Performance Management Practices Survey in China (2003)

Performance Management Practices Survey in China 2003


Anthony Mak General Manager, China/Hong Kong

China/Hong Kong Consulting Team

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Executive Summary

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Background

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Purpose

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Limitations

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Report Structure

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Unit 1: Set-up of the Participating Companies’ Performance Management Systems and Demographics of Survey Participants

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Unit 2: Findings

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Unit 3: Comparison with other Asian countries

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Unit 4: A Look Forward 42

Appendix A 44

Appendix B 48

About DDI

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© Development Dimensions International, Inc. MMIII. Pittsburgh, Pennsylvania. All rights reserved under U.S., International, and Universal Copyright Conventions. Reproduction in whole or part without written permission from DDI is prohibited.

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Executive Summary Study Objectives

The purpose of this survey was to investigate organizations’ current performance management practices in China and determine which practices influenced effectiveness and predicted success.

The same survey methodology was used in our previous work in Singapore and Malaysia so that results from China can be benchmarked to organizations in the region. Survey results are expected to give insights on strength and priority enhancement areas in the performance management system in organization in China.

This report documents the current performance management practices of organizations in China and examines the perceptions and feelings of employees towards the system.

1. Examine performance management systems and processes implemented by organizations in China.

2. Identify employee’s perceptions and feelings towards their performance management system.

3. Explore future performance management practices changes.

4. What employees feel “best” and “most frustrated” about their system?

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Coverage

A total of 17 organizations and 391 respondents working in foreign owned or joint venture organizations operating in China participated in this survey. 56.6% of organizations participated in the survey are from manufacturing industries when 43.4% of organizations are from non-manufacturing industries.

All participating companies are multi-national companies. It is a common practice that these companies may leverage on the existing system and support from their head offices in developing and implementing their performance management system.

Selected Findings System Set-up

1. Current performance management systems and processes have been in place for an average of 3.1 years, meaning that many organizations have been paying their attention to this critical business strategy.

2. 80% of the organizations use their performance management system for all employees.

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Employee’s Perceptions and Feelings

“ I am clear about what I am being expected and this helps me focus my efforts…”

“ My pay is linked to my performance and that reflects my value...”

“ I do not agree with my manager’s feedback, he relies on his perception and personal judgment on my performance.”

“ I am not involved in the evaluation, my boss is very subjective and there is no specific data supporting his views.”

1. Most of the employees were satisfied with having at least one performance review with their managers.

2. In general, respondents were satisfied with having clear expectations on goals and behaviors set at the beginning of the performance management cycle.

3. Employees were satisfied with their direct supervisor as the key person to manage their performance.

4. Employees were frustrated that promotion was not always linked to performance.

5. Strong frustration around manager’s inability to provide accurate performance evaluation against behaviors and results. Cronyism and favoritism were practised and was considered not fair by employees.

6. Strong push is needed to enhance both manager’s and non-manager’s awareness and skills in performance management. Feedback and coaching were not adequately provided to enhance an employee’s performance.

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7. Performance evaluation is one-way most of the time and the employee was not involved in the process. This triggered an employee’s low commitment to their own performance plan.

8. A significant number of employees were demotivated after their performance review with their managers. This was due to the fact that the evaluation was not supported by facts and most of the feedback focused on the employee’s limitations and not their potential. The manager dominated the performance review process and the employee was not adequately involved aggravated the resentment felt by the employee.

9. Consistent resentment towards forced-ranking. The practice was seen as unfair, not reflecting the true performance and demoralizing. This hampers employee’s motivation to improve oneself as many of them do not see that they will get higher rating even they made their effort to improve.

10. Many managers reflected that they did not have high confidence to deliver an effective performance appraisal and provide specific behavioral data during performance reviews.

Comparing survey results in China, Singapore and Malaysia in all measures of a performance management process

1. Singapore has the highest mean scores among the three countries in all measures.

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2. China has similar ratings as Malaysia in many of the measures except in “Performance Planning” and “Outcomes”. China has a higher mean score in the performance management system outcomes and lower score in doing effective “Performance Planning” when compared with Malaysia.

3. All three countries have the lowest mean scores in the area of “Feedback and Coaching”.

4. Managers in Singapore have a higher level of confidence and comfort to conduct performance management reviews, as they are better equipped with the required skills.

