Research. Performance Management Survey

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1 SOCIETY FOR HUMAN RESOURCE MANAGEMENT Research Performance Management Survey

2 SHRM / PDI Peformance Management Survey Contents 3 About This Report 4 Sponsors 5 A Message from the SHRM Foundation 6 Executive Summary 7 Survey Results 7 Overall Characteristics of Performance Management Systems 7 System Objectives: Employees Come First 8 Satisfied With Appraisals; Dissatisfied With Development 9 More Executive Support Required 9 Top Effectiveness Measures 11 System Components Are Integrated 11 Planning and Evaluation 11 Performance Planning and Evaluation: Executives Have the Edge 12 Development and Career Planning: A Need to Focus on the Future 13 Development 13 Classroom Training Popular and Preferred 14 The Fully Developed Executive? 15 Lack of Training in Feedback and Coaching 15 Rewards: Performance Pay Common At All Levels 15 Technology Industries: Champion for Non-Exempt Employees 16 The Future: More 360-Degree Feedback 18 Conclusion 19 Demographics 20 A Message from Personnel Decisions International 21 Sample Questionnaire 26 Appendix Society for Human Resource Management and Personnel Decisions International 1

3 SHRM / PDI Peformance Management Survey About This Report The Society for Human Resource Management (SHRM), with partial funding from the SHRM Foundation, and Personnel Decisions International (PDI) co-sponsored the 2000 Performance Management Survey to gather information on performance management in today s workplace. The following report provides an analysis of the survey results, based on the responses of 480 human resource (HR) professionals. The traditional focus of performance management systems has been on performance planning and evaluation, rewards and discipline. In developing this survey, SHRM and PDI decided to focus on a more contemporary viewpoint of performance management. In addition to the traditional aspects, this survey covers development and career planning, feedback, coaching, training and development methods. The study objectives were to: measure current and best practices in performance management; measure how organizations view the effectiveness of their current performance management systems overall and of specific performance management tools; and forecast where activity will be shifting in the near future. SHRM and PDI decided to survey SHRM members in organizations that were most likely to have performance management systems in place those organizations with 100 or more employees. In July 2000, questionnaires were faxed to 2,710 SHRM members: one-third each from organizations with employees, 500-2,499 employees and 2,500+ employees. Respondents could choose between two survey completion methods: paper or online. Of the 480 HR professionals responding to the questionnaire, 75% completed the paper survey and 25% completed the web survey. The survey report contains numerous tables and charts that capture the participants responses. Several comparisons based on organization size are made throughout the report. To see key data categorized by organization size, please visit either of the following web sites: or In addition, throughout the report readers are posed questions about their own organizations performance management practices in order to enhance the usefulness of the survey results. Also, the report includes a copy of the survey questionnaire and an appendix that contains white papers relating to performance management. 3

4 A Report from the SHRM Survey Program Sponsors The Society for Human Resource Management (SHRM) is the leading voice of the human resource profession. SHRM provides education and information services, conferences and seminars, government and media representation, online services and publications to more than 140,000 professional and student members throughout the world. The Society, the world s largest human resource management association, is a founding member of the North American Human Resource Management Association (NAHRMA) and the World Federation of Personnel Management Associations (WFPMA). The SHRM Foundation is a non-profit organization established in 1966 to fund and support applied research, publications, scholarships and educational programs to help HR professionals and their employers prepare for the future. The Foundation s goal is to continuously improve standards of practice and performance for the HR profession and to help HR leaders stay current with the latest developments and trends. Personnel Decisions International (PDI) is a global human resources consulting firm. PDI has helped client organizations meet their business challenges through integrated solutions to human resource needs since PDI works in partnership with clients to: define successful performance and identify the capabilities needed to achieve it. measure performance and capabilities, and evaluate potential. develop the capabilities needed to be successful now and in the future. PDI s goal is to help clients build effective organizations and gain competitive advantage through wisely choosing and effectively developing their most important asset people. For more information regarding PDI, see A Message from Personnel Decisions International following the survey report on page 20. 4

