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"Halogen Software believes that organizations of all sizes need affordable, automated tools to assess, better understand, and align employee performance
with their business strategy. We are still dedicated to providing the most comprehensive, industry leading
enterprise-class
employee performance management and talent management solutions that are undeniably simple and
powerful - but also affordable to implement. "
Source : Halogen Software
Why Employee Performance Management Technology Matters to CEOs
Employee Performance Management is also known as :
EPM,
Employee Performance Management,
Simplify Performance Management,
Performance Management,
Write Employee Reviews,
Performance Appraisal Software List,
High Performance Coaching,
Employee Performance MGMT,
Performance Appraisal Management Systems,
Managing Employee Performance,
Managing Day-to-day Employee Performance,
Involved in Employee Performance Management,
Managers Cite Performance Appraisals,
Employee Performance Development,
Best-practice Performance,
Performance Appraisal Management,
Talent and Employee Performance,
Automate Employee Performance,
Employee Performance Management White Papers,
Employee Performance Appraisal System,
Define Employee Performance,
Employee Performance Measurement,
Employee Performance Assessments,
Employee Performance Surveys,
Performance Management Managing,
Performance Management Software,
Evaluate Employee Performance,
Implement Employee Performance Management,
Performance Productivity,
High-Value Employee Performance.
The board has no business telling management what employee performance management
system to use, but it is their duty to ask if management has an efective system in place.
Sometimes from the board’s vantage point the employee performance management system
may seem just an of-shoot of the budgeting process, but it ought to be much more than that.
It ought to be one of the central tools for directing and monitoring activities right across the
organization. If it is not doing that, then the board (and CEO) need to be concerned.
An article in HR Magazine (Jan., 2007) speculates, “Performance management metrics and eforts
are so critical to corporate well-being that several industry analysts predict they’ll become
part of Wall Street critiques and corporate annual reports within the next ive years.” Employee
performance management, often relegated somewhere down in the HR department, is correctly
being seen as a governance issue.
CEOs wonder:
- Are we all pulling in the same direction?
- Are we able to change course?
- Are we falling behind the competition?
- Are we improving productivity?
- Will we hit our numbers?
- Can we keep our best employees?
The employee performance management system is meant to ensure the CEO gets the right
answers to those questions. But in most organizations employee performance management
doesn’t do the job.
Da Vinci’s Helicopter
Leonardo da Vinci is sometimes credited with the invention of the helicopter
based on his notebook sketches. But his designs didn’t amount to anything because
without the internal combustion engine to generate suicient power the da Vinci helicopter
could never get of the ground.
Employee performance management systems are like that. Most organizations have the design,
sketches of good process in policy notebooks, but not an efective system in place. They need a
simple piece of technology, they need an engine.
Paper-based performance management systems simply generate too much friction to fly.
This is why employee performance management technology is not just a matter of easing an
administrative burden; it’s the well-oiled engine that allows the system to work at all.
What Employee Performance Management Does
The new performance management technology systems are usually
referred to as Employee Performance Management (EPM). The most important
thing that EPM does is put all the performance management information on-line and automates
the work low. This means the process is faster, much more reliable, and the information the
process produces is accessible.
One of the big cultural changes
that sometimes occur with
EPM implementations is that
managers say, “Oh, you mean we
really need to do this now?” In a
paper-based system the process
could be put of, forms could be
handed in late, and managers
knew no one was really watching
the output closely. With EPM this
all changes.
There are other advantages to
EPM such as linking up to the
training management systems
and providing on-line help for
managers struggling with the
process-but that’s the sizzle. The
real meat of EPM is that is takes
a process that was painfully
creaking along and makes it work.
With EPM, goal setting,
employee appraisals and
employee development planning
are done on time. If a manager
is late, his or her superiors know
immediately and will want to
know why. If a manager is not
setting clear goals then that
is visible to anyone up the
chain of command who cares to check. It’s a simple thing really, but putting the performance
management system on-line makes the diference in whether it works or not.
EPM Outcomes
“Every person had an on-time appraisal for the irst time in
the history of the irm. Every person has goals that mean
something. Everyone has a personal development plan.
Our irm has goals for growth, marketing development and
team recruitment/retention. These now cascade down so
that each individual knows how they contribute. Before
EPM many people simply didn’t have a clue how what they
did was important to the overall mission of the irm. People
get it now.
With EPM, managers actively document the performance
of employees on an on-going basis because it is easy to do.
That never happened before. We now do mid-year reviews
to make sure we are on track, to make sure every individual
succeeds.
