1、1Table of contentsOverviewOpportunities to remove barriers to managerial performanceKey actions to improve the effectiveness of your performance management and pay-for-performance programsAbout the 2022 Performance Reset Survey Reshaping performance management and pay for performance in a challengin

2、g talent and business environmentDecember 2022TABLE OF CONTENTSOverview 03Opportunities to remove barriers to managerial performance 05Key actions to improve the effectiveness of your performance management and pay-for-performance programs 08About the survey 082Table of contentsOverviewOpportunities

3、 to remove barriers to managerial performanceKey actions to improve the effectiveness of your performance management and pay-for-performance programsAbout the survey23Table of contentsOverviewOpportunities to remove barriers to managerial performanceKey actions to improve the effectiveness of your p

4、erformance management and pay-for-performance programsAbout the survey3OverviewAmid the pressures of new work styles,high inflation and a tight labor market,organizations face the challenge of rethinking their approach to performance management and pay for performance.Our 2022 Performance Reset Surv

5、ey suggests that there is much to be gained from embracing this challenge as an opportunity to deliver value in a reconfigured workplace.While most organizations continue to struggle to be effective at both performance management and pay for performance,roughly one in four(26%)have discovered the pa

6、th to“high effectiveness”in both these areas(Figure 1).Organizations that succeed in using performance management or pay-for-performance programs effectively to power individual and team performance are more likely to outperform their industry peers financially and to report higher employee producti

7、vity(Figure 2).Pay for performancePerformance managementModerate19%Moderate14%Low effectiveness41%High effectiveness26%HighLowWhile many continue to report low effectiveness for their performance management and pay-for-performance programs,1 out of 4 organizations have figured out how to get it righ

8、t.Organizations that are using compensation programs or performance management programs effectively to drive individual and team performance are more likely to outperform their industry peers.Organizations that are effectively using their performance management:Organizations that are effectively usi

9、ng base pay,STI and LTI to drive individual and team performance:Figure 1.Being effective at both performance management and pay for performance continues to be elusive for most organizationsFigure 2.The benefits of effective performance management and compensation programs1.48x as likely to report

10、having significantly higher financial performance than their industry peers1.25x as likely to report having higher employee productivity than their industry peers1.36x as likely to report having higher employee productivity than their industry peers1.16x as likely to report having significantly high

11、er financial performance than their industry peers4Table of contentsOverviewOpportunities to remove barriers to managerial performanceKey actions to improve the effectiveness of your performance management and pay-for-performance programsAbout the survey4Effective performance management includes a h

12、olistic definition of performance that extends beyond individual performance.When compared with those in the low-effectiveness category,high-effectiveness organizations are three times as likely to include the following in their definition of performance:Demonstration of skills Individual potential

13、Progress against development plans Team performanceOrganizations in the high-effectiveness category also tend to see performance management as having a role in influencing career programs and creating alignment across the organization.For example,these organizations are twice as likely as those in t

14、he low-effectiveness category to say performance ratings influence career planning and discussions,development plans and promotions.Additionally,they are one and a half times as likely to say their pay-for-performance approach for non-executives is aligned with their approach for executives.In addit

15、ion,effective performance management fosters a better understanding among employees of key performance and compensation issues and promotes a sense of fairness.In contrast to those in the low-effectiveness category,high-effectiveness organizations are twice as likely to say their employees understan

16、d their pay-for-performance philosophy.These organizations are also twice as likely to report that their employees feel that their performance-based compensation is determined fairly and that their performance is evaluated fairly.Only slightly more than one in three organizations(35%)overall indicat

17、e their employees feel their performance is evaluated fairly.This is significant because of the prominent role performance management and,in particular,final ratings play in base salary increases and short-term incentive(STI)payouts.Viewed from this broader perspective,performance management becomes

18、 a critical business and people imperative and not just an HR compliance issue.Only four in 10(40%)organizations report that their definition of performance includes an emphasis on team performance or progress against a development plan.Our survey findings highlight the practices of organizations in

19、 the high-effectiveness category and uncover improvement opportunities for the other organizations.Start with a holistic definition of performanceOrganizations are broadening their definitionof performance beyond the what and the how.Survey respondents indicated that their organizations definition o