5 SHRM / PDI Peformance Management Survey A Message from the SHRM Foundation It s a great time to be a human resource professional. Companies today recognize that people are the competitive advantage, and HR is being asked to play a strategic leadership role in shaping their organization s future. To do this, human resource professionals will need to continually expand their knowledge and competencies. That s why the SHRM Foundation is so important today. Investing in Knowledge For Your Future The SHRM Foundation is a 501(c)(3) non-profit organization that promotes research and development in the human resource field. The SHRM Foundation advances the profession and increases the knowledge and effectiveness of human resource professionals through its funding of leading-edge human resource research, publications and educational initiatives. Sponsorship of the SHRM Survey Program As a sponsor of the SHRM Survey program, the SHRM Foundation is able to provide timely research findings on important issues to SHRM members on a regular basis. For example, the following SHRM and Personnel Decisions International (PDI) survey on performance management systems offers rich insights into the importance of employee-oriented performance systems in today s highly competitive work environment. The survey findings reveal that employees today want to know the answer to the question made famous by Ed Koch, former Mayor of New York City: How am I doing? Like Koch, employees want feedback about their performance and what the organization expects of them. Furthermore, employees want information about what they need to do to develop as leaders and to increase their value as employees. This important survey provides food for thought for HR professionals especially the inclusion of development as part of performance management systems. Foundation-Related Research Projects The SHRM/PDI survey on performance management systems is part of the larger human resource issues on productivity and career development. The SHRM Foundation is particularly interested in understanding more about the attitudes of employees today, especially in relationship to the organization. For example, here are two Foundation research projects currently underway that explore this issue in more detail: Changing Nature of the Employment Relationship: by Lynn M. Shore, Ph.D., Lois E. Tetrick, Ph.D., and Sandy J. Wayne, Ph.D. In the competition for talent, it is increasingly important for organizations to understand the changing nature of the employment relationship. The employment relationship refers to employees perceptions of what they owe the organization and what the organization owes them in return. The proposed research examines how HR practices help form the employment relationship, which in turn, influences organizational outcomes (commitment, performance, citizenship, turnover). Voluntary Turnover, Workforce Productivity and Organizational Performance: Investigating the Role of HR Management Investments: by Jason Shaw, Ph.D. This research project investigates the relationships between voluntary turnover and organizational performance in a survey study of 1,200 motor carriers, supplemented by two archival data sources. Results will enhance the scientific knowledge base and provide value for practitioners making HRM decisions that impact bottom line performance. For More Information Contact the SHRM Foundation for more information about these and other research projects by e- mailing Thank you for your support of the SHRM Foundation and your commitment to excellence in the profession. 5

6 A Report from the SHRM Survey Program Executive Summary The 2000 Performance Management Survey showed that performance management in organizations is evolving from a system dominated by the performance appraisal to a system that focuses on employee development. However, the transition is far from complete. Stronger executive support for performance management and increased employee participation in development activities is needed in order for performance management systems to truly become a tool to help attract and retain talent. Overall Characteristics of Performance Management Systems Respondents gave top priority to performance management system objectives focused on employees rather than managers. Respondents were significantly more satisfied with traditional system components performance planning and evaluations, discipline compared with developmental components leadership development, development planning, 360-degree feedback, and coaching. Executive support for performance management was lacking. HR professionals reported that many executives and senior managers did not endorse or even use their performance management system. Planning and Evaluation Seven out of 10 respondents reported that their organizations had written performance plans for most executives. Nearly two-thirds (64%) had performance plans for most exempt employees, and nearly half (45%) had plans for non-exempt employees. Seventy-five percent of participants reported that most of their executives had performance goals linked to operating results, compared to 36% for exempt employees and 17% for non-exempt employees. Development planning and career planning efforts were limited. Twenty-five percent of participating organizations had written development plans for all executives, and a mere 8% of respondents organizations had career plans for all executives. Development Classroom training was the most popular method for professional development. Eighty-six percent of respondents organizations conducted in-house classroom training and 84% had employees participate in external classroom training. On-the-job training and in-house classroom training were rated as the most effective professional development methods. Independent study both traditional and online was viewed as the least effective development method. Respondents reported that a lower percentage of executives at their organizations compared with exempt and non-exempt employees participated in most development activities. The Future 360-degree feedback was the only specific performance management area where companies planned to increase their activity during the next year. 360-degree feedback was used by only onethird of respondents organizations. 6