As a partner, I use EPM to look out across the organization
to see if there is consistency across our four oices. I look
for the same expectations; I look for the same level of
stretch in their goals.
We are accountants and we are the best time keepers
on earth so we always tracked the time we spent on
performance appraisals. In the irst year of the Halogen
implementation we saved 386 hours of people’s time. Take
that 386 hours and multiply it by our average billing rate
and the saving is phenomenal.”
Are We Pulling In he Same Direction?
Experienced managers know it is far harder to get alignment than one might expect.
Each unit, each person, has their own interests and their own way of hearing things.
What seems like a straightforward communication may not be heard, not acted upon, or
misunderstood.
There are two core methods for alignment: culture and goal setting. A strong culture creates
a common mindset while goal setting ensures that the speciics are spelled out. An employee
performance management system, enabled by technology, allows the cascading of goals, so
that each department’s goals are aligned with the organization’s vision and each individual’s
objectives support the department’s goals.
Secondly, performance management technology allows a CEO to see at a glance how many
employees are working towards each of the organization’s goals, check the status and further
drill down to see the goals and status of any individual. It creates visibility through the fog of
organizational life. In theory you can do this with a paper system; the CEO could ask HR to go to
the iles and dig out the appraisal form with the goals of a group of employees-but in practice
that doesn’t happen; it is too much work. However, if that information is available on-line then
the visibility is real. It is also immediate.
Are We Able To Change Course?
One of the main reasons CEOs have found paper-based employee performance
management systems disappointing is that they run on an annual cycle. A CEO could
never rely on the performance management system because it would too often be out of date,
and they certainly couldn’t rely on it as a tool to change course mid-year.
EPM changes that. A CEO can readily make changes to priorities or direction and cascade those
down to the relevant units. They can also check that the new goals have been set at an individual
level-again it is a matter of building transparency into the organization so the CEO can look
down and see what people are actually working on.
Are We Falling Behind he Competition?
There are two main reasons why companies fall behind the competition:
- The wrong strategy
- Poor execution
EPM won’t help you create a winning strategy but it does play a key role in execution. EPM’s role
in execution is straightforward. EPM is the control infrastructure for goal setting, tracking and
alignment, determining who your high performers are (and who the laggards are), and what an
organization is good at doing (and isn’t)-the basis of execution.
EPM is a tool which can magnify values by ensuring that the big vision gets translated into
smaller actionable goals. This allows a company to out execute the competition, across the
entire enterprise. Employee appraisals are not just about goal setting or giving an employee
a “report card.” EPM also helps managers and executives in organizations understand quickly
who’s performing well in key areas and who isn’t. It can tell a company what competencies their
workforce excels at and what they need to focus on to improve in certain areas. It can quickly
paint a picture that lets them see if they have the right people with the right skills doing the
right things for meeting today’s and tomorrow’s business strategy.
Are We Improving Productivity?
One of the reasons employee performance management is so important to
organizations is that it is the system that ensures employees are setting goals.
It actually provides a simple way for employees to track how well they are doing toward
completion of their goals and lets them see - for the irst time in many cases - how their
performance ties into the success of the organization as a whole.
Dr. Gary Latham, a Fellow of the Academy of Management and professor at the Rotman School
of Management says, “Thousands of studies have shown that goal setting is an incredibly reliable
way to improve performance. Urging people to ‘do their best’ just does not deliver the same
results as setting speciic high goals. This isn’t a point of view; it’s a scientiically validated fact
about human psychology.”
EPM drives productivity improvements by ensuring goal setting is taking place, it also gives
leaders a chance to review the goals on an on-going basis to reassure themselves that the goals
really are high and speciic. It ensures the right people are working on the right things.
Will We Hit Our Numbers?
The accounting system is essential for assessing whether the
organization will hit its numbers, but it is inevitably a look in the rear view mirror.
EPM provides a more forward looking system by showing who is working on what and how they
are progressing on their goals. If you are counting on a market study to direct sales eforts, an
EPM lets the CEO see if the research is on schedule, completed, or in trouble. The system reminds
employees to keep journal notes and progress toward goals up to date. A quick look at indicators
(green/yellow/red) lets a CEO tell whether the activities that drive the numbers are on track.
As well, while the accounting system
gives reliable numbers it usually
doesn’t identify what you need
to do. The information in an EPM
is directly related to the actions
people are taking, and that is where
management can intervene when
things go of track.
Can We Keep Our
Best Employees?
