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Friday, December 01, 2006

Performance Management Systems

According to a recent survey conducted by the Institute for Corporate Productivity, "Any organization that still seeks the one silver bullet that will revitalize its performance management (PM) system should forget about it."

"There is no single performance management practice that can transform an ineffective system into a good one. Performance management systems are just that: systems. They require the coordination of multiple key practices. The more of these practices that are in place, the more likely a performance management system is to be seen as effective.”

A performance management system is more likely to be seen as effective when it includes the following:

1. Plans for helping employees develop in the work period after the appraisal.
2. Ongoing goal review and feedback from managers.
3. Training for managers on how to conduct a performance appraisal meeting.
4. Metrics of the quality of performance appraisals.
5. Ways of addressing and resolving poor performance.
6. Appraisal information that isn’t limited to the judgment of supervisors.
7. A PM system that is consistent across the whole organization.
8. Some form of multirater feedback.
9. Employees can expect feedback on their performance more often than once a year.

Interestingly enough, when asked whether their performance management process is seen as contributing to individual performance, only 8% said their process contributes in a significant way.

Another 45% said their performance management process contributes but that more improvements are required, while nearly half (47%) are not sure whether their performance management process makes any contribution.

BOTTOMLINE: Something is still clearly missing. Even more so for small and emerging growth companies. The time is finally here for the convergence of a program that takes into account and addresses the three primary barriers of performance management systems: expertise, economics and human factors. The first sustainable program for business excellence: Six Disciplines.

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