7 SHRM / PDI Peformance Management Survey Survey Results In today s tight labor market, the ability to attract and retain valuable employees is a source of competitive advantage for organizations in every industry. One key to attracting and retaining high-performing employees is to provide strong support for their best performance: define and establish clear performance goals; track progress and give relevant, useful feedback; and develop employees to meet or exceed the company s goals and their own personal career goals. The traditional approach to providing such support has been in the form of performance management systems. But what are HR professionals objectives for their performance management systems? What are the current and best practices in performance management? How effective do human resource professionals think that their current performance management systems are both overall and with regard to specific tools? What are the greatest challenges to improving performance management systems? In which area of performance management will HR professionals concentrate their efforts in the near future? To answer these questions, the Society for Human Resource Management (SHRM) and Personnel Decisions International (PDI) conducted the 2000 Performance Management Survey. Survey respondents shared their insights on current practices and anticipated activity in performance management. The following pages report the results of this survey. OVERALL CHARACTERISTICS OF PERFORMANCE MANAGEMENT SYSTEMS System Objectives: Employees Come First Survey participants believed that performance management systems should focus on the employee. Respondents were asked to place seven performance management system objectives in rank order based on their importance ( 1 being most important; 7 being least important). Results showed that the highest ranked objectives for performance management systems were employee-oriented: Provide information to employees about perceptions of their performance. Clarify organizational expectations of employees. Provide information to employees about their development needs. Those objectives focused on providing information to managers were ranked lower by survey respondents. For example, documenting performance for employee records and providing information to managers for making promotion/demotion decisions ranked sixth and seventh, respectively (see Figure 1). Figure 1: Objectives of Performance Management System Objectives Average Rank Provide information to employees about their performance 2.8 Clarify organizational expectations of employees 2.8 Identify developmental needs 3.7 Gather information for pay decisions 4.0 Gather information for coaching 4.2 Document performance for employee records 4.6 Gather information for promotion decisions 5.2 Source: SHRM /PDI 2000 Performance Management Survey 7

8 A Report from the SHRM Survey Program Satisfied With Appraisals; Dissatisfied With Development Respondents were asked to rate their satisfaction with each of 10 performance management system components and their system as a whole. Respondents were significantly more satisfied with traditional performance management system components than with developmental components. For example, a majority of respondents were either satisfied or very satisfied with their organizations performance evaluations (61%), performance planning (51%), and discipline (51%), while only one in three were satisfied or very satisfied with leadership development (38%), development planning (34%), 360-degree feedback (33%), and coaching (33%) (see Figure 2). This may be due to the fact that organizations have been using traditional methods for a longer period of time, and that many organizations have only recently started thinking about development as part of their performance management systems. This presents a gap between what HR professionals ranked as their most important objectives for their performance management systems and how their systems are actually working. They tended to be less satisfied with the developmental areas precisely those areas critical to achieving their objectives of providing information to employees about perceptions of their performance and about their development needs (e.g., 360- degree feedback, development planning and coaching). If employees come first, should the focus of these systems shift to development from appraisal? Or can a system accomplish both? One-third (32%) of survey respondents were unsatisfied or very unsatisfied with their overall performance management system. This dissatisfaction can largely be attributed to dissatisfaction with the developmental components of the system leadership development, coaching, 360-degree High 80 % Figure 2: System Satisfaction Percent Satisfied and Percent Very Satisfied 60 % 40 % 61% 51% 51% 50% 49% 47% 46% 38% 34% 33% 33% Low 20 % Performance Evaluation Performance Planning Discipline Informal Feedback Source: SHRM /PDI 2000 Performance Management Survey Training Overall Rewards System Components Leadership Development Development Planning Coaching 360-degree Feedback 8