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Summary

The awareness of using the performance management system as a critical tool to drive business performance has grown very strongly in China in the past few years. We could see efforts were made to introduce new systems and process. Some of the organizations have experienced the benefits of using their system to enhance business results and retain talents while many of them are working hard to modify their implementations.

In the journey ahead, organizations will increase their investment and efforts to help enhance the awareness and required skills to ensure performance management system and process can be implemented effectively. The role of HR professionals will be increasingly important as a strategic partner to ensure the organization’s business results could be achieved through effective implementation and monitoring of a robust performance management process.

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Background

Introduction

In 1993, Development Dimensions International (DDI) and the Society of Human Resource Management introduced a survey of performance management practice on 79 companies. A similar survey was conducted in Singapore and Malaysia. As companies in China have increasing interests on the subject, DDI introduced the survey in China in 2002 to examine performance management practices of companies and predict future trends. The survey result was also compared with findings in Singapore and Malaysia.

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Purpose

This survey for the China region was conducted with the purpose of examining the local performance management practices and the respondent’s prediction on future practices. In addition, this survey attempted to determine which system characteristics or qualities would influence the effectiveness of performance management and employee’s satisfaction. Performance management practices were compared to survey results of Singapore in 2002 and Malaysia survey results in 2001. This study, based on 391 respondents from 17 organizations, was designed to review China’s experience in Performance Management – current and future practices, and to provide organizations with data to enhance their people management strategy for China.

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Limitations

Organizations from various industries were invited to participate in this study. However, the responding organizations coincidentally were all with foreign investment. The following assumptions were made:

These companies are more active in implementing performance management systems because of their existing practices from the head office or other parts of the organization.

Responding organizations have more resources, like performance management system tools, processes, consultation and help from their regional or head offices to establish a performance management system.

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Report Structure This report was structured into four units. Unit 1: Set-up of the Participating Companies’ Performance Management Systems and Demographics of Survey Participants

This unit provides the profile of the organizations and how performance management is met. It outlines the represented industries and the demographic data of the respondents. Unit 2: Findings

The findings are presented and organized in the following three categories:

Perceptions and Feelings

Practices and Trends

Overall Satisfaction Unit 3: Comparison with other Asian countries

This unit presents the differences between performance management practices comparison between China, Singapore and Malaysia. Unit 4: A Look Forward

Based on survey findings, DDI will make predictions on future trends.

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Unit 1: Set-up of the Participating Companies’ Performance Management Systems and Demographics of Survey Participants

A distinct majority of the organizations (95.8%) in the survey sample currently use a company-sanctioned performance management system/approach. 79.2 % of organizations use the system for all employees and some of the organizations (12.6%) use their performance management system with only 60% or fewer of their employees. (See Table 1)

Table 1: Percentage of Workforce Using the Performance Management System

Percentage of Workforce Using the System

Response

91% to 100% 79.2%

81% to 90% 8.3%

71% to 80% 0%

61% to 70% 0%

60% or less 12.6 %

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Data from HR respondents showed that 37.5% of organizations conducted a single yearly performance review while a majority (62.5%) had less than one review a year. In the contrary, 92% of respondents from the employee group feedback that they had their performance review with their managers at least once a year. The big difference may be due to the fact that performance reviews were not officially documented and shared with the human resources department. Therefore, there was a perception that fewer reviews were done as compared to actual situation.

Figure 2: Frequency of Reviews as perceivedby Human Resources

Less thanonce a year

62.5%

Oneperformancereview a year

37.5%

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Responses from human resources reflected that their performance management systems have been in place for an average of 3.1 years. 25% of the organizations plan to make significant changes to their systems within the next two years whereas 70.8% of the organizations are not sure if there will be any changes. The high percentage probably because many of the responding organizations had revamped their systems in recent 2-3 years and they do not have solid plan to initiate further changes in coming two years. Participating Organizations

A total of 17 organizations and 391 respondents working in foreign owned or joint venture companies operating in China participated in the survey. Responding organizations were from eleven industries, including 56.6% from manufacturing and 43.4% from non-manufacturing sectors. The samples included both DDI clients (76%) and non – DDI clients (24%). (Please refer to Appendix A for responding organizations information.)

