Nihon Keiei survey finds fewer than 20% of SMEs’ HR evaluation systems are fully functioning

Nihon Keiei Co., Ltd. (head office: Toyonaka, Osaka; President and Representative Director: Tatsuya Hashimoto) conducted a nationwide survey of business executives on the actual state of HR evaluation systems at small and medium-sized enterprises. In today’s rapidly changing business environment, as interest in human capital management grows, HR evaluation systems that influence employee motivation and productivity have become more important than ever. However, the survey found that fewer than 20% of companies have evaluation systems that are fully functioning, highlighting widespread issues such as formalized, ineffective systems and operational challenges. Key findings include: only about 20% of companies, or 18.9%, said their evaluation systems are fully functioning, while roughly 80% said there is room for improvement; the top issue cited by executives was “variation in evaluations depending on the evaluator,” at 63.8%; and the most common evaluation management method was “Excel or paper,” at 34.0%, showing that delayed digitalization is increasing operational burden. As background, HR evaluation systems are an important foundation for organizational management at many SMEs, but serious challenges are often observed in practice, such as systems becoming merely formal after implementation or employees failing to accept evaluations because criteria are unclear. Although such systems are meant to support corporate growth, in reality they often fail to perform their intended role due to the difficulty of operation. In light of this situation, Nihon Keiei surveyed 100 SME executives and HR managers on how HR evaluation systems are operated, why they become formalized, and what concerns companies have when introducing or reviewing such systems. The company has released a report summarizing the results to visualize the challenges SMEs face and communicate the importance of building and operating effective systems based on objective data. The survey was titled “Survey on the Actual State of HR Evaluation Systems at SMEs.” It was conducted online through a research marketing project using “Lisapee®,” provided by IDEATECH. The survey period was February 13 to February 16, 2026. Valid responses were collected from 106 executives, including representative directors, directors, and executive officers, at SMEs with 50 to 299 employees that had already introduced HR evaluation systems. The detailed findings show, first, that around 80% of companies are in a state where their evaluation systems are not fully functioning. When asked how well their own evaluation systems were working, only 18.9% answered “fully functioning.” Meanwhile, around 40% said there was room for improvement, suggesting that in an uncertain business environment, the issue of systems existing in name only is becoming more serious. Second, regarding challenges in evaluation systems, the most frequently cited operational issue among executives, in a multiple-response question, was “variation in evaluations depending on the evaluator,” at 63.8%. This was followed by “unclear evaluation criteria” at 30.0% and “formalized feedback” at 25.0%, indicating that a lack of objective indicators and insufficient communication are occurring at the same time. Third, regarding management methods and priorities, “Excel or paper” was the most common evaluation management method, at 34.0%, while about 20% of companies had not introduced any system. At the same time, 67.9% of executives said they wanted to emphasize “clarifying evaluation criteria and improving employee acceptance.” The burden of aggregation caused by analog management structures is becoming an obstacle to securing the fairness and transparency that companies should prioritize. In conclusion, the survey found that although many executives aspire to evaluations that employees can accept, they are being hindered by analog management and insufficient evaluator skills. For sustainable organizational growth, it is urgent to secure transparency through digitalization of the evaluation process and to clarify evaluation criteria. Going forward, Nihon Keiei will use the survey results to support the rebuilding and digitalization of evaluation systems, contributing to fair and highly transparent organizational management at companies. Nihon Keiei Co., Ltd. was established in 1999, with the Nihon Keiei Group founded in 1967. Its head office is located at Nihon Keiei Building, 2-13-3 Terauchi, Toyonaka, Osaka. The company is led by President and Representative Director Tatsuya Hashimoto, and its businesses include management consulting and support for building and operating HR evaluation systems. Nihon Keiei is a professional management consulting group that works to solve management issues across a wide range of industries, including healthcare, nursing care, and welfare. It covers diverse specialized areas such as strategy planning, organizational and HR consulting, financial management, and regional collaboration support, helping companies achieve sustainable growth. Since its founding, the company has provided practical proposals based on data and experience to companies, local governments, and medical institutions nationwide, and will continue to serve as a trusted partner contributing to the sound development of its clients.