9 SHRM / PDI Peformance Management Survey feedback, and development planning. Many survey respondents recognized that employee development needed to be viewed as a retention strategy. Employees continue working for organizations where they feel they are: being adequately challenged, learning new skills and capabilities, supported and coached by their manager, and progressing toward their career goals. More Executive Support Required Clearly, executive support of performance management is critical to system success. However, results showed that respondents believed such support was absent. In an open-ended question, respondents were asked to list the greatest challenge to improving their performance management system. Many survey respondents focused on executive/management support. For example, one in four respondents (22%) explicitly mentioned that their greatest challenge was lack of support/endorsement from top management, 17% reported that their performance management system was undervalued in the company, and 14% stated that lack of system use by management was an obstacle (see Figure 3). Survey results showed that there is room for improvement with regard to executive support of performance management systems at respondents organizations. At 42% of participating organizations, executives did not review the performance management system at all (see Figure 4). Survey respondents recognized that executives needed to actively use the system and publicly support it in order for the system to have credibility. How would a change in executive behavior toward performance management improve its results? What would you have executives do differently? Top Effectiveness Measures Respondents were asked in an open-ended question how the effectiveness of their performance management system was measured. Thirty percent 25% 20% 22% 17% Figure 3: Future Challenges Percent of Organizations 15% 10% 14% 13% 13% 13% 11% 5% 0% Lack of upper management support Performance management undervalued in company Source: SHRM /PDI 2000 Performance Management Survey Lack of use by management Difficult to create performance goals Lack of training Require new/upgraded system Requires too much time 9

10 A Report from the SHRM Survey Program Figure 4: Review by Management Percent of Organizations 60% 50% 40% 30% 20% 42% 19% 15% 12% 52% 37% 17% Sr. Management HR Management 10% 6% 0% Not Reviewed Biennial Annual More Frequent Frequency of Review Source: SHRM /PDI 2000 Performance Management Survey 35% 30% 30% Figure 5: Measures of System Effectiveness Percent of Organizations 25% 20% 15% 10% 5% 22% 19% 18% 12% 8% 7% 7% 5% 3% 2% 2% 0% Informal Feedback Forms Completion Compared with Performance Goals Survey or Focus Group Compared with Business Goals Informal Discussions Turnover/Retention Review Ratings Distribution Compared with Compensation Too New to Measure Training Needs Productivity Changes Method Source: SHRM /PDI 2000 Performance Management Survey 10

11 SHRM / PDI Peformance Management Survey of respondents listed informal feedback and 22% listed forms completion/timeliness of forms as the method used to measure effectiveness of the system. Other measures are listed in Figure 5. System Components Are Integrated When asked how well their performance management system components were integrated, 44% of respondents reported that their components were integrated or well integrated. Thirty-eight percent of respondents reported an average level of integration for system components (see Figure 6). PLANNING AND EVALUATION Performance Planning & Evaluation: Executives Have the Edge Seven out of 10 respondents reported that their organizations had written performance plans for most at least three out of four of their executives. Nearly two-thirds (64%) of respondents organizations had performance plans for most exempt employees, and nearly half (45%) had plans for most non-exempt employees. A disparity between executives and non-exempt employees existed in terms of linking performance goals to operating results. Seventy-five percent of participants reported that most at least three out of four of their executives had performance goals linked to operating results. Thirty-six percent of participating organizations linked performance goals to operating results for exempt employees and 17% of respondents organizations had performance goals linked to operating results for non-exempt employees. While it is true that executives often have more influence related to reaching operating results, non-exempt employees may feel disenfranchised because fewer of them have stated performance goals that are directly connected to business results. If non-exempt employees are typically a large percentage of the employee population and so few have goals related to operating results, is the linkage really necessary? Survey data showed equality across job levels as to who has input into performance evaluations. Approximately half of executives (55%), exempt Figure 6: Integration of System Well Integrated 15% Integrated 29% Not Integrated 4% Weakly Integrated 14% Average 38% Source: SHRM /PDI 2000 Performance Management Survey 11

