Skillful performance management is vital to the long-term health and productivity of any professional team. An effective performance management approach is difficult to achieve and requires insight into the workforce, your organizational definition of success, and each employee’s career journey. However, there are some benchmarks and indicators that managers can use to ensure they’re on the right path.
With that in mind, we’ve compiled a list of current performance management statistics that revolve around workers in the United States and beyond. We compare the latest performance management trends and the most effective performance management strategies in use today.
Key Performance Management System Statistics
Companies in the U.S. utilize performance management systems in numerous ways. From setting and tracking goals to identifying shortcomings and strengthening productivity, the best performance management software have a lot to offer to modern businesses in the U.S. – as long as they’re used correctly.
Yet, the adoption of performance management software isn’t as widespread as you’d think:
- 58% of companies still use basic spreadsheets to track and monitor employee performance.
- It takes U.S. managers an average of one to two weeks to complete a performance review process for a single employee.
- Approximately 60% of questions used on employee evaluations depend on a five-point rating scale.
- A study released in 2020 suggests that 46% of organizations have altered or modified their performance management systems within the past year.
- Only 45% of organizational leaders believe that their organization uses consistent tools to monitor and review employee performance.
- 40% of managers do not have access to the information needed to properly analyze employee engagement and motivation.
- Employees tend to trust software to deliver a fair performance review more than they trust their managers.
- 33% of employees want to receive continuous feedback outside of an annual or traditional review.
Performance management systems in the U.S. are hit-or-miss. While some platforms do provide a lot of value to both the organization and the employees being reviewed, most companies in the U.S. aren’t using these systems efficiently.
Successful performance management system implementation often results in increased employee engagement, which will ultimately result in greater productivity and profitability across the board.
- According to Gallup, 70% of employees agree that hiring quality team leaders will increase overall employee engagement.
- According to numerous studies, overall employee engagement is directly correlated to the frequency of performance reviews and check-ins.
- Employees who are highly engaged are 87% less likely to leave their current job than those who don’t feel engaged on a day-to-day basis.
Statistics on Performance Management in the U.S. vs. Internationally
Managers and human resources teams use performance management tools to strengthen teams all around the globe. The following international performance management statistics give useful insight into the global adoption and trends regarding these tools.
- 22% of organizations want performance reviews to focus on individual behaviors instead of expected outcomes, compared to only 12% that want to focus on outcomes rather than behavior.
- 48% of companies are working on improving team productivity and employee engagement rather than professional development.
- Performance review statistics based on traditional performance management practices are not positive. 74% of U.K. workers believe that traditional performance appraisals aren’t useful.
We know frequent feedback is a driver of employee engagement. Therefore, the level of employee engagement we see globally is a useful indicator of how attuned employees feel to their own career development.
- Only 21% of international employees feel engaged at work, while 33% of U.S. employees feel engaged.
- Worldwide, employee engagement reached a record high of 23% in 2022.
- More than half of the current global workforce is actively seeking out new employment opportunities.
- The highest levels of employee engagement were reported in southeast Asia, at 33%, with Europe coming in at the lowest levels with only 13%.
- Employee engagement has nearly four times as much influence on stress as the employee’s work location.
- A recent Gallup poll (cited above) indicates that most of today’s “quiet quitters” are leaving their jobs due to a lack of engagement or workplace culture.
- Teams that are engaged report 81% lower absenteeism and 43% lower turnover than those that aren’t engaged.
- 73% of workers in the United Kingdom thought they were more efficient while working at home during the COVID-19 pandemic than in the workplace.
Although the U.S. leads the rest of the world in overall employee engagement, some regions, like Southeast Asia, aren’t far behind. If the global rate of engagement continues to rise over the next few years, we could see record levels of employee productivity around the world.
Statistics on Traditional Performance Management Systems
Traditional performance management refers to the conventional approach that organizations use to evaluate and assess the performance of their employees. It typically follows a structured and formalized process that occurs at regular intervals, often annually. The main components of traditional performance management include goal setting, performance appraisal, feedback, and sometimes, performance-related rewards or consequences.
Countless studies suggest that traditional performance management systems just don’t work. They’re not based on quantifiable data and, many times, they’re not an accurate portrayal of the employee’s contribution to the company.
- According to Deloitte, some of the most proactive companies already began reviewing and updating their performance management systems prior to 2014.
- Approximately 33% of U.S. companies were in favor of abandoning traditional performance appraisal and review processes as of 2016.
- Others, like Microsoft, Netflix, and many others, started moving away from these traditional processes prior to 2015.
- While some, including 6% of Fortune 500 companies, have eliminated employee rankings altogether (Washington Post, cited above).
Performance Review Statistics
While numerous effective performance review examples exist, many of the complaints about traditional performance appraisals are centered around their lack of accuracy. According to both the managers completing the reviews and the employees who are receiving the reviews, they aren’t accurate enough to have any real value in the working world.
