The State of the Art in Performance Management: Learnings from Discussions with Leading Organizations

Performance management is one of the fundamental HR tools that has been part of organizational life for decades and has long been the backbone of other activities of the HR system (e.g., pay decisions, development plans). Despite the importance of performance management, it has historically been rated by employees, managers, and the HR function itself as one of the least effective and understood HR practices. Given the stagnation in academic research on the topic and discontent on the part of organizational stakeholders, we decided it was an opportune time to meet with leading companies to understand the state of the art in performance management. Specifically, we held two working group meetings with a total of 32 HR executives from 20 companies to discuss current challenges and best practices in the area of performance management. The discussions provided us with a deeper understanding of the dilemmas and challenges associated with performance management in large, multinational companies. We were also able to extract a handful of promising directions for enhancing the effectiveness of the performance management process