Figure 3: Plan to Change Performance Plansignificantly within the next 2 years

Yes25.0%

No4.2%

Not sure70.8%

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The majority (71%) of the organizations’ size was below 1000 employees. Respondents’ Profile

The two largest responding function groups are from manufacturing (18.4%) and Sales (17.4 %). Other different functions ranging from marketing, human resources to finance are listed in Appendix A.

44.2 % has joined the company for less than 3 years and 22.3% is between 4 to 5 years of tenure.

Employees at all levels were asked to fill out a questionnaire on their organizations performance management practices. 41.7% of respondents is from management level and (51.9%) of them belonged to the non-management category.

NonManagement

51.9%

Unknown6.4% Management

41.7%

Figure 4: Organizational Level of Respondents

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Unit 2: Findings

The survey is set to gauge respondents’ reaction in three aspects - perception and feelings, practices and trends, and overall satisfaction. Perceptions and Feelings

Respondent’s perceptions and feelings are sampled around the following 4 areas of performance management process:

1. Performance Planning

An established set of goals / objectives and behaviors/skills for which an individual is hold accountable and will be evaluated against.

2. Feedback and Coaching

On-going performance-related communication that reinforced behavior or help improve performance.

3. Performance Review

Communication conducted in interim / at the end of performance cycle to review an individual’s performance against the set of goals/objectives and behavior/skills

4. Outcomes

Results or ratings after performance review discussion

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Each area covers several questions and the average rating for each question are listed in Figures 5 - 8. The indicates the average mean of the practice is higher than the overall mean 3.5, a score judged by DDI research team as more closely resembling the desired behavior. Practices that scores lower than the overall mean is illustrated by .

Performance Planning

The overall mean of the rating towards performance plan is 3.59, showing that quite a number of respondents indicated that a high percentage of desired behaviors were presented in the performance planning.

Respondents indicated that the performance plans included both objectives and behaviors and identifying them had significance to help focus efforts to accomplish tasks. They also pointed out that organizational values were reflected in the performance plan. This illustrates that over 61% of organizations use performance management process as a tool to help operationalize their values and behavior to achieve desired results.

Areas perceived as less positive included that performance objectives were not updated despite changes in business needs; employees do not have ownership to perform plan, probably because the plans were set one sided by the organization.

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Figure 5: Performance Planning

I have no idea what is expected of me.

3.56 I have a clear idea of what is expected of me.

My PM plan consists of “bottom-line” results (goals/objectives) only.

3.72 My PM plan consists of “bottom-line” results (goals/objectives), plus behaviors/skills.

Behaviors/Skills in my plan are unrelated to achieving goals/objectives.

3.73 Behaviors/Skills are directly related to achieving goals/objectives.

Identifying objectives and behaviors is a waste of my time.

4.22 Identifying my objectives and behaviors helps me focus my efforts.

My goals conflict with the goals of others with whom I regularly work.

3.88 My goals are aligned with the goals of others with whom I regularly work.

My manager sets my goals/objectives.

3.32 I develop my goals/objectives jointly with my manager.

My goals/objectives do not change during the performance cycle.

3.11 My manager and I update my goals/objectives, as business needs change.

I have no ownership of my plan.

3.13 I have strong ownership of my plan.

Organizational values are not reflected in my performance plan.

3.67 Organizational values are reflected in my performance plan.

Overall Mean = 3.59

3.5

3.5 1 2 3 4 5

1 2 3 4 5

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Feedback and Coaching

This section explores the respondent’s perceptions on their manager’s support to them in terms of feedback, coaching and performance tracking. Overall mean in this session is 3.28. This is the lowest among the four areas in the performance management process.

The rating displayed that employees in China expect their managers to increase and enhance the feedback and support they need. Data shows that there is a lack of continuous feedback throughout the performance cycle where an employee is not aware of one’s performance until year-end review. Manager tends to give feedback for improvement more frequent than positive feedback. Some of the greatest frustrations revealed are that feedback given is not specific, accurate and clear. Employees were demotivated after feedback was given.

Coaching is another area, which needs improvement. Data shows that only half of the respondents received coaching they needed from their managers to help them achieve goals and objectives. Another finding portrays the employee’s frustration that they did not have access to information that reflected their performance. Managers are responsible for tracking performance. This also explains the individual’s low ownership to their performance plan in former findings.

