In a recent article, I explained how sales performance management is focused on salespeople, with software that supports sales processes such as incentive planning, quota management and territory management. Performance management software is also available for other departmental functions, including IT and marketing.
But most departments do not have such specialized performance management software. This is where employee performance management software comes in.
The basics of employee performance management
The familiar process of employee performance management involves all the key business processes that managers and employees need to monitor and measure performance throughout the year.
At the beginning of the cycle, the manager and employee meet to discuss corporate and departmental goals, which is the right starting point for setting goals for the employee that will contribute to the higher-order goals. Employee achievements are recorded in the system as tasks are completed and objectives met.
Employees and managers must be able not only to set goals, but to create metrics that help employees track their progress toward meeting those goals. Managers can then monitor progress and meet regularly with the employee to discuss it.
Managers are responsible for providing coaching throughout the year and perhaps adjusting goals to be more realistic. They may also recommend classroom training and online learning.
At the end of the year, there is a final performance review and perhaps a monetary reward.
Employee performance management aided by software
Software for employee performance management is offered standalone or as part of a broader talent management system that also includes recruitment, training, compensation management and succession planning.
The major features of employee performance management software include goal setting and strategy, a repository to capture all interactions between managers and employees, developing and delivering e-learning and other training options, and business intelligence to measure individual and group performance.
I will now examine the features and benefits of employee performance management software using user success stories from vendor websites -- sometimes paraphrased for clarity. The goal is to understand the software features that led to success, as well as the benefits obtained.
Supporting performance management interactions
Performance management is mostly about the interactions between the employee and the manager throughout the year. Therefore, employee performance management software should include a calendar of events, workflow, performance review documents, and an overall repository to memorialize the documents created and summaries of discussions.
An Oracle user at American Career College and West Coast University described the benefits this way: "We aligned performance criteria for all employees with our competencies to ensure employees understand what is expected of them. We established a standardized process for setting and measuring employee goals -- helping to improve retention and ensuring that goals align with organizational strategy."
My analysis: The heart of an employee performance management system is the repository of review documents. It must be straightforward and transparent to help managers and employees work together. The repository and workflow deliver significant structure and benefits because they enforce the required rules of engagement and memorialize the results.
Behind the scenes, IT must validate that there are appropriate levels of security, workflow and ease of use. In fact, for testing purposes, and perhaps other reasons, IT should manage the performance of its own employees with these software tools.
Skills management an essential feature
To build up an employee performance management repository that captures past and future performance, it is important to track employee skill sets. Suppose, for example, that project management is an important skill for employees to have. The management team can help by offering coaching, online or classroom training in that skill, managing much of it in the employee performance management software.
In addition, the analytics in the system should help answer the following types of questions:
- Which employees have these skills now?
- How do these skills contribute to the bottom line?
- How have managers helped employees improve their skills?
- Which training techniques have been effective?
Cornerstone OnDemand user USG, a maker of building materials, confirmed the benefits of combining employee reviews and training: "Reviews are streamlined and easier to complete. Results can also be used in tandem with our e-learning module to address skill gaps and further engage employees."
My analysis: The combination is compelling. The review process uncovers training needs, which the employee performance management software directly supports by facilitating the development and delivery of training programs. Metrics in the performance management software can be used to assess the effectiveness of the training.
Aggregate analysis expands the benefits
On a micro level, employee performance management software can help people improve their own performance, which provides a higher ROI for the company and greater rewards for individual employees. Now, consider what this means across all employees. Significant skills gaps can be identified and conclusions reached with respect to employee retention and workforce effectiveness. But doing all of this requires having a performance management repository with well-defined metadata and strong analytics tools.
That's what SAP user Edgewell Personal Care Products reported in their testimonial: "We achieved a deeper understanding of talent that informs reliable workforce planning and reporting."
Indeed, employee performance management software provides the structure needed to manage the full review cycle, supports the training that improves performance and offers analytics for assessing the overall health of the workforce.
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