20、f performance emphasized the following:individual performance against goals during a performance cycle(76%),individual performance against job/level expectations(66%)as well as demonstration of values(60%)and competencies(55%),and the impact of an individuals performance on an organizations objectiv

21、es(54%).There are opportunities to broaden the focuseven further.Only four in 10(40%)organizations report that their definition of performance includes an emphasis on team performance or progress against a development plan.5Table of contentsOverviewOpportunities to remove barriers to managerial perf

22、ormanceKey actions to improve the effectiveness of your performance management and pay-for-performance programsAbout the survey5Opportunities to remove barriers to managerial performanceWhile managers play a critical role in performance management,only roughly half of respondents agree or strongly a

23、gree that managers in their organizations are effective at assessing(55%)or differentiating(50%)the performance of their direct reports.Low-effectiveness organizations are more likely than their peers in the high-effectiveness category to report barriers to managers properly differentiating their di

24、rect reports performance.These barriers arise from the following managerial concerns:Explaining differentiation Addressing underperforming employees Disengaging employees who get ratings below their expectations Not having enough timeHigh-effectiveness organizations are reducing barriers to manageri

25、al effectiveness in performance management.In contrast to low-effectiveness organizations,they are more likely to take the following actions in their approach to performance management:Equip managers to manage the performance of individuals who use a range of flex work styles(i.e.,onsite,hybrid,full

26、y remote)(43%versus 32%)*Allow for more flexibility in goal setting and/or discretion in year-end evaluation to account for business volatility(42%versus 30%)*Strengthen linkages between performance management and career development (40%versus 21%)*Note:Percentages indicate“Already taken action”(hig

27、h-effectiveness organizations versus low-effectiveness organizations).High-effectiveness organizations are also more likely to emphasize holistic performance check-ins,which may include reviewing progress against goals,discussing barriers to success and linking performance to development opportuniti

28、es.High-effectiveness organizations report they are effectively delivering on91%of objectives for their performance management process.Delivering on performance management objectivesEffective performance management involves the effective delivery of objectives around performance,feedback andcareer d

29、evelopment.On average,organizations identify about six and a half objectives for their performance management process and deliver on four of these priorities.The number and types of performance objectives were similar across high-and low-effectiveness organizations.But there is a difference when it

30、comesto meeting objectives.Organizationswith low effectiveness deliver on 40%of their objectives,while high-effectiveness organizations deliver on 91%.Organizations can fall short in meetingtheir objectives for many reasons.Based on our experience,this often occurs when organizations focus on mechan

31、icsand compliance issues at the expense of setting appropriate goals and prioritizing quality interactions between managersand employees.Organizations should strive to set flexible,focused objectives that deliver value to employees,the team and the organization.High-effectiveness organizations are m

32、ore likely to have removed barriers to delivering on these objectives.6Table of contentsOverviewOpportunities to remove barriers to managerial performanceKey actions to improve the effectiveness of your performance management and pay-for-performance programsAbout the survey6Investing in the employee

33、 experienceHigh-effectiveness organizations recognize the importance of engaging employees in the performance management process and fostering a favorable view of the process among employees.Consequently,these organizations are more likely than their peers in the low-effectiveness category to invest

34、 in employee learning and development programs,manager capability building,and communication and branding efforts in order to build a positive employee experience around performance management(Figure 3).This experience will help boost employees understanding of how their performance is evaluated and

35、 improve their perception of fairness of the evaluation process.Figure 3.High-effectiveness organizations are more likely to invest in the employee experienceInvest in key areas of the employee experience in performance management85%vs.50%Employee learning and development programs 80%vs.62%Manager c

36、apability building 74%vs.47%Communications and branding of the performance managementNote:Percentages indicate“4/To a very great extent 5”(high-effectiveness organizations versus low-effectiveness organizations)Note:Percentages indicate“Already taken action”Objectives for these actions by high-effec