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Figure 6: Feedback and Coaching

I don't have a clue as to how I'm doing until my annual appraisal.

3.09 I receive feedback throughout the year about how I'm doing.

During the year my manager never tells me what I do well.

3.38 During the year my strengths are clearly pointed out to me.

During the year my manager never tells me how I need to improve.

3.55 During the year my areas for improvement are clearly pointed out to me.

The feedback I receive on my use of the behaviors/skills identified in my plan is pretty general.

3.23 My manager provides feedback that includes specific examples of how I am using behaviors/skills.

I never get the coaching I need during the year to achieve my goals or improve my behaviors.

3.27 I get the coaching I need during the year to achieve my goals and improve my behaviors.

I don't have access to all the information I need to track my performance.

3.15 I have access to all the information I need to track my performance.

My manager is responsible for tracking my performance relative to my goals.

3.30 I am responsible for tracking my performance relative to my goals.

Overall Mean = 3.28

3.5

3.5

1 2 3 4 5

1 2 3 4 5

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Performance Review

This part of the survey explores employee’s satisfaction level for the performance review they experienced in the organization. Positive data indicates that most of the respondents (94%) received performance review at least once a year and (60%) said that the review was focused on both their strengths and areas for improvement.

When a review is conducted, the discussion focuses mainly on results and not enough on behaviors. Interestingly, if we refer to the findings under “Performance Planning”, data shows that both objectives and behaviors are set in the performance plan and yet, when it comes to the review, the behaviors were not adequately reviewed together with the results accomplished. That indicated that organizations are still using the results as the main focus to evaluate staff’s performance.

We believe that this may be caused by an ineffective manager who is not trained in gathering and analyzing behavioral data to support their assessment of the “behaviors” required. Since “behaviors” are less tangible and not measurable in numbers, it is difficult for a manager to review effectively without specific evidence and skills. Qualitative comments extracted also show that quite a number of managers relied on impressions and personal preferences to make a rating decision.

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Another reason is that organizations in China put a higher weighting on objectives then behaviors, to the extent that behavior might only be used for learning and development. This would naturally lead to a stronger focus on objectives during the review session.

A critical finding is 40% of the respondents felt that the reviews were subjective. Another frequent observation is that the manager focused on a single incident to determine the final rating but not their overall performance trend and consistency. This is an area that requires high attention as perceptions and resentment may cause employees to loose interest in the system and trust in management, leading to lower morale and turnover in the long run.

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Figure 7: Performance Review

In my review, my manager and I discuss the results I achieved, but not the behaviors/skills I used to achieve them.

3.21 In my review, my manger and I discuss the results I achieved plus the behaviors/skills I used to achieve them.

I do not receive an annual performance review.

4.69 I receive a performance review at least once a year.

My review relies on judgment or perception, very subjective.

3.63 My review relies on factual supporting and evidence, very objective.

My review focuses mostly on what I did wrong.

3.70 My review focuses equally on my strengths and areas for improvement.

My manager does all the talking in the review.

3.48 My manager and I jointly review my performance.

Overall Mean = 3. 66

3.5

3.5

1 2 3 4 5

1 2 3 4 5

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Outcomes

In measuring how respondents felt after their performance review, the overall mean of this section was 3.9. Respondents are fairly satisfied by their performance management system.

The two highest rated areas are that the direct supervisors are responsible for all or most of the appraisees’ performance review and performance management appraisal is done at all levels of the organization. This means that respondents are satisfied with having a manager they regularly worked with and understood their performance to assess and review their performance effectively.

Findings indicate that pay was closely linked to performance (Mean = 4.02) and behavior (Mean = 3.87) but a low satisfaction on the linkage between performance and promotion. Data showing that performance did little with the promotion. Even though some systems have clearly link pay and performance together, more than half of the respondents felt demotivated after performance review. Reasons identified from frustrations expressed were that the objectives and expectations set were somehow too high and unrealistic. Managers also did not modify the goals according to business changes during the year. Consequently, employees were not able to achieve the objectives set, and the performance rating would not be met.

