2% of CHROs Think Their Performance Management System Works https://www.gallup.com/workplace/644717/chros-think-performance-m...

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MAY 7 , 2 0 2 4

2% of CHROs Think Their

Performance Management
System Works
BY BE N WIG E RT AN D H E AT H E R BA R R E T T

Two percent of CHROs from Fortune 500 companies Gallup recently surveyed

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2% of CHROs Think Their Performance Management System Works https://www.gallup.com/workplace/644717/chros-think-performance-m...

strongly agree that their performance management system inspires their

employees to improve.

Employees tend to share this perspective -- only one in five report that their
performance reviews are transparent, are fair or inspire better performance.

Traditional performance management practices have been lackluster for some time.
When the pandemic hit, some prominent corporations temporarily threw out their
performance reviews and metrics altogether, allowing employees a “gimme” on 2020.

What they discovered, perhaps unwittingly, was that their way of managing
performance did not coincide with a disrupted, dynamic and digital business
environment.

Re-Engineer Performance Management for the New

Workplace

It’s no surprise that many executives are concerned about lower productivity in a
post-pandemic world where they lack control over the performance of many hybrid
and remote employees working out of sight.

In response, Gallup conducted a nationally representative study of 18,665 U.S.

employees to assess the current state of performance management. We identified
three opportunities to improve performance management systems across all
industries.

1. Clarify expectations.

Only 47% of employees strongly agree they know what is expected of them at work.
That’s down from 56% immediately preceding the pandemic and 61% in 2015.

The most fundamental aspect of productivity is knowing what’s expected of you.

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Without clear expectations, there is no agreed upon standard or roadmap for

success.

Clear expectations begin with effective goal setting. However, great goal setting is not
as simple as telling people to set SMART goals or create a balanced scorecard.
Rather, our research shows that the most effective goal setting methods do the
following:

• Collaboratively include employees in their own goal setting. This means that a
manager and an employee meet to discuss responsibilities, tasks, outcomes and
roadblocks. Most managers don’t do this. However, when employees are actively
involved in their goal setting, they are two times as likely to have clear expectations.

• Add team and customer goals to the mix. Across all industries and job types, the
most common type of performance goals for employees are individual goals (58%).
And yet managers rank team and customer goals as more important than individual
goals, despite employees receiving them only 36% and 19% of the time,
respectively. By adding team and customer goals to performance scorecards,
employees are far less likely to focus on their own priorities at the expense of their
customers and teammates.

2. Inspire progress on goals.

Fifty-six percent of employees formally review their performance goals with their
manager once a year or less.

The folly of traditional annual performance reviews is that people receive goals at the
beginning of the year that they do not formally discuss with their manager until the
end of the year -- if those goals are even still relevant. That approach didn’t make
sense before and is likely counterproductive in today’s dynamic workplace. And yet it
remains the most common employee experience.

It’s time to flip the script and make performance management a way of working rather
than an episodic process focused on logging performance ratings that occur too long

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after the fact and assume a false sense of precision in a manager’s subjective
judgement.

Instead, progress on goals accelerates when organizations:

• Revisit goals during quarterly progress conversations. Employees and their

manager need to revisit goals frequently to ensure those goals are still meaningful
and realistic. Progress check-ins are just as important to clear expectations as goal
setting. When employees have quarterly progress checks, they are 90% more likely
to be engaged and 2.1 times as likely to feel the process is fair and transparent.

• Integrate team check-ins with quarterly goal progress conversations. Clear goals
are a great start, but the real magic happens when teams are aligned on their
shared goals and assume collective accountability for achieving them. In fact, team
and customer goals make little sense in a one-on-one performance discussion
when both objectives require strong collaboration. Instead, kick off quarterly
progress reviews with team conversations about how they can achieve their shared
goals together.

3. Improve performance evaluations.

A mere 22% of employees strongly agree that their performance review process is
fair and transparent.

Oddly enough, performance evaluations don’t always match up with performance

goals. Too often, employees are asked to do one thing and assessed on something
else. This only magnifies unclear expectations.