37、tiveness organizations include:Improving employee understanding of how their performance is evaluatedImproving goal alignment/line of sightImproving employee perception of fairness of the evaluation processHigh-effectiveness organizations Low-effectiveness organizations41%39%36%16%15%12%7Table of co

38、ntentsOverviewOpportunities to remove barriers to managerial performanceKey actions to improve the effectiveness of your performance management and pay-for-performance programsAbout the survey7Understanding what it takes to effectively pay for performanceAn effective pay-for-performance program draw

39、s on all components of compensation base pay,STIs and LTIs to power individual and team performance.High-effectiveness organizations were also more likely to indicate that the final rating along with the possession of skills critical to the success of the future business model drive both STIs and LT

40、Is;however,market competitiveness is also a key factor in determining STI payouts.Respondents indicated that they are planning or considering making changes to improve the effectiveness of their pay-for-performance programs in the following areas:Pay-for-performance philosophy Changing their pay-for

41、-performance philosophy:39%New technology Enabling the process with new technology:44%Increased managerial discretion and flexibility Introducing more managerial discretion:29%Allowing more flexibility in translating performance outcomes into payouts:41%Improved differentiation Increasing upside ear

42、nings opportunities for high performers:48%Given that pay is often a top driver of attraction and retention,these changes should help organizations hire and retain talent essential to their future success.Respondents in the high-effectiveness category were more likely than low-effectiveness organiza

43、tions to report that base pay increases should emphasize rewarding top performers in critical roles(Figure 4).Figure 4.What does effective pay for performance look like?Individual base salary increases To what extent do each of the following factors impact?Individual short-term incentivesIndividual

44、long-term incentives19%17%49%37%24%60%49%46%78%79%48%87%Final rating in year-end performance reviewPossession of skills critical to the success of future business modelPossession of skills critical to the success of future business modelFinal rating in year-end performance review61%58%30%91%84%60%Fi

45、nal rating in year-end performance reviewCriticality of the role the employee is inDemonstration of company valuesConcerns over market competitivenessInternal equity comparisonsHigh-effectiveness organizations Low-effectiveness organizations8Table of contentsOverviewOpportunities to remove barriers

46、to managerial performanceKey actions to improve the effectiveness of your performance management and pay-for-performance programsAbout the survey8Key actions to improve the effectiveness of your performance management and pay-for-performance programs Reframe performance management as a key business

47、and people process as opposed to an HR compliance exercise.Define the top three to four objectives of your organizations performance management process and ensure the performance definition and measures of program success align with the intent of the program.Shape a differentiated performance experi

48、ence.Review the role of the manager,employee and HR in performance management.Commit to a fundamental behavior change and set expectations to shape a differentiated performance experience.Emphasize career development,continuous feedback and wellbeing checks.Prioritize meaningful interactions and out

49、comes over program mechanics.Align your pay-for-performance approach with objectives.Strive to align your pay-for-performance philosophy and design with the overall objectives of the performance management process.About the surveyA total of 837 organizations globally participated in the 2022 Perform

50、ance Reset Survey,which was conducted mid-September to early November.Respondents employ 7.3 million employees.For profit 93%Nonprofit 5%State-owned or government2%2022 annual revenue(US$)Respondents by regionMedian800 millionManufacturingFinancial servicesIT and telecomGeneral servicesEnergy and ut

51、ilitiesWholesale and retailHealthcarePublic sector and educationAsia PacificCEEMEALatin AmericaNorth AmericaWestern Europe+U.K.37780116150114Domestic47%International22%Global31%21%21%18%13%10%8%7%2%9Table of contentsOverviewOpportunities to remove barriers to managerial performanceKey actions to imp

52、rove the effectiveness of your performance management and pay-for-performance programsAbout the 2023 WTW.All rights reserved.WTW-82000/01/About WTWAt WTW(NASDAQ:WTW),we provide data-driven,insight-led solutions in the areas of people,risk and capital.Leveraging the global view and local expertise of

53、 our colleagues serving 140 countries and markets,we help you sharpen your strategy,enhance organizational resilience,motivate your workforce and maximize performance.Working shoulder to shoulder with you,we uncover opportunities for sustainable success and provide perspective that moves you.Learn more at .