More Coaching, Less Counting
A new study finds only 37 percent of employers think their organization is effective in incorporating career development into the performance-management process, and experts say coaching, feedback and goal setting are all getting less attention than workers require.
By Janet Aschkenasy
Are U.S. employers overly focused on performance-based pay at the expense of providing employees with performance-enhancement tools like coaching, feedback and help with setting and achieving goals?
Experts examining a new study of more than 1,600 talent management and rewards professionals conducted during the second quarter of this year say yes. Moreover, employers and employees alike seem to agree that companies in the United States are not handling performance management as well as their counterparts in places like China and India.
New data from Towers Watson and global HR professionals' association WorldatWork, of Scottsdale, Ariz., finds that U.S. companies see themselves as less effective overall than their global counterparts in their assessment of their performance-management process in several areas.
Survey participants included multinational companies in 29 countries worldwide. Only half of U.S. respondents to the survey (51 percent) believe their performance management process effectively links salary increases to individual performance results, compared to 62 percent of global companies. Even fewer -- 44 percent of U.S employers -- believe they effectively link bonus payouts to individual performance, versus 65 percent of companies globally.
What may be happening, says Laura Sejen, global rewards practice leader at Towers Watson in New York, is that "in an era of 3-percent merit increases, coaching and feedback, goal setting and mid-course corrections may be getting less attention than needed." Given such small amounts to go around, she says, "managers are finding it difficult to differentiate pay increases in a meaningful way."
Even globally, only 37 percent of employers find their organization is effective in incorporating career development into the performance-management process, according to the Towers Watson/WorldatWork data.
And yet companies outside the United States -- in countries including India and China -- are seen doing a better job matching pay to performance, according to an employee-driven survey which Mercer completed last year.
Also, when asked to rate the effectiveness of managers in the performance management process as part of the latest Towers Watson survey, U.S. companies saw their managers as significantly less effective at setting individual performance goals (37 versus 52 percent globally), giving employees regular coaching and feedback (24 percent versus 39 percent) and conducting career development discussions (19 percent versus 33 percent).
Sejen says it's important to remember that there is a consensus among U.S.-based HR professionals that employees place a very high value on the performance-management process and that companies here are probably being extra hard on themselves in terms of "getting things right" because the issue has become such a high priority here.
Nevertheless, the Towers Watson report suggests that companies all over the globe are facing similar issues, partly because managers everywhere are so starved for time -- another issue that is impacting their performance-management delivery, says the new 15-page survey study.
Jeanie Adkins, a partner with Mercer and co-leader of its U.S. rewards segment in Louisville, Ky., agrees with much of the above.
"We do believe the United States is a leader in terms of general management practices and driving productivity," she says, "and we also believe that U.S. managers focus more on the rating and evaluation part of the performance-management process." Therefore, she says, "They continue to work on doing a better job of goal setting and coaching employees."
Mercer's What's Working Survey, conducted among nearly 30,000 employees in 17 countries worldwide from the fourth quarter of 2010 to second-quarter 2011, finds the United States "in the lower-middle part of the distribution" when it comes to whether they feel they're being rewarded appropriately for a job well-done.
Specifically, Adkins says, 40 percent of U.S. employees say they are rewarded for doing a good job, versus 65 percent to 68 percent of employees in places including Mexico, India and China who say the same. Some of the lowest scores of the survey, meanwhile, came from Italy, the United Kingdom, Spain and France. In France, for instance, just 29 percent of employees surveyed said they feel they are properly rewarded for positive on-the-job performance.
So, what can be done about the problem?
Towers Watson's Sejen says that often, it isn't so much that performance programs are poorly designed, but "more about how we execute against the design, whether we've given managers the tools and training they need to facilitate effective performance management."
She advises HR leaders at U.S. companies to establish a job architecture which clearly lays out the progression of all career paths across various job families, as well as establish the relative value of each position in each job family.
She also suggests those leaders establish scaled competency models that can document expectations for skills and behaviors at different organizational levels.
Finally, Sejen says, HR leaders should make sure managers know how to integrate those three inputs into performance management discussions with employees. If those managers who were given performance management training are no longer with the organization, make sure new managers are given access to the training they need.