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Attention is required to ensure the objectives are realistic for appraisees. “Sky-high” objectives and expectations hamper employee’s confidence and commitment to achieve their goals. Today’s employees also want to know how the organization makes decisions e.g. on promotion. Unless promotion decisions are openly communicated and substantiated, employees will continue to feel suspicious and loose trust toward management decisions. Eventually, the employee perceives promotion decisions as cronyism and favoritism. Work motivation and commitment will be diminished.

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Figure 8: Outcomes

I am usually very demotivated after every performance review.

3.41 I am usually very motivated after every performance review.

I see no relationship between achieving my objectives and my pay.

4.02 My performance affects my pay.

I see no relationship between my behaviors and my pay.

3.87 My behaviors are rated and clearly affect my pay.

Promotions have almost nothing to do with performance.

3.48 Promotions clearly are tied to performance.

My direct supervisor is not responsible for all or most of my performance review.

4.41 My direct supervisor is responsible for all or most of my performance review.

Performance management/ appraisal is done at select levels of the organization.

4.25 Performance management/ appraisal is practiced at all levels of the organization.

Overall Mean = 3. 91

3.5

3.5

1 2 3 4 5

1 2 3 4 5

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Practices & Trends

This section explores how prevalent the listed 12 performance practices were perceived by respondents. By analyzing data from current practice and hopes for future practice gives us an idea of the importance of the 12 practices and the trend of changes preferred by respondents. Understanding these data gives the organizations’ ideas about how it can enhance its performance management practice.

The average mean is calculated for each of the practice by using the rating of a Likert-type scale from 1 to 6. 1 = Not Used and 6 = Extensively Used. The larger the mean, the higher the frequency of the practice applied or would be applied.

Table 9 illustrates practices and trends according to the highest frequency of future use. The most highly rated practice is the “Overall Rating” (4.26). Use of single rating to represent the overall evaluation of an individual’s performance remains the highest in both current and future use. Respondent expressed that the number alone could not give accurate and balanced description of performance throughout a cycle. This explained that the second rated (4.17) highest practice was that, use of essay summary statement to describe overall performance was expected to supplement the current practice in the future.

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Table 9: Performance Management Practices & Trends

Performance Management Practices Future Use

Current Practice

Change in percentage Gap

Overall Rating: Use of single rating to represent the overall evaluation of an individual’s performance. 4.26 3.85 +10.6% 0.41

Summary Statement: Use of essay summary statement to describe overall performance. 4.17 3.69 +13% 0.48

Manager Training: Use of initial and refresher training to educate managers in performance management/appraisal concepts and build skills in performance planning, managing, and appraising.

4.13 3.33 +19.4% 0.80

Numerical Ratings: Use of numbers as labels for rating Scales. 4.03 3.53 +14.2% 0.50

Non-Manager Training: Use of initial and refresher training to educate non-appraisers in performance management/appraisal concepts and build skills that help them manage their own performance.

4.01 3.05 +31.5% 0.96

Appraiser Accountability: Use of measurements/ evaluation to hold managers accountable for performance appraisal effectiveness.

3.90 2.92 +33.6% 0.98

Customer Input: Formal use of input from customers (external and internal) to assess performance of individual or groups.

3.89 2.80 +38.9% 1.09

Direct Report Input: Formal use of input from direct reports to assess manager’s performance. 3.70 2.40 +54.2% 1.30

Peer Input: Formal use of input from peers to assess individual performance. 3.70 2.83 +30.7% 0.87

Six Sigma: Use of the performance management appraisal system to support and enhance the implementation and ongoing success of the Six Sigma Process.

3.66 2.64 +38.6% 1.02

Forced Ranking: Use of a predetermined percentage of ratings distribution. 3.57 3.59 -0.5% (0.02)

Team Appraisal: Team members (peers) actually set goals and conduct appraisals of fellow team members. 3.55 2.24 +58.5% 1.31

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There was a strong realization of the need of having proper training for both manager (Ranked 3rd, 4.13) and non-manager (Ranked 5th, 4.01) in performance management in future. Qualitative data show that the greatest barrier to system effectiveness was the lack of knowledge and skills of applying performance management. There is a pressing need for organizations to align the understanding of purposes, roles and performance management system implementation for all levels.

