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HR is struggling to adopt strategic approach to performance management


New research suggests that performance management in the UK is still concentrated at an individual level, despite industry claims that personal appraisals are driven by organisational objectives.

The survey, conducted by PeopleSoft, found that 83% of HR departments claim performance management is linked to organisational objectives, yet only 1% actually use targets governed by the business plan when assessing performance.

While HR staff aspire to have a strategic impact on the business, many organisations still see personal development and appraisals as a tactical function. Personal objectives are usually set between the appraiser or manager and the employee.

Only a fraction of respondents have received funding to embrace new technology when it comes to performance management, with a mere 11% having implemented a computer based system. Those leading the way are using the technology to maintain continuous development by ensuring the goals and objectives receive ‘real time’ feedback on an ongoing basis.

47% of organisations still endure a completely paper based performance management system, with the remainder combining paper with technology, to the level of emailing a document.

The research also discovered a variance between those organisations which claim to identify skills gaps as part of the performance management process, and those that do so in practice. 71% of respondents claimed that being able to identify skills areas that are lacking was a primary objective for a performance management system. However, only 38% actually attempt to monitor the skills that are available within the organisation and less than a third keep track of professional qualifications.

The shortage of technological performance management solutions might explain why, despite all good intentions, many organisations are finding it hard to align personal appraisals with business objectives.

Peter Cools, director of PeopleSoft HCM product marketing for EMEA, said: “Computer based performance management systems provide easier access to information and help HR to link an individual’s performance to the wider business strategy. Companies leading the way in performance management systems are using the technology to provide continuous human capital management support to the business at a strategic level, rather than just isolated events.”

One Response

  1. It’s not about software
    I wonder just what is meant by ‘targets governed by the business plan’.

    Yes, individuals need to have their activities aligned with the need to make the key performance indicators head in the right direction, or keep within defined limits. But that doesn’t mean that an individual’s performance target needs to necessarily be measured in sales growth or profit, esp. when they may be in a back-office role.

    What is needed is an explicit link between the indicators an individual has to influence, and those key performance indicators mentioned earlier.

    I can’t believe that as many as 1% of organisations have got this right – that would equate to thousands of organisations in the UK, excluding all the ‘one man bands’!

    Employees tolerate Management’s rationale for doing what it says and does, draw their own conclusions and then act accordingly. So, a badly designed hierarchy of indicators, misaligned with the message put out by the actions of managers, leads in part to a less-than-stella performance.

    No amount of HR and enterprise software will fix this. Having worked in organisations that have spent a fortune on this kind of software, and fudged the implementation of it too, these systems can rapidly become a hinderance.

    So, the issue is not about having the right kind of performance management software, it’s about having an effective hierarchy of indicators, presented by a management whose actions are consistent with those indicators, and with a reward and recognition scheme that fully supports the actions needed to drive the right behaviours.

    An effective hierarchy of indicators tells the past story of the organisation, the department, the team, the individual and the key processes, and is a good indicator of the near future of each of these levels. And each level is clearly linked to the levels above and below, so an individual can explicitly trace his/her activities right up to the strateguc goals and key business indicators, and know why s/he does what s/he does, and how it contributes to the success of self, team and organisation.

    Simple really!

    I guess this might have something to say about the content and structure of job and role descriptions?

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