shrm survey findings: hr professionals’ perceptions about performance management effectiveness in...

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, 2014

SHRM/NCMM: Perceptions About Performance Management Effectiveness ©SHRM 2014 2

• 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.

Key Findings


An-nu-ally 72%

Semi-An-nu-ally 16%

Do not con-duct 3%

Other 8%

Key Findings

Top priority

Some attention and resources given

30%

65%

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%Disagr

ee

Managers at my organization are willing to “make the tough calls”.

42%agree

38%Disagre

e

C21%

C+ to B53%

B+ to A12%

Grades given for the effectiveness of performance management


• 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.

What do these findings mean for the HR profession?


Typically, how often do employees within your organization undergo formal performance appraisals?

Note: n = 391. Percentages do not total 100% due to rounding.

Every other year or less frequently

Annually

Semi-annually (twice a year)

Quarterly

Monthly

As needed (e.g., when individual performance problems arise)

By request of employee or his/her supervisor

Ad hoc

Other

My organization does not conduct formal employee performance appraisals

2%

72%

16%

3%

0%

2%

0%

0%

1%

3%


If you were to give your organization a “grade” based on its overall effectiveness with performance management, what grade would you give?

n = 359

A

A-/B+

B

B-/C+

C

C-/D+

D

F

2%

10%

27%

26%

21%

10%

3%

1%


How much of a priority will performance management be in the coming year compared with other business issues?

n = 332

Performance management will be a top priority at our firm

Some attention and resources will be given to performance management, but other business issues are a higher priority

Performance management will not be a priority in the coming year at our firm

30%

65%

5%

Performance Management ©SHRM 2014 8

If you were to give your organization a “grade” based on its overall effectiveness with performance management, what grade would you give?

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 performance 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%)


Managers’ role in performance management

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.

Managers in my organization are willing to “make the tough calls”* as appropriate

Managers in my organization do an effective job of differentiating between poor, average and strong performers

4%

2%

34%

30%

19%

22%

38%

43%

4%

3%

Strongly disagree Disagree Neither disagree nor agree Agree


Demographics


Demographics: Annual Revenue

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.

Less than $1 million

$1 million to less than $5 million






$500 million to less than $1 billion

$1 billion or more

4%

19%

11%

11%

13%

12%

13%

4%

14%


Demographics: Organization Industry

Note: n = 338. Percentages do not sum to 100% due to multiple response options.

Percentage

Professional, scientific and technical services 22%

Government agencies 16%

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%


Demographics: Organization Industry (continued)

Note: n = 338. Percentages do not sum to 100% due to multiple response options.

Percentage

Accommodation and food services 2%

Information 2%

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%


Demographics: Organization Sector

n = 336

Publicly owned for-profit

Privately owned for-profit

Nonprofit

Government

Other

17%

48%

15%

16%

4%


Demographics: Organization Staff Size

n = 332

1 to 99 employees

100 to 499 employees

500 to 2,499 employees

2,500 to 24,999 employees

25,000 or more employees

23%

31%

21%

16%

9%


n = 355

Demographics: Other

U.S.-based operations only 74%

Multinational operations 26%

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?


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 survey• Margin of error +/- 5%• Survey fielded August 11-29, 2014

In collaboration with and commissioned by the National Center for the Middle Market (NCMM)

Survey Methodology


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

About SHRM Research

http://www.shrm.org/surveys

http://www.shrm.org/customizedresearch

http://twitter.com/SHRM_Research


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.

About SHRM

http://www.shrm.org/


About the National Center forthe Middle Market

EDUCATION AND OUTREACH

EVENTSACADEMIC & PRACTIONER RESEARCH

+ Congressional Caucus on

Middle Market Growth

+ Briefings for State and Local

Policy Makers

+ Executive Education

+ Industry Cluster Program

+ National Middle Market

Summit

+ Regional Partnerships and

Events

+ Events with Research and

Strategic Partners

+ Middle Market Student

Summit

+ Case Competition

+ Middle Market Indicator

+ State Economic Studies

+ Focused Research

Talent and People; Growth

and Innovation; Customer

Focus and Sales; Finance

and Governance;

Operational Excellence

For more information go to www.middlemarketcenter.org

http://www.middlemarketcenter.org/

shrm survey findings: hr professionals’ perceptions about performance management effectiveness in...

Documents

formal performance appraisals

annual performance appraisals

hr professionals perceptions

hr professionals opinions

higher priority

disagr ee managers

strong performers

disagr ee c