Bullish company growth targets outstrip economic forecasts in the UK

June 28, 2011 - PRLog -- UK 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, UK firms are targeting an average 5 per cent growth for 2011. This far outstrips the latest IMF growth forecast for the UK economy of just 1.7%.

Two thirds of UK business leaders (65 per cent) admit this is a significant challenge – which will demand an unprecedented productivity uplift from already stretched workforces – but that they lack the effective performance management required to deliver this.  

The Hay Group Strategic performance management report is based on research among 1660 senior decision-makers in large firms across more than 30 countries worldwide, including 100 in the UK.

Matt Crosby, Associate Director at Hay Group comments: “CEOs have set challenging targets, and are demanding more from their workforces to deliver them. This means engaging and inspiring employees to get behind their growth ambitions.

“Firms need to manage performance for growth to achieve the targets promised to shareholders.”

The performance challenge

More than half (55%) of UK business leaders intend to ask more of their workforces to meet their targets. On average, executives claim they will need to increase employee productivity by some 6 per cent.

Yet close to half (46 per cent) fear that their employees are already too stretched to deliver current business objectives.

Matt Crosby comments: “CEOs cannot achieve their targets without harnessing the collective power of their workforce. Yet this sort of productivity improvement is a big ask from employees who have worked hard to help their firms through three difficult years since the financial crisis.”

Performance mismanagement

Whilst UK business leaders claim that improving individual performance is critical to achieving growth targets, firms are routinely getting performance management wrong, the study finds.

The overwhelming majority (83 per cent) of UK business leaders agree that individual performance management is an important driver of overall business performance. Two in five (39 per cent) believe it makes a difference to the bottom line.

Yet less than a quarter (22 per cent) of firms align their performance management approach to company strategy, whilst more than a third (36 per cent) of business leaders describe their performance management process as a mere ‘tick-box exercise’.

And whilst almost all business leaders in the UK (96 per cent) stress that culture has an important influence on its effectiveness, just a quarter (26 per cent) of firms tailor performance management to company culture and values.

Only 17 per cent tailor performance management to both strategy and culture.

Just over a quarter of UK business leaders claim that managers in their firm fail to use their performance management process effectively (26 per cent), and that they do not actively support the process (27 per cent).

Matt Crosby comments: “Employee performance management sits at the heart of business success – yet too often is seen by senior managers as a chore. At a time when productivity is critical to achieving growth, leaders must realise that performance management is their job.”

“Aligning performance management to culture is an opportunity for business leaders to communicate what their firms stand for, and unite their workforce behind that vision and their ambitions.”

“Without an approach tailored to their strategy, culture and values, firms will not be in the right shape to deliver the growth expected of them.”

  Ends


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

Region   Average target growth   IMF forecast: 2011 GDP growth
North America   4.9 per cent   2.8 per cent
Western Europe   5.1 per cent   1.8 per cent
Central and Eastern Europe    5.1 per cent   4.4 per cent
Middle East    4.9 per cent   4.1 per cent
Asia Pacific    6.8 per cent   8.2 per cent
Latin America   5.5 per cent   4.7 per cent

Source: IMF World Economic Outlook (latest reports for regions and countries featured in the study at time of writing).

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.