According to a recent study by McKinsey
Global Survey, performance management systems can be successful but only when
executed properly. Analysis indicates
that the key to reaping business success is to establish a system that both
employees and managers perceive as fair.
To ensure that fairness the managers need to master three critical
practices:
1.
Linking individual
employee goals as closely as possible to business goals and priorities
2.
Coaching
effectively
3.
Effectively
differentiate compensation across all levels of performance.
Linking performance goals to business priorities
The study shows that linking individual
employees’ performance goals to business priorities, not only correlates with a
higher level of perceived fairness but also helps companies achieve their
strategic goals. Where employees’ goals are linked to business priorities, 46%
of respondents report effective performance management, compared with 16% at
companies that don’t follow this practice.
Manager coaching
Analysis indicates not only that
effective coaching is the strongest driver of perceived fairness but also that
there is a direct relationship between effective managers and the effectiveness
of a company’s performance-management system. Unfortunately only 30% of all
respondents reported they had effective management coaching.
Differentiating compensation
Less than half of all respondents agree
that compensation in their company is meaningfully different across levels of
performance. The results also suggest
that effective performance management is more likely when organizations
separate compensation conversations from formal evaluations.
Many performance
improvement systems are under stress because employees harbor doubts that these
core elements are equitable. To improve
your performance improvement efforts, these doubts need to be eliminated.
For
more information on Ultimate Choice Inc.’s products or services or other white
papers please contact us at Ultimatechoiceinfo@cox.net
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