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Performance Management
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• Focus and alignment of efforts. Measurement- management systems with those in the same
managed companies reported more frequently industry that did not. The researchers then
that unit performance measures were linked to compared the financial performance of the
strategic company measures and that individual organizations having performance management
performance measures were linked to unit systems (47 percent) to see how those organizations
measures. fared before and after implementation.
• Organizational culture. Compared to
nonmeasurement-managed organizations, The study results showed that:
measurement-managed companies more
• Companies with performance management
frequently reported strong cultural elements,
programs have higher profits, better cash flows,
such as cooperation and teamwork among
stronger stock market performance, and a
the management team, a greater extent of
greater stock value than companies without
employees self-monitoring their own
performance management.
performance, and a greater willingness to
• Productivity in firms without performance
take risks.
management is significantly below the industry
average, while productivity in firms with
1995 Study by Yankelovich Partners for performance management is on par with the
William M. Mercer industry average.
The 1,200 workers surveyed said that on average • Companies with performance management
they could improve their daily output by at least significantly improved their financial
26 percent if only they weren't hindered by lack performance and productivity after
of —in order of importance—direction, support, implementing performance management.
training, and equipment. One in four said they
could raise productivity by 50 percent. An effective In 1995 the researchers conducted additional
performance management system delivers the analysis of the study data. This longitudinal
direction and support workers need. research focused on the following three financial
ratios that the researchers say are excellent
1994 Study by Hewitt Associates indicators of a company's overall financial strength:
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Performance Management
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and incentives to reward those who achieved receive an annual review, and most viewed
their goals. theirs as participative and covering both
• Additional feedback. Annual reviews were strengths and areas for improvement. However,
supplemented by regular informal feedback. most respondents indicated they prepared little,
suggesting that the assessment process might
1993 Study by DDI and Society for Human not be participative. And reviews still
Resource Management emphasize results instead of results and the
skills and behaviors used to achieve them.
The national study Performance Management:
• Outcomes, defined as results or overall feelings
What's Hot—What's Not examined trends in
after participating in the performance
performance management practices, people's
management system, received mixed responses
satisfaction with their organization's current
with no areas of great satisfaction. Respondents
systems, and the bridges and barriers to effective
indicated significant frustration about pay and
management.
promotion decisions not being clearly linked to
the performance management system.
The study involved 1,149 people, including
managers (56.8 percent) and nonmanagers
Regarding the top trends, respondents think
(42.2 percent), representing 79 companies.
organizations will:
• Continue to adopt the already-popular practice
Major study findings regarding people's satisfaction
of using essays to describe an employee's
with their current system revealed:
overall performance.
• Feedback and Coaching, considered the heart of • Give managers more training in performance
an effective performance management system, management.
fared the worst. Respondents reported they • Tie performance management more closely to
receive feedback and coaching too infrequently, quality improvement efforts.
and when they do, it is unbalanced and • Hold managers accountable for using
nonspecific. performance appraisal effectively.
• Performance Planning got the highest marks. • Educate employees about their companies'
Results from this section show that performance management system to help them
organizations are getting better at clarifying manage their own performance.
goals and linking them to organizational • Ask internal and external customers to
strategies, although there is room for contribute to appraisals.
improvement. Managers reported a much
stronger sense of ownership and involvement in
establishing their performance plans than did
nonmanagers.
• Performance Review offered a good news/bad
news scenario. Most participants consistently
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Conclusion References
This growing body of research finds for us Bernthal, P., Sumlin, R., Davis, P., & Rogers, R.
characteristics and practices that have proven (1997). Performance Management Practices
successful for others. In doing so, it helps guide us Survey Report. Development Dimensions
in improving our own performance management International.
system. Some of the research also provides the
hard data we need to know that performance Hewitt Associates. (1994). The Impact of
management is an important business system—one Performance Management on Organizational
that affects our organization's bottom line and is Success. Hewitt Associates LLC.
worth our efforts to make it right.
Lingle, J. & Schiemann, W. (1996, March). Is
Measurement Worth It? American Management
Association Management Review, 56–61.
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Performance Management
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