HEALTH WEALTH CAREER

Performance Transformation in
the Future of Work
Mercer’s 2019 Global Performance Management Study
and Point of View

DATE

July 2019

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I N T O D AY ’ S S E S S I O N , Y O U W I L L . . .

Learn the 4 truths revealed by our study

Discover our predictions and recommendations

Join the discussion and ask questions

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JUST A FEW WORDS ABOUT THE 2019 SURVEY

1 , 1 5 4 C O M PA N I E S - 5 3 C O U N T R I E S - 2 4 I N D U S T R I E S

30%
55% EMEA 12%
AMERICAS UK
Canada France Germany ASIA PACIFIC
US Switzerland China
Italy Japan

Mexico

Brazil

15% Durable Manufacturing 5% Transportation and Logistics 3% Retail

12% Financial Services 5% Energy - Oil and Gas 3% Education

10% Consumer Goods 5% Professional Services 3% Energy - Utilities

10% High Tech 5% Non Durable Manufacturing 3% Real Estate/Construction

5% Pharmaceutical/Biotech
© MERCER 2019
4% Healthcare Providers
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 W H AT D O M O S T C O M P A N I E S D O T O D AY ?

M O S T P R E V A L E N T P R A C T I C E S T O D AY

85%
Assign overall ratings or labels

Link performance and pay 85%

Conduct formal year-end discussions 84%

Set individual goals 83%

Conduct performance planning discussions 77%

Use a self-assessment 70%

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PERFORMANCE MANAGEMENT IS RIPE FOR CHANGE

TOP THREE REASONS PERFORMANCE

MANAGEMENT IS INEFFECTIVE

2% People leaders are not skilled

enough at providing performance 35%
of companies say their current
feedback and coaching to employees
performance management
program delivers exceptional
value
Executives do not talk enough
about performance management 22%
as a core business process

Executive leaders do not model

People leaders play a effective performance 11%
significant role in management behaviors each day
making performance
management effective

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4 TRUTHS
from our 2019 Performance
Management Study

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FOUR TRUTHS ABOUT PERFORMANCE MANAGEMENT

1 2 3 4

Goal clarity
matters most

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THE GOAL CASCADE NEEDS WORK

D O E S Y O U R C O M PAN Y R E Q U I R E . . . . Company Goals

44%
Business Unit Goals 56% Cascade to the
Business Unit

40%
Individual Goals 83%
Cascade to the
Individual

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FOUR TRUTHS ABOUT PERFORMANCE MANAGEMENT

1 2 3 4

Effective coaching
requires empathetic
and action-oriented
managers

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M O S T O R G A N I Z AT I O N S N E E D F E E D B A C K T O I M P R O V E

F E E D B AC K C U LT U R E C O N T I N U U M

2% 10% 56% 22% 10%

Feedback quality and Feedback quality and quantity are Feedback is encouraged Some feedback occurs, Feedback is infrequent,
quantity differentiate effective, supported by training, with some formal process, but quality and quantity mostly top down
organization forums, and executive sponsorship but quality and quantity vary vary significantly

WHERE DO WE NEED TO IMPROVE IN FEEDBACK THE MOST?

Managers to employees 65% Manager and employee feedback is by far

where feedback improvement is most needed

Employees to managers 16%

Peer to peer 14%

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FOUR TRUTHS ABOUT PERFORMANCE MANAGEMENT

1 2 3 4

Dropping ratings
doesn’t necessarily
mean
richer feedback

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E L I M I N AT I N G R AT I N G S : L O T S O F P R E S S B U T L I T T L E A C T I O N

Press doesn’t mean prevalence.

Required link between performance and..
In reality, only 15% of companies do
not have ratings... 44%

35%
31%

22%
18%
16%
...and our study shows
a weak positive
correlation between
not having ratings and
a feedback-rich culture
Development Promotion Succession

Companies with Ratings Companies without Ratings

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FOUR TRUTHS ABOUT PERFORMANCE MANAGEMENT

1 2 3 4

Integrated people
strategy is the way
forward, but needs
work

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P E R F O R M A N C E M A N A G E M E N T M U S T S TA R T F R O M A N I N T E G R AT E D
H R S T R AT E G Y

IS YOUR PERFORMANCE MANAGEMENT

T E C H N O L O G Y I N T E G R AT E D ?

70% of companies aspire to improve the links

between performance management and
other programs Integration only with
HRIS 30%

No integration 27%

Companies with ratings are High growth companies

20% more likely to link are 4x more likely to have Fully Integrated 16%
performance to other an integrated talent
talent decisions strategy in place

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FOUR TRUTHS OF CURREN PERFORMANCE MANAGEMENT

Goal clarity Effective coaching Dropping ratings Integrated people

matters most requires empathetic doesn’t necessarily strategy is the way
and action-oriented mean forward, but needs
managers richer feedback work

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3 PREDICTIONS
for the future of
performance management

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PREDICTION #1: MANAGERS AS WE KNOW THEM WILL CEASE TO
E X I S T, A N D A R T I F I C I A L I N T E L L I G E N C E W I L L P L AY A B I G G E R R O L E
~~~~~,

70%
~~~~~~~~~~
•
~~~~~,
~~~~~~~~~~ ~~~
~~~~~~~~~~ • ~~~~~~~~~~~~~~~~
• ~~~ ~~~~~~~~~~
• ~~~~ ~~~~~~~~~~
~~~
~~~

