"The survey results clearly indicate that corporate America's performance management systems need fixing," said Scott Cohen, Ph.D., national director for talent management at Watson Wyatt and an expert in performance management. "Unfortunately, too many organizations view their performance management programs as 'organizational wallpaper.' They exist in the background and aren't expected to add value."

While performance management programs do somewhat better at more traditional functions such as appraising performance and assisting with pay decisions, they are not successful in improving performance. The survey of 1,190 workers found that 61 percent of employees feel their performance appraisal was accurate and 54 percent say employees with better reviews get better raises and bonuses. However, only 30 percent of employees give their performance management system good marks in helping them to improve their performance. In addition, less than 40 percent say the system establishes clear performance goals, generates honest feedback or capitalizes on technology to streamline the process.

Workers' Views on Performance Management

	Aspect of Performance Management Strongly Agree/Agree Program helps poor performers improve 19% Program has helped me improve my performance 30% Program establishes clear performance goals for current year 35% Program does a good job of giving honest feedback 36% Program uses technology to streamline performance management process 38% Program rewards better-reviewed employees with better raises/bonuses 54% I was evaluated accurately in my recent performance appraisal 61%

The survey also found that only 54 percent of workers say their company sets high performance standards and only 44 percent feel that people are held accountable for their performance. Nineteen percent of all workers say their company deals effectively with poorly performing employees.

"Performance management programs represent a lost opportunity for most companies. These systems, if designed and implemented properly, can have a strong, positive impact on individual performance and financial results -- our studies suggest possibly a 20 percent improvement in shareholder value," said Cohen.

To effectively confront the pitfalls of the performance management process, Cohen advises managers and leaders to do the following:

1. Get rid of the HR-speak and make sure the performance management processes use the language of the business
2. Make the tough decisions. Recognize star performers and confront poor performers as soon as possible but no later than their next formal review.
3. Burn paper forms. User-friendly automation is better, faster and cheaper. Best of all, it helps re-engage managers and employees who have grown weary of burdensome PM systems.

"A company's success is contingent on the success of its employees," said Cohen. "In the end, the companies that make the needed changes to their performance management process will generate significant competitive advantages and create more value for shareholders."

Copies of the survey are available by clicking here.

About Watson Wyatt Worldwide

Watson Wyatt & Company, the primary subsidiary of Watson Wyatt & Company Holdings (NYSE: WW), is an international human capital consulting firm that provides services in the areas of employee benefits, human capital strategies and related technology solutions. The firm is headquartered in Washington, D.C., and has 3,900 associates in 61 offices in the Americas and Asia-Pacific. Together with Watson Wyatt LLP, a leading Europe-based consulting partnership, the firm operates globally as Watson Wyatt Worldwide. Watson Wyatt Worldwide has more than 6,000 associates in 88 offices in 30 countries.

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