12 A Report from the SHRM Survey Program (61%), and non-exempt (53%) employees had input into their own performance evaluations. Across all job levels, the direct supervisor had the most input into performance evaluations (Figure 7). Performance plans and evaluations were largely done on an annual basis, with 85% of respondents organizations preparing performance evaluations and reviewing performance plans/goals annually for all employees. This leaves an opportunity for organizations/managers to review performance more often than once a year to check progress and to avoid annual surprises during performance review conversations. Are there pockets of success in your organization that can be explained by the informal impact of a great manager? What does this say about formalizing the review process is it really necessary? How can you transfer this success to other parts of your organization? Development & Career Planning: A Need to Focus on the Future According to survey results, 25% of participating organizations had written development plans for all executives compared with 17% for all exempt employees and 12% for all non-exempt employees. These percentages were even lower for organizations with employees (23% for executives, 13% for exempt and 9% for non-exempt). Development plans were typically prepared and reviewed annually. Career plans were even less commonly used than development plans. Sixty-three percent of respondents reported that their organizations did not have career plans for executives compared with 66% for exempt employees and 73% for nonexempt employees. A mere 8% of respondents organizations had career plans for all executives and only 3% had career plans for all exempt and non-exempt employees. Figure 7: Input into Appraisals Percent of Organizations 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 93% 96% 96% Supervisor 33% Other Management 49% 35% 55% 61% 53% Self Group 17% 16% 10% Peers 14% 12% Reports 4% 9% 13% 10% Customers Executives Exempt Non-Exempt 9% 4% 5% Others Source: SHRM /PDI 2000 Performance Management Survey 12

13 SHRM / PDI Peformance Management Survey Organizations appear to be missing a key opportunity to retain employees. Employees who work for organizations that actively partner with them to create development and career opportunities are more likely to stay. This is supported by a 2000 SHRM Retention Practices Survey finding that a primary reason why employees voluntarily resign from their positions is to pursue career opportunities elsewhere. DEVELOPMENT Classroom Training Popular and Preferred Survey results showed that classroom training reigns as the most popular method of professional development. Eighty-six percent of respondents organizations conducted in-house classroom training and 84% had employees participate in external classroom training. Coaching from managers and on-the-job training/action learning ranked next in terms of usage. The development method used least by respondents was externally hired coaches (28%) (see Figure 8). Organizations with 2,500+ employees had the highest usage level for all development methods except external classroom training. Smaller organizations (with employees) had the lowest usage level for inhouse classroom training (83%), traditional independent study (53%), online independent study (34%), and externally hired coaches (17%). Respondents were asked to rate the effectiveness of eight professional development methods on a scale from 1 to 5, where 1 is not at all effective and 5 is very effective. Survey respondents Figure 8: Development Method Usage Percent of Organizations 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 86% 84% 76% 74% 58% 44% 34% 28% In-house Classroom External Classroom Manager Coaches On-the-job Training/ Action Learning Traditional Independent Study Online Independent Study Job Assignments External Coaching Source: SHRM /PDI 2000 Performance Management Survey 13

14 A Report from the SHRM Survey Program viewed on-the-job training and in-house classroom training as the most effective professional development methods, with an average 3.90 effectiveness rating. They viewed independent study both traditional and online as the least effective development method (see Figure 9). What keeps people from actively pursuing their own learning through independent study? Although classroom training is popular and preferred, employees are not spending a significant amount of time in the classroom. On average, exempt employees spent 2.6 days per year in classroom training compared to 2.3 days for executives and 2.1 days for non-exempt employees. Employees at organizations with more than 2,500 employees spent more time in the classroom on average compared with smaller organizations (see Figure 10). The Fully Developed Executive? Compared to exempt and non-exempt employees, fewer respondents reported that executives at Figure 9: Development Method Effectiveness Action Learning/ OTJ Training In-house Classroom Manager Coaches Average Rating External Classroom Job Assignments External Coaching Online Independent Study Traditional Independent Study Source: SHRM /PDI 2000 Performance Management Survey 14

