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May 2020
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TD Magazine

Recognize and Reward

Nearly all organizations have a performance management process—but not many employees think it's working.

The Association for Talent Development's research report Performance Management: Driving Organizational and Personal Growth found that while 94 percent of companies have a performance management process, less than half of the talent development professionals who were surveyed believe that process is highly effective in any area. Respondents were most likely to feel the process is highly effective in evaluating performance (44 percent) and developing goals (42 percent).

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However, about one-quarter believe their organizations' process is highly effective in incentivizing performance. Similarly, when respondents were asked about the biggest barriers to effective performance management, a top obstacle they identified was an inability to adequately reward or incentivize performance that exceeds expectations. Evidently, there is room for organizations to improve in this area.

The most common methods companies use to reward employees for good performance are salary increases and promotions, both applied by two-thirds of companies. But two other methods—a financial bonus or a recognition or award—had the strongest link to effectiveness. Top-performing organizations, defined as those whose employees said their organizations' performance management process was highly effective in all areas of the process, were significantly more likely than all other companies to reward employees with a financial bonus or a recognition or award. In fact, Gallup research has found that recognizing good performance is linked to higher employee engagement, increased productivity, and increased company loyalty.

Patrick Boyle, senior vice president and chief learning officer at UL, is a proponent of recognizing employees for their contributions. "I think the biggest reward is immediate recognition," he says. "It's easy, it's cheap, and people feel really good about it."

Boyle says time is of the essence when it comes to recognizing employees. "When you see it, reward it immediately." At UL, Boyle uses an app to recognize employees for their work.

About the Author

Shauna Robinson is a former ATD research analyst. Her responsibilities included preparing surveys, analyzing data, and writing research reports.

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