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Are Performance Reviews an endangered species? (Chapter II)

Last quarter we discussed the fact that while employee performance management has been a mainstay of most organizations, the process is fraught with imprecision and dissatisfaction. 

Rather than serving as opportunity for providing direction, growth and alignment, Performance Management is more often seen as a necessary evil.  An Aberdeen Group study indicated there is clearly a disconnect between the concept of performance management and it’s successful execution, since 95% of study reported giving performance reviews but only 11% felt the reviews actually improved performance levels.

In our June post we discussed the two key performance criteria that defined ”Best in Class” Companies with regards to performance management:

  1. Improved bottom line results: best in class companies experience a minimum profitability growth of 10% or move over last 12 months.
  2. Increased employee retention rates: 94% of best in class companies increased or maintained stable employee retention rates over the last 12 months.

This quarter, we would like to discuss WHY focusing on performance management is seen as more important a project than ever.

According to Aberdeen, industry pressures are forcing all companies to adapt to change in two primary elements of their business.  First, the labor pool is shrinking and second, the pressure to perform more profitably is unceasing.

The study show the top five (5) pressures driving performance management within a company were:

  1. Pressure to improve overall company performace indicated by 57% of group.

  2. Pressure to improve employee productivity indicated by 46% of group.

  3. Pressure to increase employee satisfaction indicated by 31% of group

  4. Pressure to gain visibility of goals, metrics and ratings indicated by 30% of group

  5. Pressure to add structure to the process indicated by 20% 0f the group.

Key takeaway?  Employee Performance Management used by best in class companies as method to increase company performance.

Key disconnect? 31% of group indicated they were dissatisfied with their Employee Performance Management Solution.  Bottom line? The review process is anticipated by both managers and employees with a great deal of dread and trepidation. 

 Aberdeen’s study showed:

  • Best In Class:  in the top 20% of companies, 94% improved employee retention and 88% increased profit at least 15%.

  • Industry Average: in the middle 50% of companies, 74% improved retention and 4% increased profit at least 15%. 

  • Laggard: in the bottom 30% of companies, 59% improved retention while 0% increased profit at least 15%. 

Key Takeaway?  Companies that successfully use Employee Performance Management are much more likely to retain more employees, leading to significant profit growth. 

The key to success?  Hire employees that fit their jobs, and make sure they are capable of doing the job, doing the job how you want it done, and being interested in doing a good job.

 Coming next Quarter: What IS the connection between productivity, turnover and job match?

Thank you for taking the time to read about Employee Performance Management.  Your employees are your company’s largest asset; with workforces shrinking, employee retention will be key factor impacting success of any company.

Hope to see you in St. Louis at NAMA National October 15-17, 2008. 

 Sincerely,

Dave McCaffrey

This entry was posted on Tuesday, September 16th, 2008 at 11:34 am and is filed under Hiring and Screening. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Biography of Dave McCaffrey:

Before becoming a strategic partner of Profiles International™, Dave McCaffrey built a thirty year career in the fast food, convenience store, vending, and Office Coffee Service segments, ultimately holding senior segment management positions at Oscar Mayer, Kraft Foods, and Starbucks Coffee Company.

Over his career, he developed successful relationships with corporate clients such as ARAMARK, Compass Group, Circle K, 7-Eleven and Standard Coffee Service Company, as well as many regional and local independent businesses in the foodservice industry. Dave also grew and enjoyed productive relationships with brokerage and distributive components, as well as segment specific media and national associations of each unique foodservice segment.

Dave feels his greatest professional (and personal) accomplishment of his successful corporate career was the fact that many of the people that he managed were able to move up to their own managerial responsibility. His own management experience gave him the understanding of the benefit of accurate personnel assessments as quality tools for developing key employee engagement and effectiveness.

Having received his Bachelor of Science degree from the University of Wisconsin, he also earned an Associate Degree in Marketing from the Madison Area Community College.

Actively involved in many volunteer capacities, Dave is a member of several commissions at Immaculate Conception Parish (Elmhurst, IL) In addition, Dave and his wife Rita actively mentor engaged couples participating in the Joliet (IL) Diocese pre-marriage program.

Dave and his wife Rita (Flad), both from Madison WI, have been married for forty+ years (’67), and have lived in Elmhurst, Illinois, for over ten years. They have two daughters, both of whom live and work in the Chicago area.

One Response to “Are Performance Reviews an endangered species? (Chapter II)”

  1. Marianne Hynd, Ann Michaels & Associates Says:
    September 17th, 2008 at 6:37 am

    Employee performance management is an important step, as mentioned in this article, for many reasons. In addition to the performance management successfully used by best in class companies, many turn to objective measures of employee performance as well, including mystery shopping programs. Used correctly and positively, this type of program can measure employee performance on an ongoing basis, allowing managers to provide feedback and additional training where needed as issues arise versus waiting for a performance review.

    In my experience, many companies use mystery shopping programs for ongoing monitoring, feedback for performance reviews, and bonuses or incentives.

    I look forward to next quarter’s discussion of the connection between productivity, turnover, and job match.

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