15 SHRM / PDI Peformance Management Survey their companies participated in development activities such as in-house classroom training, independent study, coaching provided by internal personnel, job assignments, and action learning/onthe-job training. The only development method that executives used more than other job levels was externally hired coaches of the respondents who do hire external coaches, 90% reported that executives at their organizations use external coaching as a developmental tool. Exempt employees led the way in terms of participating in development activities. Nearly all respondents reported that exempt employees at their organizations participated in the following development methods: in-house classroom training (95%), online independent study (94%), external classroom training (93%), coaching provided by managers (92%), and traditional independent study (91%). Non-exempt employees had the highest level of participation for on-the-job training (91%), and the lowest level of participation for external classroom training (74%) and external coaches (26%). Lack of Training in Feedback and Coaching On average, approximately half of executives, managers and supervisors in participating organizations were trained in providing feedback. Three out of four respondents organizations (75%) used internal coaching, yet only one-third of executives, managers and supervisors at their organizations were trained in coaching others. The challenge for organizations is to insure that all executives, managers and supervisors are using best practices and appropriate methods in providing feedback and coaching. If your managers are trained in coaching and giving feedback, how well are they doing it? If they need improvement, what will it take to help them be their best? Rewards: Performance Pay Common at All Levels Most participating organizations used performance bonus pay at all levels. For example, 86% used bonus pay for executives, 83% used it for exempt employees and 68% used it for nonexempt employees. The usage level for performance bonus pay was even higher at large organizations and those in the technology industry. The most popular types of performance bonus pay for all levels were based on individual performance, profit sharing, and team performance. Technology Industries: Champion for Non- Exempt Employees Technology industries (e.g., finance, insurance, high tech/computers, and telecommunications; Figure 10: Average Annual Classroom Training Hours, by Job Level Job Level < 100 Employees (n=26) Organization Size Employees (n=142) 500-2,499 Employees (n=126) 2,500 + Employees (n=160) Overall Survey Average (n=454) Executives 15.8 hours 16.3 hours 16.7 hours 22.5 hours 18.6 hours Exempt 21.9 hours 19.3 hours 18.6 hours 24.2 hours 21.0 hours Non-Exempt 16.0 hours 17.2 hours 14.8 hours 19.1 hours 17.2 hours Source: SHRM /PDI 2000 Performance Management Survey 15

16 A Report from the SHRM Survey Program organizations producing or highly dependent on rapidly changing technology) as a group led the way in using performance management tools for non-exempt employees, according to survey results. The technology industry group also had the highest usage and satisfaction levels for all development methods other than job assignments. Not surprisingly, the biggest usage gap was in online independent study. Fifty-seven percent of technology organizations reported using online independent study, compared with 41% of manufacturing organizations and 42% of services organizations. The technology industry group also had the highest average annual classroom training hours for all levels (see Figure 11). The Future: More 360-Degree Feedback According to survey results, 360-degree feedback was used by only one-third of respondents organi- Figure 11: Usage of Performance Management Tools, by Industry Group Performance Management Tool Technology Industry Group (n=99) Manufacturing Industry Group (n=166) Services/Other Industry Group (n=192) Performance plans for most* non-exempt employees Development plans for most* non-exempt employees Career plans for non-exempt employees Link performance goals to operating results for non-exempt employees Performance pay for non-exempt employees 60% 37% 46% 26% 17% 16% 35% 27% 21% 77% 63% 53% 89% 71% 53% Online independent study 57% 41% 42% Classroom training, average annual hours per employee Executives Exempt employees Non-exempt employees 21 hours 26 hours 23 hours 18 hours 20 hours 16 hours 17 hours 20 hours 16 hours *Denotes at least three out of four non-exempt employees Source: SHRM /PDI 2000 Performance Management Survey 16

17 SHRM / PDI Peformance Management Survey zations for executives (32%) and exempt employees (29%), and only one-fifth (18%) of respondents organizations for non-exempt employees (see Figure 12). Larger organizations (with 2,500+ employees) tended to use 360-degree feedback to determine development needs and career plans. Respondents from mid-sized organizations (500-2,499 employees) reported the highest usage level for determining pay changes. Smaller organizations ( employees) tended to use 360- degree feedback to evaluate performance. Although current usage is low, the near future looks bright for 360-degree feedback. Data shows it is the only specific performance management area where organizations planned to increase their activity during the next year. This is especially true for smaller organizations (with fewer than 2,500 employees). Longer term, there is opportunity for organizations to shore up their efforts in the other developmental areas that exhibited dissatisfaction such as leadership development, development planning and coaching. Figure 12: Usage of 360-Degree Feedback Percent of Organizations 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 68% 71% 82% 32% 29% Executives Exempt Non-exempt 18% Does Not Use Uses Usage Source: SHRM /PDI 2000 Performance Management Survey 17

