priority at their organizations were more likely to give a lower grade (i.e., C grade). Performance Management Will Be a Top Priority Performance Management ©SHRM 2014 8 A-/B+ grade (61%) B grade (35%) Note: Only statistically significant differences are shown. > C grade (14%) A-/B+ grade (61%) > C-/D+ grade (16%) Some Attention and Resources Will Be Given to Performance Management C grade (80%) > A-/B+ grade (36%)
- 9. Managers’ role in performance management 2% 4% 30% 34% Managers in my organization do an effective job of differentiating between poor, average Managers in my organization are willing to “make the tough calls”* as appropriate Note: n = 358-361. Percentages may not total 100% due to rounding. *e.g., giving a low/no increase for poor performance, firing a poorly performing employee, etc. 22% 19% 43% 38% 3% 4% SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014 9 and strong performers Strongly disagree Disagree Neither disagree nor agree Agree Strongly agree
- 10. Demographics SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014 10
- 11. Demographics: Annual Revenue 4% 19% 11% 11% 13% 12% 13% 4% 14% Less than $1 million $1 million to less than $5 million $5 million to less than $10 million $10 million to less than $20 million $20 million to less than $50 million $50 million to less than $100 million $100 million to less than $500 million $500 million to less than $1 billion $1 billion or more Note: n = 247. Participants who answered "don't know" or “prefer not to say” were excluded from the analysis. Percentages do not total 100% due to rounding. SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014 11
- 12. Demographics: Organization Industry Professional, scientific and technical services 22% Government agencies 16% Health care and social assistance 12% Manufacturing 12% Finance and insurance 11% Educational services 9% Retail trade 5% Transportation and warehousing 5% Administrative and support and waste management and remediation services 4% Construction 4% Wholesale trade 4% Utilities 3% Note: n = 338. Percentages do not sum to 100% due to multiple response options. Percentage SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014 12
- 13. Demographics: Organization Industry (continued) Accommodation and food services 2% Information 2% Mining, quarrying, and oil and gas extraction 2% Real estate and rental and leasing 2% Religious, grant-making, civic, professional and similar organizations 2% Repair and maintenance 2% Agriculture, forestry, fishing and hunting 1% Arts, entertainment and recreation 1% Personal and laundry services 1% Other industry 10% Note: n = 338. Percentages do not sum to 100% due to multiple response options. Percentage SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014 13
- 14. Demographics: Organization Sector SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014 14 n = 336 17% 48% 15% 16% 4% Publicly owned for-profit Privately owned for-profit Nonprofit Government Other
- 15. Demographics: Organization Staff Size SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014 15 n = 332 23% 31% 21% 16% 9% 1 to 99 employees 100 to 499 employees 500 to 2,499 employees 2,500 to 24,999 employees 25,000 or more employees
- 16. n = 355 Demographics: Other SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014 16 U.S.-based operations only 74% Multinational operations 26% Single-unit organization: An organization in which the location and the organization are one and the same. 30% Multi-unit organization: An organization that has more than one location. 70% Multi-unit headquarters determines HR policies and practices 55% Each work location determines HR policies and practices 2% A combination of both the work location and the multi-unit headquarters determines HR policies and practices 43% Is your organization a single-unit organization or a multi-unit organization? For multi-unit organizations, are HR policies and practices determined by the multi-unit headquarters, by each work location or by both? Does your organization have U.S.-based operations (business units) only, or does it operate multinationally? n = 255 n = 249 What is the HR department/function for which you responded throughout this survey? Corporate (companywide) 70% Business unit/division 16% Facility/location 14% n = 250
- 17. 17 SHRM Survey Findings: Perceptions About Performance Management Effectiveness In collaboration with and commissioned by the National Center for the Middle Market (NCMM) Survey Methodology • Response rate = 13% • 391 HR professionals from a randomly selected sample of SHRM’s membership participated in this survey • Margin of error +/- 5% • Survey fielded August 11-29, 2014 SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014
- 18. About SHRM Research For more survey/poll findings, visit shrm.org/surveys For more information about SHRM’s Customized Research Services, visit shrm.org/customizedresearch Follow us on Twitter @SHRM_Research SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014 18
- 19. Founded in 1948, the Society for Human Resource Management (SHRM) is the world’s largest HR membership organization devoted to human resource management. Representing more than 275,000 members in over 160 countries, the Society is the leading provider of resources to serve the needs of HR professionals and advance the professional practice of human resource management. SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China, India and United Arab Emirates. Visit us at shrm.org. SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014 19 About SHRM
- 20. About the National Center for the Middle Market ACADEMIC & EDUCATION AND EVENTS PRACTIONER OUTREACH RESEARCH + Congressional Caucus on Middle Market Growth + Briefings for State and Local Policy Makers + Executive Education + Industry Cluster Program + National Middle Market Summit + Regional Partnerships and Events + Events with Research and Strategic Partners + Middle Market Student Summit + Case Competition SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014 20 + Middle Market Indicator + State Economic Studies + Focused Research Talent and People; Growth and Innovation; Customer Focus and Sales; Finance and Governance; Operational Excellence For more information go to www.middlemarketcenter.org