Business leaders demanding unprecedented increase in productivity

According to the Hay Group study, Australasian businesses are targeting growth of six percent for 2011, compared with the global target average of five percent. To achieve this aggressive target, 60 percent of New Zealand and Australian business leaders are demanding an unprecedented uplift in productivity. More than half admit this is significant challenge, and 37 percent fear their employees are already too stretched to deliver current business objectives.

The Hay Group Strategic Performance Management report is based on research among 1660 senior decision-makers in large firms across more than 30 countries. According to the research, strong majority of business leaders claim that improving individual performance is critical to achieving their growth targets. Yet the study found only 41 percent of Australia and New Zealand businesses plan to implement more rigorous individual performance management this year.

Henriette Rothschild, general manager, Hay Group Pacific, says fresh approach to managing performance is needed if executives are to harness the collective power of their employees and deliver the performance uplift promised to shareholders.“Performance management sits at the heart of business success. At time when productivity is critical to achieving the challenging growth targets that executives have set, business leaders must realise that performance management is their job. Business leaders have become too reliant on the cost lever to stay afloat. It’s time for them refocus on growth by pulling the performance lever.”

Performance mismanagement

Both globally, and in the Australia/New Zealand region, firms are routinely getting performance management wrong, the Hay Group study found. Linking individual performance to corporate strategy has long been recognised as basic component of the performance equation. However, alarmingly, less than third of organisations in Australia and New Zealand align their performance management approach to company strategy (29 percent).

The study highlights another critical success factor for performance management – alignment of performance to company culture and values. An overwhelming 94 percent of business leaders in Australia and New Zealand stress that culture has an important influence on effectiveness. Yet just 17 percent of Australasian organisations tailor performance management to company culture and values, which is considerably lower than the global average (24 percent), says Henriette Rothschild.

“Business leaders have known for over 20 years that performance management must be aligned to company strategy to be effective. But that is not enough. Company culture plays vital role in driving performance as well. Without an approach to performance management tailored to their strategy, culture and values, firms and business leaders will not be in the right shape to deliver the growth expected of them.”

Business leaders are also not dedicating adequate time to managing poor performance: 44 percent in Australia and New Zealand and 40 percent worldwide admit spending 10 percent or less of their time doing so.

• For more: www.haygroup.com/ww/spm

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