18 A Report from the SHRM Survey Program Conclusion The 2000 Performance Management Survey showed that performance management in organizations is in transition from a system dominated by the performance appraisal to a more comprehensive human resource management system that includes activities such as development and career planning, leadership development, coaching and 360-degree feedback. However, the transition is far from complete. The biggest challenge facing HR professionals as they make this transition is to gain executive support for performance management systems. Currently, many executives are not reviewing or using the system, nor are they participating in development activities as much as other job levels. Executives need to be active role models for performance management and publicly support it in order for systems to have credibility. According to survey results, the most important performance management system objectives were employee-focused. However, HR professionals were not satisfied with system components that were most likely to help employees improve their performance coaching, leadership development, 360-degree feedback and development planning. This dissatisfaction may be due to the fact that many organizations have been using traditional methods (e.g. performance appraisals, discipline) for a longer period of time and have only recently started to use developmental tools as part of their performance management system. Several performance management system aspects require additional focus, including increased support and review from senior management, more emphasis on formal feedback systems, development and career planning. These aspects will allow the performance management system to reach its full potential as a tool to fully utilize the potential of the existing workforce, to retain current employees and to attract additional talent as necessary. 18

19 SHRM / PDI Peformance Management Survey Demographics Number of Employees Total Company: Fewer than 100 employees 2% 100 to 499 employees 31% 500 to 999 employees 14% 1,000 to 2,499 employees 13% 2,500 to 4,999 employees 8% 5,000 to 9,999 employees 7% 10,000+ employees 20% No response 5% Number of Employees This Location: Fewer than 100 employees 15% 100 to 499 employees 45% 500 to 999 employees 16% 1,000 to 2,499 employees 11% 2,500 to 4,999 employees 4% 5,000 to 9,999 employees 3% 10,000+ employees 2% No response 4% Unionization (exempt employees in unions): None 59% Less than 10% of exempt employees in unions 12% 11 to 50% of exempt employees in unions 14% More than 50% of exempt employees in unions 9% No response 6% Type of Organization: Manufacturing 35% Finance/Insurance 13% Health Care 11% Services profit 9% High Tech/Computers 5% Nonprofit 4% Transportation 4% Wholesale/Retail 4% Education 3% Government 3% Telecommunications 2% Utilities 2% Agriculture/Other 1% No response 4% 19

20 A Report from the SHRM Survey Program A Message from PDI A Message from Personnel Decisions International (PDI) In today s workplace, human capital is the primary constraint in meeting organizational goals. Attracting and retaining talented employees and maximizing their performance have become of paramount importance. Thus, the role of HR professionals has never been more crucial to organizational success. At PDI, we are committed to helping the HR community succeed and believe that providing useful information, such as the Performance Management Survey, to HR professionals is our most important role. We are proud and excited to cosponsor the 2000 Performance Management Survey with SHRM, and are confident that the information provided in this report has been helpful to you. Our Performance Management Perspective PDI is dedicated to advancing performance management practices. We believe that a holistic approach to performance management that focuses on defining, measuring and, most importantly, developing capabilities is key to success. Our goal is to help our clients to advance their performance management processes so far that performance evaluations are no longer needed employees will receive feedback and develop capabilities daily, thereby eliminating the need for an annual evaluation. About PDI Personnel Decisions International (PDI) is a global human resources consulting firm. Our services and tools are developed out of extensive research and more than 30 years of experience with client organizations around the world. We know our services are effective because of our on-site, validated results with real clients in real business situations. We work in partnership with our clients to pinpoint their business needs, then bring together PDI consulting, services and tools to meet those needs. The solutions we create can be applied to individuals, teams and organizations. PDI solutions help our clients to define, measure and develop capabilities for successful performance. PDI has more than 20 operating offices around the world. Each office is staffed with consulting psychologists experienced in the cultures of their particular region. Every PDI client is served by a team of people selected from one or several offices for the expertise required by the client s business need. For More Information: Contact PDI for more information about our capabilities related to performance management or other business challenges. Call or visit our web site at for further information. 20

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