The State of Performance

Management 2020

Debbie McGrath
Chief Executive Officer (CEO)
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About the Survey

Respondents: 341 HR professionals

Date Fielded: Ran in May and June 2020

Organizations:
• The participants represent a broad cross-section of employers by
number of employees, ranging from small businesses with under
50 employees to enterprises with 20,000 or more employees.
• Questions for the survey were guided by an independent panel
of HR professionals, coaching and mentoring experts who we
thank for their invaluable insights.
Finding: Most firms say that the Covid-19 crisis has changed
their performance management process in some way
Survey Question: How has the coronavirus era changed performance management?

More performance discussions occur remotely rather than face-to-face 55%

Managers need new performance management skill sets for remote work 44%

Goals have been adapted to new circumstances 41%

More likely to touch on issues aside from performance (e.g., health and well-being) 40%

Managers schedule more frequent one-on-one meetings 29%

More emphasis on short-term agility rather than long-term performance goals 29%

There have been no changes 15%

Other - Write In 5%

0% 10% 20% 30% 40% 50% 60%

The Current State of
Performance Management
Finding: Most organizations have a performance
management process
Survey Question: Does your organization have a
performance management process?

8%

92%

Yes No
How Successful Is Performance
Management?
Finding: Top leaders too often view performance
management as a “necessary evil”
Survey Question: In your organization, how do most top leaders
tend to view performance management? (select the one that
best applies)

As a necessary evil 25%

As crucial for overall business performance 23%

As an aid to employee development 17%

As an effective way to make employee-related decisions 14%

As a means to improve engagement and/or retention 11%

As an unnecessary waste of time 7%

0% 5% 10% 15% 20% 25% 30%

Finding: Only 28% believe managers are satisfied
with their current performance management system
Survey Question: To what extent do you agree with the following statements
about most managers in your organization? (Percent saying managers in their
organizations are satisfied with PM system)

Strongly disagree 8%

Disagree 26%

Neither agree nor disagree 33%

Agree 26%

Strongly agree 2%

Don't know 4%

0% 5% 10% 15% 20% 25% 30% 35%

Finding: Only about a third of HR professionals say their PM
process meets organizational performance management
goals to a high or very high degree
Survey Question: To what degree does your organization’s
performance management process result in the ability to
meet all organizational performance management goals?

Very low or not at all 4%

Low 14%

Moderate 46%

High 28%

Very high 9%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Finding: Relatively few say their performance management
process leads to better engagement, performance, or
development to a high or very high degree
Survey Question: To what degree does your organization’s
performance management process result in the following?
(Percent responding high or very high degree)

Better employee development 26% 7% 33%

Improved employee performance 27% 5% 32%

Increased employee engagement 22% 6% 28%

0% 5% 10% 15% 20% 25% 30% 35%

High Very High

What Are the Features of
Performance Management?
 Survey Question: Which of the following statements are features of
Finding: your organization’s performance management process? (select all that
apply)
There are three
widely cited It includes both positive feedback and constructive critique 81%

features of It includes a discussion of work goals 80%

It involves a conversation about developmental goals and

performance activities
77%

It allows for continuous feedback 55%

management
It is easy to understand 45%

It improves relationships between managers and employees 43%

It is easy to use 40%

It accurately portrays employee performance 34%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

What Is the Frequency of
Performance Management?
Finding: Formal reviews still tend to be a yearly
occurrence
Survey Question: On average, how often are formal reviews or appraisals
of employee performance conducted in your organization?

11%
Four or more times a year
10%

30%
Twice a year
22%

53%
Once a year
68%

0% 10% 20% 30% 40% 50% 60% 70% 80%

2020 2018
Finding: The frequency of performance
management actions largely depends on the types
of communication
Survey Question: On average, how often are the following
actions conducted in your organization?
(Percent doing this four times a year or more)
Feedback between supervisors and employees 52%

Manager and employee conversations about performance 45%

Manager and employee conversations about career goals

24%
and aspirations

0% 10% 20% 30% 40% 50% 60%

To What Degree to Has
Performance Management
Changed In Recent Years?
Finding: About a quarter of organizations have
changed their performance management systems
over the past two years to a high degree
Survey Question: To what degree has your performance
management system changed? (percent responding high
or very high degree)

Over last two years 15% 9% 24%

0% 5% 10% 15% 20% 25%

High Very High

The Objectives of Performance
Management
 Survey Question: Which of the following describes
Finding: Employee your organization's objective for conducting performance reviews?
growth is the most (select all that apply)

widely cited reasons To help individual employees learn and grow 71%

for performance To help the organization improve overall performance

To boost communications between employees and
70%

60%
reviews, but it is managers
To meet organizational requirements (e.g., for compliance) 45%
far from the To facilitate performance-related changes in pay 42%

only one To force a conversation about poor performance 35%

To provide guidance about employees' raises 35%

To have a legal record of interactions with employees 29%

To justify dismissing low-performing employees 22%

Other - Write In 4%

We do not conduct performance reviews 2%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Managerial Skills and
Accountability
Finding: Many managers fall short in multiple
performance management areas
Survey Question: To what extent do you agree with the
following statements about most managers in your
organization? (Percent responding agree or strongly agree)

