As performance management continues to transform to meet the demands of the modern market, organizations are experiencing a mixture of successes and challenges. HR.com’s recently published, PeopleFluent-sponsored “Future of Performance Management 2024-25” report, provides a comprehensive look at the current state of performance management, offering valuable insights into what’s working and where improvements are needed.

In this blog post, we’ve pulled together a quick look at some of the key findings from the full report.

Key Findings at a Glance

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1) Performance Managers Are Aligned With Important Organizational Goals

The most frequently cited goals of performance management are meeting organizational requirements (73%) and helping individual employees grow (73%). It’s also used to boost individual performance (71%), improve organizational performance (69%), and enhance communication between employees and managers (69%).

2) Few Organizations Meet Their Performance Management Goals

Despite the importance of these goals, fewer than half of organizations achieve them to a high degree. Only 45% report success in improving employee performance, achieving performance management objectives, developing employees, and enhancing legal protections.

3) Performance Management Is Moving Toward More Frequent and Strategic Touchpoints

Performance management processes have evolved in the last two years, with 41% of organizations reporting that they’re conducting more frequent one-on-one meetings between managers and employees. They also report that they’re achieving closer alignment of personal goals with business objectives (36%), and increasing their focus on broader issues like employee well-being (30%).

Over the next two years, organizations plan to focus more on:

• Frequent or continuous feedback (60%)
• Manager training (53%)
• Frequent, natural conversations between managers and employees (46%)
  

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4) Certain Performance Management Processes Are Widely Used

Most organizations’ processes incorporate positive feedback with constructive criticism (81%), goal discussions (76%), and development conversations (68%). However, fewer than half of the respondents say their processes are easy to use (49%), improve relationships between employees and managers (46%), or accurately portray employee performance (35%).

5) Digital Performance Management Tools Often Fall Short of Expectations

Over 80% of organizations use digital tools for performance management, but only 42% use them to a high or very high degree. Common features include performance appraisals (66%) and goal evaluations (52%). However, fewer organizations use performance management systems to aid in employee recognition (30%), company communication (29%), or training and development (28%).

Platforms like PeopleFluent can bridge this gap, offering a configurable talent management suite with advanced tools such as unified talent profiles, real-time analytics, and flexible workflows. These tools help HR leaders recognize achievements, support development, and align talent with organizational goals, especially in highly regulated industries.

6) Organizations Use a Relatively Small Range of Core Measurement Techniques and Metrics

Performance management processes typically rely on a few key techniques and metrics. SMART goals (60%) and key performance indicators (48%) are the most frequently preferred methods for setting goals and subsequently tracking progress.

The most commonly used metrics include goal achievement (67%) and self-ratings (57%). The former aligns with the top objective of “meeting organizational requirements”, and can be a useful way to track how well performance management processes achieve objectives. Self-rating, meanwhile, gives employees a voice in the process and a means to steer goals in the direction of their own personal goals (within reason).

7) Managers Rarely Receive Performance Management Training and Aren’t Held Accountable to Goals

Only 40% of respondents believe their managers are sufficiently trained in performance management, and just 31% think managers are skilled in handling it overall. Furthermore, managers aren’t held accountable for actually completing performance management activities. While 63% of organizations track the formal appraisals managers perform, four-fifths of organizations do not tie performance management process completion to compensation, KPIs, or feedback.

8) Leaders’ Perception of Performance Management Is Mixed

58% of HR professionals believe their top leaders view performance management positively, seeing it as essential for performance and development. However, a sizable percentage (24%) believe that these managers view it only as a necessary evil or even as a waste of time (9%).

9) Top Performers in Performance Management Stand Out in Specific Areas

Organizations that excel at performance management are over twice as likely to have leaders who view it as essential for improving performance. These top performers are also:

• Nearly 2x more likely to use digital tools for performance management to a high or very high degree
• 1.5x more likely to provide performance management-related training to managers
• 1.5x more likely to hold work-related feedback sessions between supervisors and employees at least four times a year
• Significantly more likely to leverage AI for training recommendations, performance analysis, and to enhance goal-setting.

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