More organizations are saying good-bye to the outdated
performance appraisal system and embracing a new method for
managing employee performance: coaching and development.
Performance management is shifting with the times. The traditional
competitive assessment model, which documents employee performance
and is used to make compensation and succession decisions, is being
replaced by a new approach, according to the August 2011 Bersin and
Associates report, High-Impact Performance Management: Part
1Designing a Strategy for Effectiveness.
The research from 214 organizations spanning a variety of
geographies and industries shows that more companies are
strategically integrating their talent management processes to
lead, manage, develop, reward, and assess employees using a
coaching and development model. Seventy percent of survey
respondents say that they are already using a coaching and
development model, while 30 percent still use a competitive
assessment approach. Comparative Bersin research from 2008 revealed
that 60 percent of organizations use the new model and 40 percent
use the outdated approach.
Despite the growing number of organizations devoting themselves to
coaching, the study found that managers' inability to coach is the
number one performance management challenge. "The severity of the
challenge of coaching was surprising to us," says Stacia Sherman
Garr, senior analyst at Bersin. "We often hear that the performance
process is broken, and if we can just fix the process, things will
get better. But it seems the real problem is coaching
The study found that only 11 percent of senior leaders coach their
employees and 15 percent very frequently discuss the importance of
coaching and development. Therefore, although many organizations
say that they manage employee performance through coaching and
development, few do it well.
Additionally, four of the top five most critical performance
management challenges are related to poor executive engagement.
Organizations have better business results when senior leaders hold
direct reports responsible for supporting their employees.
"Coaching often is focused on developing only executive-level or
critical talent," says Sherman Garr. "This study is telling us that
effectively coaching employees at all levels makes a big
As more high-performing organizations manage performance through
coaching and development, those that currently use this approach
will lose some of their competitive pull in the marketplace. In
today's increasingly globalized workforce where talent demand is
greater than supply, organizations must use new strategies to fill
their talent pipelines.
"When you look at the pull in emerging markets, a lot of
organizations are trying to attract and retain talent through
coaching and development," Sherman Garr says. "These companies will
have to show metrics up front to prove that their coaching efforts
This report is the first in a five-part series designed to identify
the components of an effective performance management strategy. The
subsequent reports will focus on setting and revising goals for
relevancy, maximizing coaching and development planning, rewarding
and recognizing for impact, and using appraisal to drive