They have received sufficient training in performance

40%
management

They are good at helping employees set goals 32%

They are skilled at performance management 28%

They are good at having conversations about workplace

26%
performance and behaviors

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Finding: About two-thirds of managers are held
accountable by tracking their formal appraisals
Survey Questions: How do you hold managers accountable for
completing performance management activities? (select all that apply)

The formal appraisals they do with employees are tracked 67%

The performance levels of direct reports are assessed 27%

Their coaching and/or conversation sessions with employees are
23%
tracked
Their compensation rates, bonuses or other rewards are tied to it 20%
The engagement and/or retention rates of direct reports are
18%
assessed
They are not held accountable in any particular way 15%
Their employees rate them, in part, by how well they manage
11%
performance
Other - Write In 2%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Performance Management
Through Technology
Finding: Performance management technologies
are used by most organizations with a PM process
Survey Question: Does your organization use technology for
the purpose of performance management?

29%

71%

Yes No
Finding: Among those that use PM technologies, a majority use
at least one integrated or bundled solution
Survey Question: Which technologies does your
organization use to support performance management?
(select all that apply)

Tool(s) bundled or integrated into HR

66%
management/information system(s)

Stand alone or single point solutions (e.g., LMS, ATS) 24%

Excel, Access, or similar spreadsheet or database

22%
programs

Other - Write In 8%

0% 10% 20% 30% 40% 50% 60% 70%

 Survey Question: Which of the following capabilities does your
Finding: Most performance management technology system(s) include? (select all
that apply)
performance Facilitates employee performance review or appraisal process 70%

management Allows users to evaluate performance in relation to goals

Allows workflow approvals 54%

64%

technologies Tracks performance review meetings 51%

facilitate the Permits automated reminders

Enables one-on-ones and/or check-ins between managers and

45%
47%

employees

review Enables 360-degree feedback between managers, employees and

peers
41%

process Enables recognition/praise by others

Aids communication
35%

34%

Aids training and development 33%

Includes a calibration process 28%

Can integrate with third-party solutions 18%

Other - Write In 1%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Finding: Note-taking and recognition features are most
common among the minority of organizations whose PM
technologies facilitate communication
Survey Question: Which of the following features do your
performance-related technologies include? (select all that apply)
Permits managers to add notes at any time 81%

Allows recognition of employee achievements 72%

Permits employees to add notes at any time 69%

Tracks training and development achievements 56%

Makes training and development suggestions 42%

Allows rewards for employee achievements 30%

Other - Write In 2%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Tracking Performance
Management Through Metrics
Finding: Nearly three-quarters use manager ratings
as part of their PM processes
Survey Question: What types of metrics are incorporated into
your performance management process? (select all that apply)

Manager ratings 73%

Behavior-related scores 38%

Metrics/analytics from other systems (e.g., ATS, HRMS) 21%

Rankings (but not forced) 20%

Peer ratings 17%

Forced rankings 13%

Other - Write In 10%

None of the above 10%

Social recognition scores 5%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Finding: SMART goals are the most common
method of set objectives and track results
Survey Question: What methods does your organization use to
set goals and track results for the purpose of increasing
performance? (select all that apply)
SMART (specific, measurable, achievable, relevant, and
68%
time bound) goals

Key performance indicators (KPIs) 60%

Objectives and Key Results (OKRs) 31%

Management by objective (MBO) 22%

Key Result Area (KRAs) 15%

Progress, Plans, Problems (PPPs) 13%

Agile goals 10%

Other - Write In 4%

0% 10% 20% 30% 40% 50% 60% 70% 80%

The Future of Performance
Management
Finding: Just over a third say their performance
management system will change to a high or very
high degree over the next two years
Survey Question: To what degree will your performance
management system change?

Over next two years 30% 25% 12% 67%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Moderate High Very High

 Survey Question: Where do you think the future of performance
Finding: Over the management is headed over the next three to five years? (select
next three to five all that apply)
years, a majority It will become more integrated with employee engagement
62%
and satisfaction data
of HR professionals It will be more focused on development activities 58%

expect PM to It will become less formal and structured 46%

become better It will become better at boosting employee performance 45%

integrated with It will have more automated components related to artificial
42%
intelligence
employment It will increasingly be based on verbal or written
38%
conversations rather than ratings
engagement and It will become more objective 26%
development
It will increasingly disappear from the landscape 6%

Other - Write In 2%

0% 10% 20% 30% 40% 50% 60% 70%

How Do Performance Management
Leaders Differ from Performance
Management Laggards?
How Do Performance Management Leaders Differ
from Performance Management Laggards?
We wanted to take a closer of what differentiated organizations with successful performance
management processes from those with less successful processes. To do this we separated our
sample into two groups:

