WOODSIDE, Calif., March 6, 2024- RedThread Research, human capital analysts and thought leaders, today released their newest groundbreaking report — "Performance Management Trends 2024: Productivity At Any Cost?" — which raises serious questions about the current state and future effectiveness of performance management practices in organizations.
This new report paints a concerning picture of the performance management landscape, finding that companies in 2023 were increasingly focused on immediate productivity — at the expense of long-term employee growth and satisfaction. In fact, 47% of employees said they believe the top reason companies manage their performance is to boost productivity. This represents a 9-point increase from 2022. However, the report findings show that companies that especially emphasized productivity were not any more likely to have highly productive employees.
"Employers are emphasizing productivity above all else," says Stacia Garr, RedThread's co-founder and principal report analyst. "But that push for productivity has not actually translated into any better outcomes. Which means companies are chipping away at employee trust for no discernable gain."
The report also shows low levels of employee satisfaction with company performance management practices, with only 44% of employees expressing contentment in 2023. Additionally, only 39% feel that their companies provide a fair and consistent evaluation process — a noticeable drop from 48% in 2021.
"This isn't only a measure of whether employees think they are being fairly assessed," says Garr. "Given that so much hinges on performance management – compensation, promotion, equity, engagement – the fact that most folks view it as unfair signals a deep-seated trust issue in organizations. This problem is likely to only intensify as AI and automation become more ingrained in the workplace."
Key findings in the report include:
Employee satisfaction with performance management practices was only 44% in 2023.
Only 39% of employees view their company's evaluation process as fair and consistent in 2023.
Despite a 9-point increase in the perception that companies used performance management mainly to drive productivity — those companies did not see better results.
Fewer than half (46%) of employees said their companies encouraged them to learn and develop skills regularly in 2023 - a 7-point decline compared with 2021.
There is a 10-point decrease from pre-pandemic levels in employees feeling encouraged to have regular conversations with managers.
These findings are part of a larger trend of diminishing support for managers and their effectiveness, a concern that RedThread Research has noted in their past research on manager effectiveness.
"The continued decline in support for managers is also alarming," added report author and Senior Analyst Priyanka Mehrotra, "considering the unsteady ground on which managers already find themselves. When organizational support for performance decreases, it can impact employees' overall assessment of their managers' effectiveness, and their engagement — which makes this new report a worrying sign for the future of the workplace."
