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Halogen Software Inc. has established itself as the leading provider of employee performance management (EPM) solutions. Founded in 2001 as a subsidiary of a successful consulting company, Halogen offers powerful, easy-to-use, and affordable Web-based software that dramatically improves HR and line-manager productivity.
Employee Performance Management: Making it a reality in your organization
Employee Performance Management (EPM) is also known as:
Human Resources management,
Performance Management Overview,
Simple Employee Reviews,
HR Performance Management,
Employee performance appraisal system,
Employee performance evaluations,
Employee performance assessments,
Employee performance appraisal
Getting past the'good idea' stage
The advantages of employee performance management (EPM) are widely recognized
today. Thousands of companies have implemented EPM
systems enhancing their employee performance appraisals and assessments, and
obtaining greater strategic value out of their HR divisions. This is why more
than 90 percent of HR professionals rate EPM as a top priority. Yet considerably
fewer have EPM systems deployed within their organizations.
The reasons for this are many, and almost all of them stem from issues around
planning and preparation. A good number of HR professionals express uncertainty
about how to begin the process of acquiring an EPM system. Many more have
concerns about securing upper management support and financial commitment. Both
of these latter considerations hinge on the ability of the HR team to present a
persuasive case that the EPM project will be successful and that it will yield a
satisfactory return on investment.
While there are no short cuts to getting project approval, a structured and
thorough approach to selecting, planning for and implementing an EPM solution
provides HR managers with strong arguments for their organizations to move
This white paper details such an approach, outlining all the key steps
involved and indicating ways for HR practitioners to shine a bright light on the
benefits of EPM
By any other name&8230;
EPM and related concepts can be referred to in many different ways. Some of
the most common permutations are:
- Workforce Performance Management
- Talent Management (a broader category that includes compensation,
learning and recruiting)
- Workforce Lifecycle Management (a broader category that includes
incentives and learning)
- Human Capital Management (a high-level categorization
Building a vendor selection plan
To drive the acquisition of an appropriate EPM system, HR managers must
establish a vendor selection project plan. This involves creating a timeframe
for progressing through eight critical steps:
- Become familiar with solution pricing
- Establish organization-specific business needs, priorities and benefit
- Gaining initial management buy-in
- Prepare a draft Implementation Plan
- Evaluate EPM vendors
- Refine the draft Implementation Plan with preferred vendor in mind
- Present vendor recommendation to executive
- Act on executive approval and establishing contract
The final stage, following all of the above, is the execution of the
Implementation Plan. The following sections explain each of these steps in
1. Become familiar with solution pricing
This is a straightforward activity that can be completed with minimal effort
over the course of a day or two. It is important for an HR manager to
appreciate, starting out, how the various offerings available conform to his or
her organization's budget. Any of the top vendors should be willing to estimate
rough costs for this purpose, and many provide license-pricing figures on their
2. Establish organization-specific business needs, priorities and benefit
To establish the business needs of their organization, HR managers should
begin by documenting their current employee appraisal processes. Any
modifications to this process changes that it is hoped can be achieved through
EPM automation should also be noted.
It is critically important that the organization's own unique needs are
captured through this exercise. While vendors may offer generic matrices for
evaluating requirements and benefits, these are of little use if a company's
essential EPM needs areas are left out of the equation. The ability to achieve a
strong return on investment which will be discussed further in this
paper derives in large part from the requirements defined at this early stage.
The following points indicate the kinds of'pains' organizations typically
face with respect to managing employee performance:
Lack of goal alignment
- Employees are not focused on organizational priorities, wasting effort
Inefficient appraisal process
- Employees and managers spend too much time on appraisals rather than
main business functions
- HR spends too much time on process rather than optimizing human
- Appraisal work is lost through clumsy electronic document handling (e.g.
loss of file attachments, etc.)
Failure to complete appraisals/Unprofessional appraisal process
- Resulting in situations where top performers are being lost, employees
are dissatisfied and productivity is affected
- Creating risks around accreditation
- Creating risks around litigation and cost for wrongful dismissals
Whether these or other so-called pain points are identified and an
organization-specific set of requirements is laid out, HR practitioners can then
view top vendors' marketing materials and online demos, knowing exactly what
they are looking for.
Following that kind of brief survey, it is a good idea to revisit the
original requirements list and subdivide it into mandatory and desirable
elements as in the following example:
- Easy creation of appraisal form and process workflow
- Goal and competency management
- Line manager authoring aids including spell check, language sensitivity
and comment helper
- Automated email reminders
- Development plan recording and reporting
- Centralized at-a-glance process status view
- Sophisticated workflow capabilities
- Performance journal
- Electronic signature
- Seamless integration with merit-based compensation programs
- Customizations available if needed
Beware what some refer to as'advanced VCR features': the sophisticated bells
and whistles vendors tend to promote with their solutions. These may be
tantalizing but not practical, and can add unnecessary costs and complexity
At this stage, HR leaders should outline the benefits they expect their
organizations to achieve by implementing an EPM system. This is always a crucial
component of any presentation to management.
