Survey: Companies Lack Quality Performance-Management Programs

Recent surveys show employers and workers agree their companies need more effective ways to monitor employee progress.

Watson Wyatt Worldwide, a human-capital and financial-management consulting firm, and WorldatWork, a Scottsdale, Ariz.-based not-for-profit professional association focused on human-resources disciplines, released the results of their studies on Nov. 29.

The firms conducted one survey of 265 large U.S. companies and another complementary poll of 1,100 workers about their companies' performance-management programs.

The surveys show that although most companies provide employee-assessment programs, they don't effectively execute them. For example, while 92% of programs are designed to link pay to performance, 79% of employers say that managers at their organizations are moderately or greatly effective at it. Employees see even more room for improvement, with 52% saying their managers tie pay to performance.

Companies that don't base pay on performance risk lost productivity, says Laura Sejen, director of strategic rewards consulting at Watson Wyatt.

"Without improving the implementation of their programs, employers will have difficulties with aligning the performance of their workforce with business results," she says. "In fact, companies with strong performance-management programs post significantly better financial results than those with weak programs."

The survey also shows that many companies fail at providing successful career- development programs, with 37% of employers saying they're at least moderately effective at providing career development.

One way to improve the management of rewards programs is by providing managers with training. Managers at companies that offer such a program are more effective at providing coaching and feedback, providing formal periodic performance discussions and helping poor performers improve, according to the survey analysis.

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