- Nearly 75% of millennials are left unsure about their job performance or how to improve.
- As a result, 62% of them felt completely blindsided by one or more of their evaluations.
- Almost 60% of millennial workers believe their managers are unprepared to give constructive feedback during their performance reviews.
- 77% of HR leaders agree that traditional performance reviews are not enough to form an accurate picture of an employee’s day-to-day performance.
Not only are traditional performance evaluations inaccurate, but, in some scenarios, they can be downright hazardous to the company.
- 85% of employees would seriously consider quitting after an unfair performance assessment.
- Approximately 10% of the U.S. workforce reported feeling enraged after receiving negative feedback.
- Four out of 10 U.S. employees disengage from their work when they receive little to no feedback from their managers (ClearCo, cited above).
95% of HR Managers Say Performance Management Sucks
In many cases, the HR leaders who are responsible for completing and delivering employee performance reviews aren’t happy with the process, either. This is demonstrated through numerous studies, reports, and statistics on the topic.
- A dismal 5% of HR leaders are satisfied with their current performance review system (Gartner, cited above).
- Conversely, 95% of current HR leaders aren’t satisfied with the traditional performance appraisal process whatsoever.
- Nearly 50% of managers fail to see the value in their company’s performance management process.
- Traditional performance reviews are considered overly time-consuming and unnecessarily complex for the amount of value they provide (Gartner, cited above).
Performance Management Strategies Compared
There are a variety of performance management systems and strategies in use today. Some are more effective than others and some are more viable in certain industries.
Regardless of the metrics and format performance reviews happen in, the core performance management best practices are similar. The strategies exist in five buckets:
1. Annual Review Cycles
While most experts agree that the annual review is one of the least effective means of monitoring and recording an employee’s performance, it’s better than nothing. At the very least, annual reviews are meant to highlight individual strengths and weaknesses. However, most employees feel that an annual performance review cycle is not consistent enough to be of any real value.
- According to SHRM, 71% of companies still conduct performance reviews on an annual basis.
- On a yearly basis, most managers spend an average of 210 hours preparing annual performance reviews for their respective teams.
- Teams that are provided with feedback on their strengths are 8.9% more profitable and 12.5% more productive than those with reviews focusing on weaknesses.
2. Continuous Performance Management
Most companies that have replaced their traditional performance review platforms with up-to-date alternatives are satisfied with the results. According to a 2020 study, companies that embraced continuous performance management, for example, outperformed their counterparts by 24%. Similar results are seen when companies explore other alternatives, too.
- Companies that implement continuous performance feedback are 39% more effective at attracting talent and 44% better at talent retention than their counterparts.
- Human resources teams see an increase in “excellent ratings” from their managers after ditching traditional performance appraisals.
- Team members are more than five times as likely to consider their feedback as “meaningful” when it’s delivered on a weekly basis.
- Those who have received feedback in the past week are four times as likely to be engaged than those who haven’t.
- More than half of all respondents want to receive feedback on a daily or weekly basis, and nearly 75% believe that feedback plays a valuable role in their day-to-day productivity (LinkedIn, cited above).
- If they could choose, 94% of employees would want feedback and development opportunities daily, or in real-time.
- 81% of employees feel they should receive feedback at least quarterly via check-ins with their manager.
- Employee engagement is three times more likely to occur when team members are given consistent feedback.
- Almost one-third of employees receive feedback once every three or four months.
- Companies that provide regular feedback report 14.9% lower turnover rates than those who don’t provide feedback at all.
- 84% of engaged staff members feel recognized after going above and beyond while only 25% of disengaged workers feel the same.
- Engagement is an average of 15% higher when employees are offered professional development, while retention is 34% higher.
Some employees are open to reviews from their peers, customers, and clients, too.
3. Peer-Reviewed Performance
Although they’re usually used in conjunction with another performance management strategy, peer reviews are becoming more commonplace in every professional setting. It makes sense. Teams are well aware of the contributions high performers make to their overall efforts.
- Nearly one-third of companies currently use peer reviews on a regular basis (Lattice, cited above).
- It helps that the turnaround for peer reviews is generally faster than feedback from managers. 80% of office workers would prefer immediate feedback rather than having to wait for it.
Not only do employees tend to prefer peer reviews over other forms of performance management, but these reviews can benefit the entire organization by building stronger teams, improving individual performance, and ensuring consistency during reviews.
4. Customer-Reviewed Performance
Much like peer reviews, customer reviews can go a long way in highlighting an employee’s strengths and weaknesses. Organizations have been using customer feedback for decades. It’s invaluable in improving business processes. When used as part of a formal review process, this feedback can help you separate top-performing employees from those who may be struggling.
