About Performance Management Effectiveness In collaboration with and commissioned by the National Center for the Middle Market NCMM October 21 2014 How often do organizations conduct formal employee performance appraisals ID: 707185
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Slide1
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, 2014Slide2
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
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Key FindingsSlide3
SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014
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Key Findings
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
M
anagers at my organization are
willing to “make the tough calls”.
42%
agree
38%
Disagree
Grades given for the effectiveness of performance management Slide4
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 20144What do these findings mean for the HR profession?Slide5
Typically, how often do employees within your organization undergo formal
performance appraisals?SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014
5
Note: n = 391. Percentages
do not total 100% due to rounding.Slide6
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
= 359Slide7
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 = 332Slide8
If you were to give your organization a “grade” based on its overall effectiveness with performance management, what grade would you give?
Performance Management ©SHRM 2014
8
Note: Only statistically significant differences are shown.
Performance Management Will Be a Top Priority A-/B+ grade (61%)B grade (35%)>C grade (14%)A-/B+ grade (61%)>C-/D+ grade (16%)
Comparisons by Priority of Performance Management
HR professionals who indicated that p
erformance 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).
Some Attention and Resources Will Be Given to Performance Management
C grade (80%)
>
A-/B+ grade (36%)Slide9
Managers’ role in performance management
SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014
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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.Slide10
SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014
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DemographicsSlide11
Demographics: Annual Revenue
SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014
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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.Slide12
Demographics: Organization Industry
SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014
12Note: n = 338. Percentages do not sum to 100% due to multiple response options.
Percentage
Professional, scientific and technical services22%Government agencies16%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%Slide13
Demographics: Organization Industry (continued)
SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014
13Note: n = 338. Percentages do not sum to 100% due to multiple response options.
Percentage
Accommodation and food services2%Information2%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%Slide14
Demographics: Organization Sector
SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014
14n = 336Slide15
Demographics: Organization Staff Size
SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014
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n = 332Slide16
n = 355
Demographics: Other
SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014
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U.S.-based operations only74%Multinational operations26%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
Corporate (companywide)
70%
Business unit/division
16%
Facility/location
14%
n = 250
What is the HR
department/function for which you responded throughout
this survey?Slide17
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SHRM Survey Findings: Perceptions About Performance Management Effectiveness
Response rate = 13%391 HR professionals from a randomly selected sample of SHRM’s membership participated in this surveyMargin of error +/- 5%
Survey fielded August 11-29, 2014
In collaboration with and commissioned by the National Center for the Middle Market (NCMM)Survey MethodologySHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014Slide18
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
18About SHRM ResearchSlide19
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
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About SHRMSlide20
SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014
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