BWI: CEOs Target Employee Performance to Achieve Bullish Growth in 2011: report by Hay Group

Press release from Business Wire India
Source: Hay Group
Wednesday, June 29, 2011 01:30 PM IST (08:00 AM GMT)
Editors: General: Consumer interest; Business: Accounting & management consultancy services, Business services, Information technology; Technology
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CEOs Target Employee Performance to Achieve Bullish Growth in 2011: report by Hay Group


New Delhi, Delhi, India, Wednesday, June 29, 2011 -- (Business Wire India) -- -- CEOs' growth targets outstrip economic forecasts
-- Firms will therefore demand 7.3 per cent more productivity from workers
-- Business leaders to ask more from stretched workforces

CEOs have set bullish growth targets for 2011, and are demanding significant increases in workforce productivity to meet them, according to new research from global management consultancy Hay Group.

According to the study, global firms are targeting 5 per cent growth for 2011, targets which outstrip local economic forecasts in most cases (see table below).

In India, firms are more ambitious: targeting double digit growth on average, which is outstripping the IMF's economic growth forecast of 8.2 per cent.

Business leaders admit this is a significant challenge, which will demand an unprecedented uplift in productivity from already stretched workforces.

The Hay Group report about Strategic performance management is based on research among 1660 senior decision-makers in large firms across more than 30 countries worldwide. In India, 100 large local and foreign companies (private sector only) took part in this qualitative study.

Mitali Bose, BEO Practice Leader, Hay Group India comments: "CEOs have set challenging targets, and are demanding more from their workforces to deliver them - and this needs to be delivered in more complex, dynamic and competitive environment. Given that over 76% of Business Leaders in India feel that Individual Performance Management is a key driver to achieving business results - "A fresh approach to managing performance is needed if leaders are to harness the collective power of their employees and deliver the performance uplift promised to shareholders."

The performance challenge

In India, over half of the business leaders surveyed (57 per cent) ¬- admit that their growth targets present a significant challenge. In comparison, their global peers are even less confident - nearly two in three admit that their growth targets are challenging.

Despite M&A activity showing signs of reviving, firms cannot rely solely on acquisitions to achieve growth. Businesses need a step-change in workforce productivity if they are to grow organically.

Business leaders in India claim they need to increase productivity by some 6 per cent on average, with the majority (63 per cent) intending to ask even more from their workforces. In this respect, Indian leaders are more achievement-oriented compared to their global peers, with 57 per cent intending to push their teams harder.

Meanwhile, about one in three (35 per cent) fear that their employees are already too stretched to deliver current business objectives.

Mitali Bose, BEO Practice Leader, Hay Group India comments: "This level of productivity improvement is a lot to ask, especially from employees who have worked hard to help their firms through the financial crisis and then motored their way through the sudden upswing. Business leaders used the efficiency and cost optimisation lever. Overleveraging this lever may lead to delivery fatigue. It's time for them refocus on growth by pulling the performance lever."

Spotlight on performance

Business leaders in India claim that improving individual performance is critical to achieving their growth targets. Nearly half (48 per cent) plan to implement more rigorous individual performance management this year.

A significant 3 out of 4 (76 per cent) business leaders agree that individual performance management is an important driver of overall business performance. Close to half (49 per cent) believe it makes a difference to the bottom line.

Mitali Bose, BEO Practice Leader, Hay Group India comments: "Performance management sits at the heart of business success. At a time when efficient execution and delivery is critical to achieving the challenging growth targets executives have set, business leaders must realise that performance management is their job."

Performance mismanagement

Yet firms in India are routinely getting performance management wrong, the study finds.

Linking individual performance to corporate strategy has long been recognized as a basic component of the performance equation. However, less than one-third of firms align their performance management approach to company strategy (31 per cent). Globally, one-quarter (27 per cent) of companies align their performance management with strategy.

The study highlights a further critical success factor for performance management. Nine tenths of leaders (91 per cent) in India stress that culture has an important influence on its effectiveness. Yet only a quarter (26 per cent) of firms tailor performance management to company culture and values.

Despite knowing the importance of connecting performance management to strategy and culture, only 13 per cent of business leaders actually do both.

Three in ten business leaders believe that managers in their firms fail to use their performance management process effectively (29 per cent) and that they do not actively support the process (44 per cent). Almost as many describe their process as a 'tick-box exercise' (37 per cent).

As a result, business leaders are unable to dedicate adequate time to managing poor performance: almost 26 per cent admit spending 10 per cent or less of their time doing so.

Mitali Bose, BEO Practice Leader, Hay Group India comments: "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 a vital role in driving performance.

"Yet 91 per cent of firms in India are failing to align performance management with their strategy and culture and are thus not getting any ROI from their performance management systems.

"Without an approach that tailors performance management to their strategy, culture and values, firms will not be in the right shape to deliver the growth expected of them."
ends

For further information

For more information, an interview with Mitali Bose, BEO Practice Leader, Hay Group India or a copy of the forthcoming Strategic performance management report, please contact Nidhi Mehra Kapoor at nidhi.mehra@haygroup.com

The Strategic performance management report can be downloaded in September at: www.haygroup.com/spm

Notes to Editors

Please note: this study should be credited to 'global management consultancy, Hay Group', and not 'Hay' or 'Hays', which are separate and unrelated organisations.

Regional economic growth forecasts v. average company growth targets

About the Strategic performance management report

This is a report from Hay Group, based on independent opinion research among senior decision-makers in 1660 firms from over 30 countries across Western, Central and Eastern Europe, North and Latin America, the Middle East and Asia-Pacific. All respondents represent firms with in excess of ?250 million annual turnover. Research was carried out by independent market research agency Coleman Parkes.

About Hay Group

Hay Group is a global management consulting firm that works with leaders to transform strategy into reality. We develop talent, organize people to be more effective and motivate them to perform at their best. Our focus is on making change happen and helping people and organizations realize their potential.

We have over 2600 employees working in 85 offices in 49 countries. Our insight is supported by robust data from over 100 countries. Our clients are from the private, public and not-for-profit sectors, across every major industry. For more information please contact your local office through www.haygroup.com.
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CONTACT DETAILS
Nidhi Mehra Kapoor, Hay Group, nidhi.mehra@haygroup.com

KEYWORDS
CONSUMER, CONSULTANCY SERVICES, BUSINESS SERVICES, IT, TECHNOLOGY

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