North American employers are the overall global leaders in employee performance management, indicates a new report by Lumesse.
The report, which is includes interviews from 500 business and HR executives in 44 countries globally, addresses the contrasts between North America, Europe and Asia Pacific regarding the maturity of employee performance management processes. Cascading goals, identifying career plans, linking between pay and performance, and using good financial metrics are key processes included in the report.
North American companies rank at the top at every basic performance management practice while other regions had much more mixed results. Thirty-seven percent of employers in the United Kingdom have cascading goals for the majority of employees, which is the second highest of all regions; however, the UK shows to be the least effective at providing financial metrics. Germany, France, Italy, Benelux and Scandinavia sit at above the global average of 32 percent for providing career goals and at 19 percent for linking these to financial metrics. Despite this, the countries still struggle to connect pay and performance at 24 percent, falling below the global average.
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The Asia Pacific region also had different strengths and weaknesses, as it is the No. 2 region at connecting performance and compensation, but just 22 percent of its employers provide cascading goals for the most employees. Only 17 percent measure the majority of its managers on leadership effectiveness, which is the weakest figure for all regions on both standards.
The report also finds that 41 percent of North American employers have cascading goals for 70-100 percent of their employees, but only 22 percent of Asian Pacific employers have that standard in place. When it comes to having in place a connection between performance and compensation for 70-100 percent of their employees, 35 percent of North American employers do while only 20 percent of employers in France, Italy, Benelux and Scandinavia do.
For employers that measure 76-100 percent of managers on leadership effectiveness, North America ranks at 38 percent, but Asia Pacific comes in at the lowest with 17 percent. Employers that have 76-100 percent of employees using financial metrics as part of goals is the highest in North America at 29 percent and lowest in the UK at 13 percent. Retention is also highest in North America at 68 percent while Germany ranks the lowest at 37 percent.
"Wherever we look, we see the best organizations enhancing performance management processes to develop the talent that will be needed for growth and competition because only people can create great performance," says Matthew Parker, CEO of Lumesse. "But these results show that while there are global hotspots of good practice, there is still plenty of untapped opportunity for substantial business improvement by focusing on the areas, which deliver the most benefit."
According to the global data, the top employers set their employees' cascading goals in order to better understand how their work supports the company objective. Forty-seven percent of the top respondents have cascading goals for most or all employees, with more than a third at 35 percent retaining more than 90 percent of their high performers and high-potential employees over the past five years.
The top employers are also more likely to hold managers accountable for leadership effectiveness, as 42 percent of respondents say they measure most or all managers' leadership ability. Still, although 40 percent of respondents say most or all of employees can identify a clear correlation between performance and compensation, just 28 percent of respondents use financial metrics to create employee goals.
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