Normally, we think of
management control systems as
something employees don’t like,
but that is not really the case.
Employees like having clear goals.
They are lattered if managers a
level or two above them care about
their goals. They are impressed if the
company has an efective on-line
system that helps their manager
set goals, give feedback and assign
appropriate training. And most
of all, if they genuinely are high
performers, they are pleased when
that high performance is recognized.
It’s common to hear people say, “I’ve
been at my company for two years
and I’ve never had a performance
review.” This is a major cause of dissatisfaction. EPM ensures this doesn’t happen anymore. EPM
also ensures the assessment process is fair and meaningful as all transactions can easily be
reviewed on-line and any exceptions lagged and dealt with quickly.
Most pay-for-performance systems do not, in practice, make large diferentiations in pay
between average and high performers. One reason for this is that no one has much conidence
in the appraisals. EPM makes the process faster, more consistent and more reliable. It provides
better and timelier data to management and HR. This creates the foundation for pay for
performance that has been missing.
Consistent Goal Setting & Appraisal
“In the past our performance management systems were
so time consuming and complicated that you had to ight
people to get it done. We almost had to make completing
the performance management process a goal in itself, which
is a waste of a goal. The technology we now use makes the
process simple, easily understood, and not time consuming.
Our overall mission statement is to connect people to
conservation and wildlife worldwide; we want to be a world
leader in that. We take that overall vision statement and
break it down in into very practical goals around facilities,
education, conservation and supporting processes. The
system allows me to communicate these goals in a simple
and consistent way whether I’m talking to the HR Director,
Director of Collections or Development Director. It makes
sure I do it in a timely manner because the darn thing keeps
reminding me.
Employees like the system because it allows us to rate
them fairly on a consistent basis. Also, because it’s much
faster it gives managers time to sit down with employees
and gives them a process for talking through goals and
accomplishments.
Performance management technology has been such a
success for us and we’re going to push it down to the front
line employee.”
From a CEO’s perspective a smoothly run employee performance management system is a way
of keeping talented employees happy. It supports the retention of employees, and in particular,
the retention of the best employees. It is a way to ensure the intent of the reward system is
realized in practice.
How Hard Is It To Do his?
Employee performance management technology, which is still new enough to sound
a bit exotic, has matured to the point that it is neither expensive nor diicult to
implement. Diferent vendors will give diferent prices and implementation timeframes,
but a mid-sized organization might spend $20,000 to $40,000 on employee performance
management technology and take one to six weeks to implement it.
The best vendors are able to point to very high customer satisfaction rates. There simply are not
the complexities that plagued ERP and CRM projects and made CEOs leery of software solutions.
Does EPM technology work? Will I Really See A ROI?
The numbers tell the tale of the efectiveness of EPM. Amcor Sunclipse, a nationwide
distribution company headquartered in Southern California, reports that with their
paper-based system only 10% of performance evaluations were completed on time. After their
EPM implementation they had a 90% on-time record. The earlier metaphor of EPM as a well-oiled
engine is not just a tidy image. A system that is on time only 10% of the time is an engine that
is just not turning over; a 90% or better on-time record is what you should expect. That sort of
performance rarely happens without EPM.
While the CEO’s main concern must be whether or not the performance management system is
an efective tool for directing and monitoring the organization, there is an added bonus in that
an EPM directly reduces administrative costs. Amcor also estimates they will save $300,000 a year
in reduced administrative overhead alone. Van Meter Industrial, an electrical wholesaler used to
spend $100 per review, now they spend $15. Phoenix Children’s Hospital is currently saving an
estimated $75,000 a year with their EPM and they expect that number to rise. ASCG, a mid-sized
consulting irm saves $100,000 year. But cost savings are just the tip of the real return with EPM
systems. Visibility and accountability, alignment, and better execution are the more exciting
returns that help CEOs like the ones mentioned in the side bars sleep better at night.
These individual examples are supported by a 2006 study by CedarCrestone. This study looked
at 324 irms and found that companies that use performance management software have higher
operating income growth.
In Summary
The case for EPM is strong in terms of strategic importance, ease of implementation, and cost.
What has happened is that, rather quickly, technology has evolved to make a process that never
worked very well, efective. If a company doesn’t have 90% of its goals set and appraisals done
on time then the board ought to be asking why. CEOs who can’t see the goals of every individual
in the organization ought to be concerned. EPM is not a system to help the HR department, it’s
a management control system, and top management should be taking the lead in getting it
implemented as quickly as possible.