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Mercer recently released an excellent report on performance management (no signup needed) across the world. I just read it, and here are the top takeaways:

Takeaway #1

Only 2% of companies feel that their performance management approach delivers “exceptional value.”

Takeaway #2

There are six common performance management practices (see above). Surprisingly, there’s been a lot of change in those practices across a six-year period. The most surprising decreases is the decrease in formal performance management practices such as formal year-end discussions and self-assessments. It appears to be offset by “performance planning discussions,” which is equivalent to goal setting.

Overall, it just seems like companies are doing less performance management activities compared to six years ago.

Takeaway #3

This chart (see above) shows the most common performance-related HR metrics. This biggest trend is the reduced emphasis on “completing” the performance evaluation.

Similar conclusion as above: it seems like HR departments across the board seem to be content with tracking fewer metrics.

Takeaway #4

The report calls out differences in HR performance practices by region and industry. Interestingly enough, there are some stark differences. Some regions / industries are stronger in:

Formalizing performance processes
Linking performance to pay
Conducting succession planning
Adopting new technologies
Emphasizing technical competencies

Takeaway #5

The paper asserts that coaching needs to improve, and it starts with feedback. Here are some notable data points regarding feedback:

The study found that only 2% have a feedback-rich culture.
When prioritizing where feedback needs to improve the most, 65% of companies say it’s manager to employee feedback.
Frank feedback is not enough; feedback that is connected with learning experiences that accelerate the contribution and acquisition of new skills is the key.
Paper strongly concludes that the company should “set expectations first” and then move on to “improving the quality of feedback conversations.”
Eliminating performance ratings, interestingly enough, does not improve feedback frequency or quality.
66% of companies do not use real-time feedback technology. And among those that do, one-third find it less effective than what they had anticipated before implementation.
Industries have different beliefs on who needs feedback strengthening whether it’s:
- Manager to employee
- Employee to manager
- Peer to peer

Takeaway #6

A significant # of companies have banished employee ratings over the last 6 years. Here’s the interesting thing: those that banished ratings are less likely to connect pay w/ performance.

BUT the implication is that it increases the perception among employees that compensation practices are biased and unequal.

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Takeaways from Mercer's 2019 Global Performance Management Study