~~~~~,
~~~~~~~~~~
• Investment in AI to
collect multiple
~~~~~~~~~~
~~~~~~~~~~
• ~~~
~~~ • ~~~~~~
• ~~~

feedback and assess

• ~~~~

~~~~~,
~~~~~~~~~~
~~~~~~~~~~ employee activity
• Reduction of manual
~~~~~~~~~~
• ~~~
• ~~~~~~
~~~
• ~~~
~~~~~, • ~~~~
~~~~~~~~~~

work
~~~~~~~~~~
~~~~~~~~~~

~~~

• ~~~
• ~~~~~~
• ~~~ ~~~~~,
• ~~~~
~~~~~~~~~~ • ~~~
~~~~~~~~~~ • ~~~~~~
~~~~~~~~~~ • ~~~
• ~~~~

~~~
• ~~~
• ~~~~~~
• ~~~
• ~~~~

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P R E D I C T I O N # 2 : TAL E N T M O D E L S W I L L B E S E G M E N T E D AN D
ALIGNED TO EACH UNIT’S BUSINESS CYCLE

73% Agile business segment Stable business segment

of executives are
anticipating significant START-UP HIGH-GROWTH TRANSFORMATION MATURE
industry disruption in
the next few years
TA PM R D TA PM R D TA PM R D TA PM R D
2019 Global Talent Trends Sudy

Swift scale ups mean more Capitalize on established

frequent or continuous employee growth plans.
updating of expectations,
selection of new talent, and Invest in tried and true
development of current learning experiences and
TA Talent Acquisition talent career paths

Performance
PM
Management

R Rewards

Development and
D
Succession

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P R E D I C T I O N # 3 : T H E E N D O F A N N U A L M E R I T P AY

T O D AY FUTURE

Merit Pay Skill Cluster Skill Cluster

87% Skill Skill

Skill Skill

Skill Skill
Job Job Job
Skill Skill
Skill
Skill

Market + performance = merit Skill Cluster

Skill
Skill

Skill

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P R E D I C T I O N # 3 : T H E E N D O F A N N U A L M E R I T P AY

T O D AY FUTURE

Merit Pay

87%

Incentive Compensation

65%

Career Advancement

58%

Learning Opportunities and

Special Projects
43%

Non-Monetary Recognition

20%
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SUMMARY OF THREE FUTURE PREDICTIONS ON PERFORMANCE
MANAGEMENT

I. MANAGERS AS WE KNOW THEM WILL CEASE TO EXIST AND AI WILL PLAY A BIGGER ROLE

II. TALENT MODELS WILL BE SEGMENTED AND ALIGNED TO THE BUSINESS CYCLE

III. THE END OF ANNUAL MERIT PAY

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N E X T S T E P S : B U I L D I N G P E R F O R M A N C E T R A N S F O R M AT I O N F O R
FUTURE OF WORK

Prepare Assess Align Execute Review

…to be future ready …current company situation …to new work expectations …with AI & automation …through feedback & analysis

Validate and
align with Communicate
Build business targets to
Identify issues Evaluate impact,
Stakeholder objectives employee
and challenges key barriers,
Readiness groups, Adjust
from all angles and
especially accordingly
People effectiveness
to changing
Leaders company
Assess current Design
performance cascaded Critical for Technology
goals
management goals for the success platforms
Understand system organization enablement
business context
and goals

Activities proven to have impact in building your workforce for the future
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I M P O R TA N C E O F H AV I N G S K I L L E D P E O P L E L E A D E R S T O M A K E
PERFORMANCE MANAGEMENT EFFECTIVE

TOP THREE REASONS PERFORMANCE

MANAGEMENT IS INEFFECTIVE

2% People leaders are not skilled

enough at providing performance 35%
of companies say their current
feedback and coaching to employees
performance management
program delivers exceptional
value
Executives do not talk enough
about performance management 22%
as a core business process

Executive leaders do not model

effective performance 11%
Proper assessment management behaviors each day
through Mercer Mettl

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READY TO USE ASSESSMENT CONTENT ACROSS
P E R S O N A L I T Y, C O G N I T I V E , D O M A I N ( I T / N O N - I T )

Question Mapping/Creation &

Assessment Configuration

Map or Create questions to

evaluate proficiency levels
based on the framework
Knowledge-based
questions (MCQs)

Application-based
Question
(Simulators)
Configure assessment for each
competency framework

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A S S E S S M E N T P L AT F O R M
FOR CONDUCTING ASSESSMENTS ONLINE

• Supports Diversity of • Ensures Data Security • Generates Automated • Focuses on Better

Question Types Reports Candidate Experience

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A S S E S S M E N T P L AT F O R M
REAL TIME REPORTING

IN-DEPTH E AS Y- TO - C O N S U M E
Score of each competency along
Summary along with Development
with the benchmark
Tips (IDP Formulation)

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Q&A
Further inquiries:
DIKSON.KWAN@MERCER.COM

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