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What's Your Performance Management System Worth?
November 19, 2008
By Margery Weinstein
Was that performance management program and supporting technology worth the investment you've coaxed from your company's decision-makers? To answer that question, Bersin & Associates, a research and advisory firm focused on enterprise learning and talent management, released two new studies, "The Essentials of Performance Management Practices," Part 1 and II. Here are some of the highlights:
• "Once viewed as a standalone employee appraisal process designed to feed compensation and promotion decisions, performance management now has become the cornerstone of modern talent management," says Leighanne Levensaler, director of talent management research and the study’s primary author. "Our research found this seemingly simple process is undergoing significant transformation as organizations embark on automating goal alignment, assessment, coaching, development, and succession processes."
• "This research demonstrates two important findings," says Josh Bersin, president. "First, effective employee management practices are different from those in the past and focus on alignment, coaching, development, and measurement. Second, the red-hot market for performance management software is paying off for buyers. More than 85 percent of the organizations we studied are seeing demonstrable positive business impact from implementation."
Other key findings:
• Forty-five percent of respondents believe managers in their organizations currently have difficulty differentiating between high and low performers. Almost 40 percent of line managers do not believe they have the training and skills needed to effectively manage employee performance.
•Only one-third of responding organizations today exclusively use competitive assessments for performance management, and these organizations see far less return than those with a coaching and development model.
• High-impact organizations do not adopt the "one-size-fits-all" approach to performance management. To maximize business value, high-performing organizations tailor practices according to operating functions, geography and culture, legal requirements, and unique needs of different workforce segments. Companies that localize key practices report higher employee retention rates.
• The performance management systems market is the fastest growing segment in the human capital management market and soon will be the biggest. The market is estimated to reach $520 million by end of 2008, a 35 percent increase from 2007.
• Organizations with integrated talent management suites cite two to three times the return on investment than organizations implementing point solutions.
• User experience is the key differentiator in a crowded field of approximately 30 suppliers. In the last year, several leading providers have undergone major development efforts to significantly improve their systems' user experiences. These solutions now incorporate "next-generation" features, such as decision and performance support, collaboration, and contextual or smart content.
Editor's Note: What does performance management mean at your company? Do you, or anyone you work with, know? Do you have proof that it actually means whatever you think it means in practice? Join the discussion on Training Day.
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