Bonus management failed by a focus on process

by 11 Jun 2009

Many organisations are being let down by their approach to employee performance management at a time when they most need it to work for them, according to Watson Wyatt.

In recent years, many employers have been updating what they have seen as failing performance management systems by streamlining the administration, improving rating systems and simplifying the communication documents.

But while these process improvements are important they do not get to the heart of failing performance management, according to Justin Grice, a senior reward consultant at Watson Wyatt.

“It is the intangible aspects of performance management that make a tangible difference. Are line managers actually capable of managing poor performance? Do employees know how to set objectives, and provide and receive feedback? Are objectives set in the context of business objectives that balance financial performance with risk?” he asked.

“Determining bonuses in this way relies on assessing performance ‘in the round’. You need to intelligently determine financial and non-financial delivery and balance this with behaviour in line with organisational values. This places renewed emphasis on performance management and ensuring organisations can assess the complexities of performance in a consistent way.”

There are four aspects of performance management that process improvements too often overlook, according to Watson Wyatt:

• Line managers’ capability to manage poor performance and have difficult conversations, which can be addressed through coaching and training

• Employees’ capability to set objectives, and provide and receive feedback, which can also be addressed through training

• Ongoing communication to ensure undue emphasis is not inappropriately placed on objective setting and end-of-year reviews to ensure that performance management is seen as the ‘way we do things’

• Ensuring that performance management is placed in the context of overall business performance to provide employees with a ‘line of sight’ and help them to understand how achieving their objectives help to deliver organisational success


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