As one person we interviewed explained, “Our rating system feels distant from the
work being performed.”

The truth is that measuring performance is difficult. There is not a set of metrics that
works well across all roles. Performance reviews often rely on too-general metrics or
the subjective judgment of a single manager.

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Yet performance reviews are a powerful tool for empowering employees to perform
and develop. Performance reviews that inspire improvement and personal growth do
the following:

• Assess performance with multiple inputs. Employees report that their

performance evaluations are most often based on their manager’s observations
(67%) and performance ratings (54%) -- both subjective methods for evaluating
work. Despite being among the most important aspects of performance, team
goals, customer metrics and other objective measures are far less likely to be part
of evaluations. It is best to use a multi-source approach to measuring performance
that includes a mix of objective and observational measures. The holistic nature of
this approach reduces bias inherent to manager ratings while inviting detailed
feedback on aspects of performance that are difficult to measure.

• Include development goals. What gets measured and paid, gets done. Managers
too often deprioritize development goals at the expense of performance goals. If
you expect your team to continually improve and grow, consider making critical
development goals as important as their performance goals.

• Omit pay and promotion conversations. While performance should always inform
pay and promotion, discussing them during performance reviews detracts from the
feedback and lessons learned. A separate pay and promotion conversation allows
managers to spend more time explaining how these decisions are made and what it
takes to get to the next level.

Fixing productivity concerns requires fixing performance

management.

Gallup research shows that if organizations ensure their workers have clear
performance expectations -- even simply by encouraging more frequent and
consistent manager-employee goal progress conversations -- they are highly likely to
see immediate benefits to productivity. Addressing the thornier process of creating
the perfect set of metrics or subjectively assessing behaviors takes more time, but

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2% of CHROs Think Their Performance Management System Works https://www.gallup.com/workplace/644717/chros-think-performance-m...

there are best practices to emulate.

Ultimately, the benefits of unifying an organization’s goals and priorities go far beyond
improving productivity. Clear expectations are the foundation of transparency,
fairness, empowerment and meaningful work.

Transform the performance management system at your organization.

• Learn how Gallup can help you get the best out of your employees.
• Download our perspective paper, Re-Engineering Performance
Management, to learn why traditional performance management
practices are failing.
• Explore data on how employees feel about leadership and management,
two key elements of performance management.

Subscribe to the Gallup at Work newsletter to

create an exceptional workplace.
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AU T H O R ( S)

Ben Wigert is Director of Research and Strategy, Workplace Management, at Gallup.

Heather Barrett is a Senior Consultant at Gallup.

Ryan Pendell contributed to this article.

SU RV E Y M E T HODS


Results for this Gallup poll are based on self-administered web surveys conducted
each quarter. Q3 2023 surveys were conducted Aug. 9-24, 2023, with a random
sample of 18,665 adults who are aged 18 and older, working full time or part time for
organizations in the United States, and members of the Gallup Panel. For results
based on this sample, the margin of sampling error is ±1.1 percentage points at the
95% confidence level.

Gallup uses probability-based, random sampling methods to recruit its panel

members.

Gallup weighted the obtained samples to correct for nonresponse. Nonresponse

adjustments were made by adjusting the sample to match the national demographics
of gender, age, race, Hispanic ethnicity, education and region. Demographic
weighting targets were based on the most recent Current Population Survey figures
for the aged 18 and older U.S. population. In addition to sampling error, question
wording and practical difficulties in conducting surveys can introduce error or bias

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2% of CHROs Think Their Performance Management System Works https://www.gallup.com/workplace/644717/chros-think-performance-m...

into the findings of public opinion polls.

RELEASE DATE: May 7, 2024

SOURCE: Gallup https://www.gallup.com/workplace/644717/chros-think-performance-management-
system-works.aspx
CONTACT: Gallup World Headquarters, 901 F Street, Washington, D.C., 20001, U.S.A
+1 202.715.3030

Copyright © 2024 Gallup, Inc. All rights reserved.

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