LESS THAN HALF of employees working in the manufacturing, telecom, healthcare, high tech industries and public sector believe their organisations adequately address poor performance
LESS THAN HALF of employees working in the manufacturing, telecom, healthcare, high tech industries and public sector believe their organisations adequately address poor performance.
This compares to more favourable ratings in the pharmaceutical, retail, and insurance industries, where more than 50 percent of employees believe their companies have adequate systems in place for dealing with poor performers.
A global research project, conducted by Hay Group, examining whether employees believe that their company has a fair system for evaluating individual performance, found that only 38 per cent of public sector employees agreed with this. Other notable sectors were financial services and manufacturing (both 42 per cent).
“When companies don’t address issues with poor performers and continue to provide them with pay increases, companies send mixed messages to employees at all levels and risk turnover of their top performers,”said Tom Agnew, a senior consultant with Hay Insight (Hay Group’s employee survey group).
“Companies need to consider how much compensation dollars they are tying up in dead weight at the bottom of the performance scale. And if top performers don’t receive the recognition they deserve, don’t be surprised if they look elsewhere.”
Top performing companies believe that well-differentiated rewards – even forced ranking of employees – leads to better execution. Yet, at year-end, rather than confront poor performers with the bad news, many managers choose the path of least resistance, speeding through performance reviews and spreading merit pay out almost evenly – like ‘peanut butter’.
The research, which comes from Hay Insight’s database of approximately 1.2 million employees in over 400 organisations worldwide, also found that with even tight budget constraints, many leading companies give above-average pay increases to top performers and provide nominal or no increases to those who do not perform adequately.
When combined with a sound performance management program, reward programs can be effective in attracting and retaining the staff in a way that best supports organisations to grow their businesses.