- 90% of current CEOs think that the customer has the biggest impact on their bottom line.
- Likewise, 90% believe that customers have the biggest impact on overall company strategies and objectives.
- Almost 80% of modern consumers prefer brands that actively consider customer feedback.
- The average response rate to customer feedback surveys is just under 25%, but this number grows beyond 85% when using a well-crafted survey.
5. Performance-Based Remuneration
According to the latest studies, performance-based compensation is not a direct contributor to employee performance.
There are several reasons for this, but most revolve around the issue of fair pay. It is difficult to create a standardized pay scale in a performance-based setting that rewards everyone equally or proportionally. Any perception of unfair remuneration seriously harms the employee experience. Employees who find that the cost of high performance outweighs their benefit to the workplace will ultimately hurt the company in the end.
An engaged employee is wholly at work and sees how their efforts translate into a valuable contribution and, ultimately, rewards. An employee who does not see this cost-to-benefit chain unfold will ultimately lose engagement. We can see this in workplace phenomena like quiet quitting.
- Employees spend an average of five hours per week using the internet at their job for non-work means
- Disengaged workers cost the U.S. economy more than $300 million every year
- Nearly 40% of employees currently feel underappreciated by their managerial leaders
- Workplace productivity in the U.S. declined by 2.4% in Q2 2022
Performance-based remuneration isn’t viable in every industry. According to a recent study from Harvard Business School, most HR professionals prefer a consistent, weekly or bi-weekly salary over a commission-based structure. However, occasional bonuses and gifts are always well-received.
- The most common type of bonus, a year-end or annual bonus, is granted to approximately 11% of the U.S. workforce
- 61% of companies provided higher bonuses in 2021 when compared to 2020
- Employees in the IT industry have greater access to incentives and bonuses than those in other industries
- Profit sharing is most commonly seen in companies with 100+ employees
- Workers who receive consistent bonuses or incentives are eight times more engaged than those who don’t
While employers and employees alike are struggling to come up with a fair structure for performance-based pay, another issue has come up in recent years – remote and hybrid workers.
Remote Performance Management Statistics
Remote and hybrid roles are more popular than ever before. Nearly 13% of full-time employees currently work from home. Just over 28% are currently working in a hybrid model with a mixture of both at-home and in-office duties, and, according to some reports, more than 32 million U.S. workers will be in fully remote roles by 2025.
There’s a good reason for the sudden increase in work-from-home jobs. According to one study, 77% of workers are more productive when working offsite. Other studies show similar results.
- 88% of remote workers use email as their primary means of communicating on a daily basis.
- 30% of employees accomplish more in the same amount of time while working offsite than while working at the office.
- 52% of remote workers are less likely to request sick time than their in-office counterparts.
- Companies lose approximately $600 billion annually due to workplace distractions.
- Employers that offer remote work report greater retention rates than those who don’t.
While many companies have already adopted remote and hybrid workplaces, some are still hesitant. They often cite challenges in communication and, specifically, performance management, as a barrier to productivity. However, the statistics speak for themselves.
- The highest engagement levels are reported by hybrid employees (81%), followed by remote employees (78%), and, finally, on-site employees (72%).
- 79% of remote employees say that their transition to a remote workspace has had little or no effect on their overall performance.
- The majority of remote and hybrid workers feel that their opinions matter, while approximately one-third of on-site employees can say the same.
- 89% of remote and hybrid workers already have the technology needed to perform their jobs at home.
- Although the overall number of fully remote employees has decreased since the COVID-19 pandemic, the number of hybrid workers has remained steady.
- 83% of organizations report a successful shift to the remote workspace.
- Only 13% of executives want their office to resume business as it was prior to the COVID-19 pandemic.
- Employees with little experience are more likely to prefer in-office work, while those with more experience are likely to prefer remote roles.
- 55% of employees prefer working remotely at least three days per week.
Remote Performance Feedback Statistics
Apart from traditional performance management systems, managers have plenty of tools at their disposal when it comes to monitoring and assessing the productivity of remote workers.
- 72% plan on implementing new tools to bolster team collaboration.
- 70% are expanding their organization’s IT infrastructure to increase security.
- 64% are preparing managers to oversee remote and hybrid employees.
- 57% have added conference rooms that support virtual connectivity.
However, it’s not all good news. Despite the numerous benefits of remote workers, there are some drawbacks, too.
- 53% of remote workers say that the lack of personal interaction makes it difficult to feel connected to their employees.
- Nearly 70% of remote workers report feeling burnout from using digital communication tools on a day-to-day basis.
- 73% of executive leaders believe that remote workers are a greater security risk than in-house employees.
There will always be some jobs that can’t be done remotely. However, these jobs are fewer and farther between than ever before. Given the current state of technology and the rate that it’s evolving, the remote workplace is quickly becoming the norm.