Most HR leaders believe performance management improves the business, but less than half can back it with business metrics

Ask almost any HR leader if performance management is boosting business priorities and they’ll respond with a hearty affirmative. Just don’t expect them to provide empirical evidence to back their position.

Nearly 85% of HR leaders say they are very or extremely confident that performance management improves organizational priorities, but only 44% say they could provide business metrics backing their position. This according to a 2026 Performance Management Survey conducted in August by Betterworks, which uses AI to help organizations turn performance into measurable business impact.

The survey, which polled 934 HR and business leaders, also found that while another 31% of HR leaders polled could offer some business evidence, another 23% could only point to engagement or activity metrics. The disconnect doesn’t lie with HR alone, as only 34% of business leaders say they could provide clear business metrics demonstrating impact from performance management.

“Business owns the organizational priorities and HR owns the people that deliver on them, ” said Betterworks CEO Doug Dennerline. “If organizations can’t show how performance improves execution, it becomes much harder to know what’s working, where to invest or how to improve. Closing that gap is only more important in today's environment and requires executive leadership, managers, and HR to work together to make that impact visible.”

Confidence is high, the evidence thin

The findings suggest that HR leaders believe performance management has matured beyond being just a compliance box-check. But ask those HR chiefs to defend their claims and provide proof in front of a CFO or CEO and the facade cracks.

Underneath lies an aspirational mindset for HR leaders who strongly believe performance management boosts the business. A gut-feel that requires a reality check.

The truth lies in the data, as 41% of both HR and business leaders say measuring outcomes is the single biggest breakdown point. This means that HR can't lean on process completion, participation, check-in frequency or engagement scores to demonstrate strategic value.

Betterworks concluded that as budgets tighten and C-suite execs ask harder questions, HR needs a far more collaborative partnership and operating model.

Performance management is a team sport

HR's job is not redesigning another HR process, but rethinking the operating model for how performance happens across the business. When 70% of organizations say business priorities change quarterly, performance can no longer be managed primarily through an HR calendar. HR has an opportunity to orchestrate how changing business priorities translate into aligned goals, manager coaching, employee work, performance signals and, ultimately, business outcomes.

That requires a new partnership in which business leaders set direction, managers regularly translate priorities into execution and HR designs the systems, capabilities and technology that connect the two. The goal is to create an operating model that helps the organization execute strategy faster and adapt as priorities change.

So how do organizations make this happen?

HR chiefs should:

• Land on three to five organizational outcomes performance management is expected to influence, ideally before 2027 planning locks in.
• Establish baselines before changing the process.
• Replace review-completion reporting with measures like percentage of goals linked to current priorities, time to realign goals after a strategy change, manager time spent on admin and speed of performance-risk identification.
• Review evidence quarterly with HR, finance, operations and business leadership.
• Be explicit about whether a given piece of evidence shows activity, association, improvement, or causation.

It’s clear from the survey of HR and business leaders that something must change to better align what HR perceives as the benefits performance management provides to business priorities with the actual value it provides to the business.

Methodology:

Betterworks surveyed 488 HR and 446 business leaders at the director-level or higher at organizations with 500+ employees across the U.S. and the UK. The research was geared to answer a key question: Is performance management actually driving business results, or does it just feel that way from inside HR? Full methodology available upon request.

Read more about the other five findings from the Betterworks survey here.

About Betterworks

Betterworks helps organizations turn performance into measurable business impact. Built for large and fast-growing companies, its AI-native solution brings goals, feedback, skills, and talent intelligence into the flow of work — giving leaders real-time visibility into workforce capability, manager effectiveness, and progress against business priorities. Betterworks helps organizations align teams, coach employees, support growth and internal mobility, and make confident talent decisions grounded in evidence rather than guesswork.

Trusted by leading organizations like Intuit, Betterworks is backed by Kleiner Perkins, Emergence Capital, 8VC, and John Doerr. For more information, visit www.betterworks.com.

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