The gap between the current and future identified indicates the strong awareness of the need of practice change in the future. The most significant gaps (1.31) fall on the practices of “Team Appraisal” and (1.30) “Direct Report Input” and (1.2) on “Customer Input”. Findings show that respondents consider that involving team member, customer and third party to rate an individual or group’s performance was more effective and important as this provided more comprehensive and objective data from different sources. Another significant forecast was on the “Six Sigma”, it was encouraging to see that respondents realize that performance management system was viewed as an important business tool to drive and support important organization initiatives.

Out of the 12 practices surveyed, 11 of them showed an increase for usage in the future. The only one that showed a slight decreasing trend was “Forced Ranking” (the use of predetermined percentage of rating distribution among all staff). Forced ranking has been repeatedly described as demoralizing and unfair practice to rate individual’s performance and was the major cause of resentment towards the performance management system.

Table 9 illustrates the gaps between current and future practices, the practices were listed according to the degree of future use.

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Overall Satisfaction

This section is designed to measure the overall satisfaction of the respondents towards system and appraisal effectiveness. The overall effectiveness of current performance management system was rated as 3.16 and the effectiveness of appraisal received was at rating 3.17. Data showing that the performance management practices and tools are highly desired to be enhanced in order to make the appraisal effective.

Respondents with responsibilities for appraising were asked to answer three more questions on the appraisals they conducted. Managers were not comfortable to deliver appraisals; the rating 3.42 indicated that managers need strong support in terms of knowledge and skills about system and process. They also felt uneasy (3.36) to provide behavioral data in the appraisal to support the rating. Manager was also not effective to include organization values in performance discussions.

The manager’s ability to explain and communicate desired behaviors; observe, diagnose and make sound judgment on employee’s behavior, ability and motivations for reinforcement and improvement is critical for day-to-day leadership. This essential competency is one of the key factors that determine the success of the system and process. Respondents repeatedly indicated that manager’s inaccurate performance evaluation was one of the major causes of resentment. This is an area that requires strong attention from organizations.

Data in this section reaffirms that current performance systems organizations are on the right track and still need to strive to ensure the detailed tasks are performed effectively.

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Rate your current performance management/appraisal system in terms of its overall effectiveness as a tool to help you be effective in your job. (1 = Ineffective; 5 = Highly Effective)

3.16

3.17

3.42

3.36

3.33

1 2 3 4 5

Effective

Rate your impression of how the appraisals you received over the past three years have helped you be more effective in your job. (1 = Ineffective; 5 = Highly Effective)

Rate your degree of overall comfort and confidencein the appraisals you have delivered over the past three years. (1 = Not Confident; 5 = Highly Confident)

Rate your ease/skill level of providing behavioral data in appraisals. (1 = Very Uneasy; 5 = Very Easy)

Rate your inclusion of organizational values in performance discussions and appraisals. (1 = Ineffective; 5 = Highly Effective)

Figure 10: Overall Satisfaction

Ineffective

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Unit 3: Comparison with other Asian countries Perceptions and Feelings

In comparing employee’s perceptions, feelings and manager’s overall satisfaction towards internal performance management process, employees in Singapore indicated higher ratings in all aspects, showing that there were higher percentage of desired behavior presented in their performance management process.

Findings from China are very close to Malaysia’s findings. In the areas of performance review and outcomes, Chinese employee’s reflected a higher mean score than Malaysia. Managers in Singapore indicated higher overall satisfaction and were the most confident group in implementing effective performance management process with required skills. Managers in China came second followed by Malaysia.

Among the findings, highest mean score was on “Performance Planning”. This illustrates that specific objectives and goals to guide employee’s actions and behaviors were commonly practised in these three countries.

Singapore had the highest mean score in four areas and China came second.

Setting objective goals and behaviors are widely practiced.

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The lowest mean scores for all three countries related to same area, which is the “Feedback and Coaching”. All 3 countries had scores lower than 3.5, meaning that there was inadequate coaching and feedback across the whole region. This would probably be caused by manager’s development needs in skills, and lack of awareness of the importance of coaching and feedback. Asian managers and employees also tend to be more subtle and most of them will practice coaching and feedback when it is extremely necessary.

It is interesting to see that even though China started to apply formal performance system in a later stage than other 2 countries (based on both commercial and industrial development process), she came up very quickly in terms of employee’s perceptions, feelings and expectations towards performance management. This could be explained by earlier data, the performance systems has only be in place for 3.1 years on average. This showed that many of the responding organizations realized the importance of performance management system and has started to revamp the process a few years ago. With the support from external resources support from headquarter, process and planning were clearly identified and established, whereas manager’s skills in conducting the process and discussion were not yet ready and required lots of effort to enhance.