EPM benefits extend from the line manager and end-user level through HR and
out across the entire enterprise. Some of the most cited benefits include:
- Improved goal alignment
- Higher appraisal-completion rate
- Better-quality appraisals
- Reduced administration time
- Complete status reporting
- Simpler way of meeting compliance/ legal requirements
LINE MANAGER/END USER
- Ease of completion (writing assistance)
- Faster completion
- Clear direction re: requirements for completion
3. Gain initial management buy-in
Once they have laid this groundwork, HR managers are in a solid position to
approach their organization's executive team and win support for taking the EPM
solution-selection process forward. Essentially, this requires:
- A summary of the organization's pains and requirements, and a
description of how an EPM solution will address those.
- A brief presentation of general costs based on the estimates gathered
from solution providers.
- A clear outline of the next steps in the process, including: vendor
selection (estimated at two months, encompassing the establishment of
evaluation criteria, identification and evaluation of top vendors), and
implementing the solution (estimated at one month).
Armed with such information, the management team is likely to approve moving
ahead with the EPM evaluation process.
4. Prepare a draft Implementation Plan
The Implementation Plan covers the period after the eventual contract is
signed up to completion of the first appraisal process. The plan should include:
- software installation
- set up of appraisal forms and processes
- population of user data
- monitoring of the live process
Once a vendor is selected, the timeframe associated with each of these tasks
can be defined with greater precision; because of their different methodologies,
vendors often assign a slightly different effort and duration to these steps.
5. Evaluate EPM vendors
Most organizations allow two to four weeks for this part of the process.
Based on their own research and on the advice of industry analysts, HR managers
should prepare a shortlist of companies to evaluate.
The goals of the evaluation process are to:
- Ensure that the EPM solution can support all steps of the organization's
- Compare the solution's capabilities with the mandatory and desirable
requirements established during stage 2.
- Verify that the product will deliver the expected benefits.
The best way to assess a vendor's suitability is to request a product
demonstration. HR managers should ask vendors to create and demonstrate using
their system at least one of their organization's existing appraisal forms as a
proof of concept. It is common for organizations to require multiple
demonstrations of the product to make an informed and confident decision: don't
hesitate to ask to see it again.
The evaluation stage is also an appropriate time to request detailed,
multi-year costing including license fees, installation fees, implementation
fees, training fees, hosting fees, maintenance, support and any other applicable
To ensure that your assessment is objective and focused, it is best to make
use of a well-defined evaluation form.
An example of such a form is provided below.
|Features - Mandatory
|Goal and Competency Management
|Sophisticated Automated Workflow
|Automated Email Reminders
|Language Sensitivity Check
|Ease of Use For End Users
|Ease of Use For HR Administrators
|Highly Configurable Without IT Involvement
|Support For Focal, Anniversary & Probationary
|Features - Optional
|365 Day Performance Journal
|Integration With Compensation
|Multi-rater / 360 Integration
|Current Number of Customers
|Year 1 Costs
|Year 2 Costs
|Year 3 Costs
|Year 4 Costs
|Year 5 Costs
Once this form is completed, the results can be tallied for each of the
vendors under consideration and a clear leader should emerge for recommendation
In the case of the figure above, Vendor A's solution is slightly more
expensive to implement, but the annual costs are considerably lower. (For this
reason, it is essential to request multi-year pricing from each vendor being
considered.) In fact, Vendor A and C employ a perpetual licensing model, whereas
Vendor B sells its software as a service meaning that at the end of year five
customers may have to renew at higher rates to preserve their databases.
Some organizations require detailed return-on-investments data; others don't.
Those that do should ask their selected vendor to help calculate ROI or provide
client case studies that document other customers' investment returns using
their EPM solution.
Outside of the solution itself, it is valuable to know as much about each
vendor as possible. How viable is the company? How many EPM customers EPM
specifically has it served? Do check the references provided; a frank and
friendly conversation with someone already using the vendor's solution can yield
priceless insights, especially when it comes to support and customization.
Finally, there are other considerations to be factored in to the decision:
- Application hosting is this to be done at the customer site, or the
vendor's? Either way, the pros and cons must be weighed carefully. In-house
hosting can put strains on an organization's IT department and potentially
compromise responsiveness if the system requires support; external hosting
by the vendor raises questions about security (of customer data and the
hosted environment itself), reliability and scalability.
