Global Study: Medium Enterprises Seek More Agile Performance Management

To keep up with competitors and an evolving talent landscape, medium enterprises around the world are evolving their approach to employee performance management. And with good reason: In the global “Employee Performance Management Needs a Promotion” study, conducted by Forrester Consulting on behalf of Workday, 60 percent of medium enterprise respondents worry they are falling behind their peers when it comes to managing employee performance.

The study, which surveyed more than 600 employee-performance decision-makers in 14 countries, representing North America, Europe, and Asia Pacific, also found that traditional, periodic performance reviews are giving way to more continuous and engaging methods.

Additionally, the study found that four out of five (82 percent) respondents are refocusing the performance management processes at their companies and agree that they need more agile processes to keep pace with business and technology changes. For medium enterprise organizations, attracting, retaining, and developing employees is vital to business success, yet many companies treat employee performance management as an annual business maintenance—a cost—as opposed to a strategic investment that will pay dividends down the road.

According to Deloitte’s Global Human Capital Trends report, 70 percent of companies are in the process of reinventing their HR performance management processes, yet the Forrester survey demonstrated there is work to do for medium enterprises in this area. Forrester found that nearly two-thirds of medium enterprises (64 percent) still conduct periodic performance reviews on an annual or semi-annual basis. Crucially, a third of respondents (33 percent) feel that employees and managers don’t get enough value out of the process for the time required, and roughly the same proportion (32 percent) feel their current processes are too time-intensive.

While continuous coaching can help acknowledge employee successes, address performance issues in real-time, and streamline administrative processes associated with periodic reviews, 36 percent of respondents feel that managers at their companies lack coaching and people development skills.

Sixty percent of medium enterprises worry that they are falling behind their peers when it comes to employee performance management. But, what specific objectives are driving this evolution? Forty-four percent of medium enterprise decision-makers stated that they need to better connect employee performance to measurable business objectives, while 46 percent said they believe improvements in performance management will boost employee retention.

The evolution of technology will be a crucial component in reshaping continuous performance management, and three in four medium enterprise respondents stated that they are seeking technologies that can provide analytics on team and company performance. Meanwhile, 74 percent said that integration with learning, succession planning, and career advancement systems—and an ability to provide managers with contextual guidance for better coaching (73 percent)—were also highly desirable attributes from performance management technology.

While technology is clearly an important enabler, the study also uncovered the importance of cultural change from leadership within medium enterprise organizations. Forty-five percent of respondents felt that establishing a performance philosophy and set of goals is one of the most important first steps to evolve their processes.

Helping managers develop better coaching skills is another important first step for 44 percent of respondents. To motivate employees to buy into new processes, 38 percent advocate for creating stronger rewards and recognition programs. Decision-makers also understand that employee performance management affects the entire company, and 45 percent underscored the importance of clear and transparent communications as they evolve their performance programs.

The research clearly demonstrated that the rewards are plentiful for organizations who successfully reinvent their performance management processes. Among medium enterprises who updated their performance management programs within the past two years, 60 percent cited improved employee engagement and more than half (53 percent) reported improved employee productivity as benefits of their efforts. Perhaps most interestingly, improved employee experiences trickle through to improved customer experiences, with 42 percent citing improved customer satisfaction as a result of their employee performance management improvements.

For more on these findings and the full survey results, read “Employee Performance Management Needs A Promotion,” a February 2018 commissioned study conducted by Forrester Consulting on behalf of Workday.

For an overview of the key areas that organizations should consider to improve employee performance management, read the first blog, “Global Study: Continuous Performance Management Increases Competitive Advantage.”

Learn what medium enterprise organizations think about performance management in the second blog in this series, “Global Study: Medium Enterprises Seek More Agile Performance Management.”