Lower mean score in coaching

Performance management process is more ready than skills required.

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Figure 11 Performance Planning

4.02 3.873.59

1

2

3

4

5

China 2002 Singapore 2002 Malaysia 2001

Aver

age

Mea

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Figure 12 Feedback and Coaching

3.28 3.253.48

1

2

3

4

5


Aver

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Mea

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Figure 13 Performance Review

3.883.58

3.66

1

2

3

4

5


Aver

age M

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Figure 14 Outcomes

3.91 3.943.41

1

2

3

4

5


Aver

age

Mea

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Practices and Trends

All three countries predict that they will increase the future use in 11 practices out of 12. Particular increase will focus on training managers and employee in performance management process and skills. In terms of evaluating performance, direct report and customer’s input will be increased significantly. Hopefully, this could help provide more comprehensive data to make a fairer performance evaluation conclusion.

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1.00

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Team App

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Forced

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China 2002Singapore 2002Malaysia 2001

Figure 15: A comparison of the current practicesin 3 countries

1.00

2.00

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4.00

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Team App

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China 2002Singapore 2002Malaysia 2001Figure 16: A comparison of the future trends in 3

countries

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Overall Satisfaction

China 2002

Singapore 2002

Malaysia 2001

1. Rate your current performance management/appraisal system in terms of its overall effectiveness as a tool to help you be effective in your job. (1 = Ineffective; 5 = Highly Effective)

3.16 3.51 3.05

2. Rate your impression of how the appraisals you received over the past three years have helped you be more effective in your job. (1 = Ineffective; 5 = Highly Effective)

3.17 3.45 3.02

3. Rate your degree of overall comfort and confidence in the appraisals you have delivered over the past three years. (1 = Not Confident; 5 = Highly Confident)

3.42 3.64 3.42

4. Rate your ease/skill level of providing behavioral data in appraisals. (1 = Very Uneasy; 5 = Very Easy)

3.36 3.58 3.20

5. Rate your inclusion of organizational values in performance discussions and appraisals. (1 = Ineffective; 5 = Highly Effective)

3.33 3.53 3.19

3.16

3.17

3.42

3.36

3.33

3.51

3.45

3.64

3.58

3.53

3.05

3.02

3.42

3.2

3.19

1 2 3 4 5

1

2

3

4

5Malaysia 2001Singapore 2002China 2002

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Summary

This study reveals that over 95% of the survey participating organizations in China have structured performance management systems implemented throughout the whole organization. It is encouraging to find that organizations have paid much effort and attention to review and change their systems in the past few years. This shows that these organizations have heightened their awareness of using performance management system as a business strategy to drive results.

In general, a significant portion of employees is satisfied with their performance management practices. Some of the organizations have started to experience the benefits of performance management systems while some of them are still enhancing their system or working on implementation. Data shows that more than half organizations surveyed are effective in:

1. Structuring specific performance plan that contains work objectives and behaviors to help focus employee’s efforts.

2. Reviewing performance with employees at least once a year.

3. Linking the performance to pay

4. Holding the direct supervisor accountable for evaluating employee’s performance.

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From the analyzed data, areas that organizations need to continue to work on are:

1. Develop the appraiser in performance management concepts, roles and skills. An appraiser needs to:

understand the roles in performance management, particularly in feedback and coaching along the process.

share performance data openly to help employees gauge the direction for improvement.

develop skills and knowledge to evaluate performance in a fair manner to avoid cronyism, favoritism and bias.

2. Review approach to differentiate employee’s performance

Consistent data showing that employees are frustrated by the unrealistic “performance standard” and “average mark” set for different ranking.

Resentment aggravated by the pre-determined distribution of employee’s performance (Forced-Ranking), which perceived as “not fair”.

Increase employee’s involvement in performance data input

Organizations have introduced performance management system and process but appraisers and appraisees still have to improve their skills. A strong drive from Human Resources is required to ensure a robust, comprehensive and effective process could be implemented thoroughly to achieve results and impact targeted and support organization’s success.