- Customer profile depending on an organization's size and needs, some
vendors may be more appropriate than others. HR managers should review the
logos or customer lists on each potential vendor's website. A small or
medium-sized organization, for example, may not wish to sign on with a
vendor whose customers are primarily Fortune 500 companies; it's possible
the smaller company will suffer from lack of mindshare when it comes to
support or contributing to product direction.
Subscription pricing: the pros and cons
An increasing number of vendors today promote the'software as a service'
selling model, whereby the software and all related infrastructure are'rented'
from the vendor for an annual or monthly fee.
While this can seem less expensive at the outset i.e. can have lower
implementation costs it may not be so in the long term. When it comes time to
renew the contract, the customer is susceptible to price increases. Switching
vendors and adopting a new solution amounts to starting from scratch, with a
potential loss of data and requiring significant data-conversion efforts.
One alternative is to purchase a perpetual license and, if necessary, rent
only the equipment in other words have the system hosted by the vendor. At the
end of the hosting contract term, a customer in this situation can renew the
agreement, switch to a different equipment provider or bring the solution in
house while continuing to use the software and data resources that the EPM
system has been built around. This is ideal if the IT resources already exist to
support the system
6. Refine the draft Implementation Plan with preferred vendor in mind
Prior to making a presentation to their corporate executive team, HR managers
are advised to refine the draft Implementation Plan, tailoring it to the
methodology of their selected vendor. This ensures that the organization's
leadership has as complete a perspective on the EPM implementation as possible,
which in practice has been found to help secure support and buy-in.
7. Present vendor recommendation to executive
Generally, company executives want to be confident and to see that their HR
managers are confident in the prospects for a successful EPM implementation
under the chosen vendor. While they do not typically require extensive detail,
the high-level overview they seek includes:
- A clear definition of the expected benefits
- A clear rationale for the choice of vendor (which the completed
evaluation form and associated information will provide)
- An understanding of why competing vendors were not chosen
- A price comparison between all vendors; and
- A solid implementation project plan.
The chosen vendor will usually be happy to help prepare for and even
participate in this presentation, if desired.
- Certain questions routinely come up during these presentations. HR
managers who prepare for them in advance will be well-positioned to garner
support for the chosen vendor. One of the most crucial is often: Can we
complete the work in time for our next appraisal process? The answer should
be accounted for in the Implementation Plan. As well, the chosen vendor
should be able to provide examples of customers who implemented their
solutions successfully in a short space of time.
- Will our data be confidential?
This is most critical for
vendor-hosted solutions. Be sure to have a description from the vendor of
the security and reliability of its hosting environment prior to the
- What is the return on investment?
Having established an ROI estimate
with the vendor ahead of time will help address this question.
8. Act on executive approval and establish contract
Once the executive team approves the selected vendor (which should be the
outcome of the presentation described above if the groundwork has been laid
properly and the required information has been communicated effectively), the
organization can firm up contract details with the vendor based on the
requirements and Implementation Plan that have been developed and refined
previously. HR managers are advised to capitalize on the momentum gained during
the evaluation process to move ahead with the contract.
Execute the Implementation Plan
With a contract in place, the organization is now ready to carry out the
Implementation Plan and launch its EPM system.
The most important consideration is that the EPM solution ultimately chosen
must satisfy the particular requirements of the organization in question.
Flexibility and adaptability are key factors, as is the vendor's performance
history. As with any technology/business-process project, there are always
unexpected occurrences to contend with. An established vendor with a base of
loyal customers is likely to have demonstrated the ability to identify and
respond effectively to such contingencies in the past.
While no single plan works for all organizations alike, the approach detailed
in this paper will help HR managers demonstrate their due diligence when
proposing an EPM solution to their executive team.
About Halogen Software
With over 500 customers, Halogen Software Inc. has established itself as the
leading provider of employee performance management (EPM) solutions. Founded in
2001 as a subsidiary of a successful consulting company, Halogen offers
powerful, easy-to-use, and affordable Web-based software that dramatically
improves HR and line-manager productivity. The company's flagship product,
Halogen eAppraisal&8482;, automates and simplifies time-consuming employee
appraisals. Halogen eAppraisal&8482; Healthcare, created specifically for the
healthcare industry, helps to simplify the task of performing appraisals and
meeting accreditation criteria. Halogen e360&8482; automates and simplifies formal
360-degree feedback procedures and offers sophisticated performance reporting.
Halogen eCompensation&8482; automates the entire compensation adjustment process
including budget distribution and approval. Halogen eSuccession&8482; makes it simple
and affordable to get a best practices succession planning program underway at
If you have any questions or comments please visit www.halogensoftware.com
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