PM Leaders respondents who say that their
organizations’ performance management
processes result in them achieving all
performance management goals to a high or
very high degree.
PM Laggards: respondents who felt their
organizations’ performance management
processes result in them achieving all
performance management goals to a very
low, low, or moderate degree
Finding: PM Leaders are better at adapting
performance management to pandemic challenges
Survey Question: How has the coronavirus era changed
performance management?
More performance discussions occur remotely rather than 68%
face-to-face 50%

Goals have been adapted to new circumstances 60%

30%

Managers need new performance management skill sets for 52%

remote work 44%

More emphasis on short-term agility rather than long-term 48%

performance goals 17%

More likely to touch on issues aside from performance (e.g., 48%

health and well-being) 36%

Managers schedule more frequent one-on-one meetings 40%

23%

There have been no changes 7%

17%

0% 10% 20% 30% 40% 50% 60% 70% 80%

PM Leaders PM Laggards
Finding: PM Leaders achieve a range of better
outcomes
Survey Question: To what degree does your organization’s
performance management process result in the following?
(Percent responding high or very high degree)

68%
Improved employee performance
15%

66%
Better employee development
17%

57%
Increased employee engagement
13%

0% 10% 20% 30% 40% 50% 60% 70% 80%

PM Leaders PM Laggards
Finding: Objectives for performance management are
more closely aligned with business and workforce
needs Survey Question: Which of the following describes
your organization's objective for conducting performance reviews?
(select all that apply)

83%
To help individual employees learn and grow
65%

80%
To help the organization improve overall performance
66%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

PM Leaders PM Laggards
Finding: Performance conversations are more
frequent and informal
Survey Question: On average, how often are the following actions
conducted in your organization? (Percent responding quarterly or more
frequently)

70%
62%
60%

50%

40% 37%
34%
30%
20%
20% 17%

10% 5%

0%
Manager and employee conversations about Peer-to-peer feedback Formal reviews or appraisals of employee
performance performance

PM Leaders PM Laggards
Finding: Key performance management processes
are more prevalent in PM Leader organizations
Survey Question: Which of the following statements are
features of your organization’s performance management
process? (select all that apply)

It allows for continuous feedback 70%

46%
It improves relationships between managers and 63%
employees 30%

It is easy to understand 57%

36%

It accurately portrays employee performance 49%

25%

It is easy to use 49%

33%

0% 10% 20% 30% 40% 50% 60% 70% 80%

PM Leaders PM Laggards
Finding: Managers at PM Leader organizations
tend to be better prepared to drive effective
performance management
Survey Question: To what extent do you agree with the following statements about
most managers in your organization?
(Percent responding agree or strongly agree)

They have received sufficient training in performance management 50%

36%

They are good at helping employees set goals 50%

23%
They are good at having conversations about workplace performance and 42%
behaviors 20%

They are satisfied with our performance management system 40%

22%

They are skilled at performance management 37%

25%

0% 10% 20% 30% 40% 50% 60%

PM Leaders PM Laggards
Finding: Leaders at PM Leader organizations are more
likely to see performance management as crucial
Survey Question: In your organization, how do most top leaders
tend to view performance management? (select the one that
best applies)

As crucial for overall business performance 27%

21%

As an aid to employee development 19%

15%

As an effective way to make employee-related decisions 18%

13%

As a necessary evil 15%

31%

As a means to improve engagement and/or retention 14%

9%

As an unnecessary waste of time 3%

9%

0% 5% 10% 15% 20% 25% 30% 35%

PM Leaders PM Laggards
Finding: High Performers are more likely to use
technology to support their performance management
process
Survey Question: Does your organization use technology for the purpose
of performance management? (Percent responding yes)

82%

65%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

PM Leaders PM Laggards
Finding: High Performers are more likely to
continuously improve their process
Survey Question: To what degree has your performance
management system changed and to what degree will it
change? (Percent responding high or very high degree)

56%
Over the next two years
29%

37%
Over the last two years
20%

0% 10% 20% 30% 40% 50% 60%

PM Leaders PM Laggards
Finding: PM Leaders see better employee
performance as well as better financial performance
Survey Question: Please rate your organization’s performance in the
most recent fiscal year compared to competitors in your industry
(Somewhat above average and Far above average)

58%
Overall employee performance
36%

65%
Financial performance
40%

0% 10% 20% 30% 40% 50% 60% 70%

PM Leaders PM Laggards
 Recommended Tactics
1. Build performance management skills
2. Encourage agile performance objectives and conversations
3. Put your efforts into behaviors as well as objectives
4. Develop more robust performance management metrics
5. Expand PM feedback and conversations
6. Use better technologies
7. Build active senior level support
8. Consider adding more verifiable data to the performance management process
9. Leverage and aid career development aspirations
Questions?
Download the 2020 Research Report
For more information!
Feel free to contact us at:
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www.hr.com/featuredresearch

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