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Unit 4: A Look Forward

Traditional performance management process refers to once-a-year appraisal, a routine discussion to talk about how manager and employee “feel” about employee’s performance. The generic discussion does not help much to individual and company as there is no specific direction, objectives and measurements that can help individual continue to grow. As a result, it became a formality and routine process that required by human resources department.

Today, performance is a live system, characterized by understanding the linkage between business success and individual’s performance plan, mutual ownership, setting specific and concrete objectives that contribute to organizational success, continuous feedback and coaching, comprehensive performance data and effective interactions.

Effective performance system helps individual to see how one’s contribution links to business success. Organization can use her performance management system to communicate the business objectives and required behaviors with individuals. Helping employee with direction, road map and indicators to achieve set goals and objectives. Performance management is a business strategy that drives organization success.

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Organization will increasingly use performance management system to support and enhance business process. To enhance system effectiveness, organization indicates that they will highly increase the formal use of direct report’s and customer’s input for performance evaluation. Training and development opportunities for both manager and non-manager on performance management will be increased in order to enhance practice effectiveness and remove application difficulties and barriers. Organizations also understand that having manager hold accountable is a drive for skill application and behavioral changes along the implementation.

Obviously, organizations are trying to re-evaluate and try different new methods to manage performance better. These new practices means new opportunities to succeed and organization will need to continually re-examine the system alignment, employee’s satisfaction, tracking and monitoring the effectiveness and modify the system to accommodate the changing needs and demands.

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Appendix A: Demographic Data

Manufacturing

Health Care

Technology/IT

Communications

UnidentifiedManufacturing/Heavy Industry

Wholesale/Retail/Trade

Nonmanufacturing

Transportation

Utilities/Oil and Gas

Construction/Mining

By Industry

Respondent’s Functions

0.0% 5.0% 10.0% 15.0% 20.0%

Accounting/Finance

Service/Support

Sales

Research/Development

Quality Assurance

Purchasing

Marketing

Manufacturing

Information Systems/Data Processing

Human Resource/Personnel

Distribution

Engineering

Administration

Others

Unidentified

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41.2%

29.8%

13.7% 10.4%

2.2% 2.7%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

1-500 500-999 1000-2499

2500-4999

5000 orgreater

Unknown

Company Size

Organizational Level of Respondents

Non-Management

51.9%

Unknown6.4%

Management41.7%

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4.0%

39.2%

22.3%

27.3%

7.2%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

< 1 Year 1-3 Years 4-5 Years > 5 Years Unidentified

No. of Years with Current Company

No. of Years Using Currect Performance Management/Appraisal System

> 5 years

Unknown

1-3 years

< 1 year

4-5 years

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How often has the performance managemnet/appraisal system changed during your tenure?

10.9%Never

20.8%1 time

15.1%2 times9.9%

3 times4.2%

4 times

10.9%5 or more

times

23.8%Don't know

4.2%Unknown

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Appendix B: Participating Organizations ABB (China) Limited

AT & T China

BASF JCIC Neopentylglycol Co. Ltd.

Beijing Havi Food co. Ltd.

China PepsiCo Foods Ltd.

Cognis China

Eli Lilly Asia Inc.

GEM Electronics Shanghai

Kodak

Lucent Technologies

Pharmacia & Upjohn China Ltd.

Philips (China) Investment Co., Ltd.

Rich Products

Shanghai General Motors

Shanghai McCormick Foods Co. Ltd.

Warner-Lambert (Guangzhou) Co. – Adams Division

Wyeth China

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About DDI

Development Dimensions International (DDI) is an international human resources company that specializes in helping clients improves their business performance by aligning people strategies with business strategies. DDI works closely with clients to assess their organization and people, develop and implement practical strategies, and achieve measurable improvements in organizational and individual performance. The company now includes more than 70 offices and affiliates and more than 1,000 employees. DDI’s international presence and expertise make it possible for its multinational clients to link hiring, training, and performance management across cultures in 60 countries.

DDI’s leadership programs build specific, job-critical competencies and promote positive behavior changes that lead to better job performance. Its training materials are highly customizable and suit both manufacturing and service/professional environments. Multiple languages and delivery options are available. More than 400 of the Fortune 500 have used DDI’s leadership programs.


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Date post:	12-Nov-2014
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Performance Management Practices Survey in China (2003)

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