Asia Pacific lags behind in employee performance management

North American companies came out on top at every basic performance management practice.

Lumesse announced Sept 9 the results of its Performance Management Assessment Tool which reveals companies in the US and Canada as overall global leaders in employee performance management. The Asia Pacific region had different strengths and weaknesses. It was the second best region at enabling its employees to see a connection between performance and compensation. But only 22% of APAC organisations provide cascading goals for the majority of employees, and just 17% measure the majority of its managers on leadership effectiveness, proving to be the weakest region on both measures.

Erik Schmit, Group Managing Director APAC, Lumesse comments: “Although APAC is the second leader in the survey, there’s still a lot of room for improvement. Using financial metrics to create employee goals would be the most challenging topic to be discussed.”

Based on assessments by 500 business and HR executives in 44 countries worldwide, the results, highlight the contrasts between North America, Europe and Asia Pacific when it comes to the maturity of employee performance management processes. The report also details five key areas, based on real-world feedback from the best practitioners, where companies can make the most noticeable improvements in performance management. Areas examined included key processes such as the use of cascading goals, the identification of career plans, links between pay and performance, and good use of financial metrics.

North American companies came out on top at every basic performance management practice; other regions had much more variable results. In the UK, for example, 37% of organisations had cascading goals for the majority of employees – the second highest of all regions – but the UK proved to be the least effective at providing financial metrics. Meanwhile, Germany, France, Italy, Benelux and Scandinavia were above the global average (32%) in terms of setting business goals and linking these to financial metrics (19%), but still struggled to make a connection between pay and performance – all falling below the global average (24%).

The global data showed, for example, that the best companies were setting their employees cascading goals so they could understand how their work supports the company objective. Almost half (47%) of the best have cascading goals for most or all employees and more than a third (35%) retained more than 90% of their high performers and high potential employees over the past five years, according to a Lumesse report.

Francis Chan, Country Manager Hong Kong, Lumesse:”Goal setting is the basic action that has to be taken in performance management processes. A transparent platform where employees know what they need to do and how their work is related to organization goals can have a significant impact on the performance of individuals and hence organization.”

The best companies were also more likely to hold their managers accountable for leadership effectiveness, with nearly half (42%) confirming they measure most or all managers’ leadership ability. However, while leaders fare well in connecting pay and performance – 40% say most or all of employees are able to see a clear relationship between performance and compensation - only 28% of leaders have financial metrics in place to create employee goals.