People are usually identified as an organization's most important asset, but little is done by leaders to ensure their employees are engaged, motivated, and performing at their full potential. Increasingly small and midsize companies are beginning to maximize people performance, thanks to innovative, cost-effective Web-based technology called Performance and Talent Management software.
Imagine the manufacturer who discovers that an injection molding machine is supplying only 75 percent of the material it was designed to provide; he or she will quickly take steps to fix the problem. Or the travel agent whose Web site is too slow will take great pains and spend whatever necessary to bring it up to speed. These profit-destroyers are monitored carefully and corrected rapidly. But employers in many small and midsize businesses (SMBs) have taken few if any steps to be certain their employees are working at their top performance levels. These most-important assets determine the productivity, profitability and ultimately the survival of any business, but we often neglect to put in place even the simplest processes to tell how individual employees are doing on the jobor even to determine what top performance means for specific employees.
In fact, the lack of established processes and systems for communicating the company's vision and goals is a primary obstacle to the success of many small businesses. Harvard performance management gurus Robert S. Kaplan and David P. Norton, who lead the Balanced Scorecard Collaborative, assert that "a mere seven percent of employees today fully understand their company's business strategies and what's expected of them in order to help achieve company goals.
Most smaller businesses can't afford gurus, though; and areas like goal management, performance reviews, and employee recognition and retention often slip into haphazard territory. Until recently, the investment in dollars and time to create these kinds of HR tools in an SMB were all but prohibitive. Recently, however, Web-based software has hit the market to provide big-company-style HR capability to SMBs. This software enables companies to use proven approaches and workflow techniques to deliver effective and objective performance reviews, monitor and track progress employee by employee, provide real-time employee coaching, and plan compensation in a manner that rewards achievements that align to established company goals.
SuccessFactors and other companies offer these solutions as Web-based applications - an attractive benefit to SMBs who don't have large IT departments to manage costly software installations and desktop support. Additionally, Web-based applications can be up in running much faster than traditional software implementations that can take several months even in smaller organizations.
Benefits of People Performance Software
A Web-based goal management tool accessible by every employee can ensure that employees understand and acknowledge how their performance is being measured and the standards on which they are being evaluated. Additionally, these tools give employees the ability to link their individual goals to others in the organization, creating shared accountability and increasing employee collaboration.
Setting effective goals is a worthless exercise if you don't measure performance against those goals with an effective performance review process. But as any HR professional knows, the review process is often perceived by both managers and employees to be a tedious and painful process. An online performance review process can transform not only a company's HR methods but also the attitudes of managers and employees, who will no longer find reviews a chore, but rather a valuable asset. The cleverest of these online programs even provide help in writing the review, offering hundreds of professionally worded phrases to help managers articulate their thoughts and feelings about employee performance, whether the employee needs improvement or exceeds expectations. If the reviewer feels the language needs to be more positive or more direct, the wording can be fine-tuned with other suggested phrases. As a checkpoint, the online program incorporates a legal scan to make certain that terminology is appropriate and won't likely lead to litigation. Completing reviews becomes an easy and much more straightforward process.
Following the review, Web-based performance management software that includes an integrated compensation planning tool can help tie financial rewards to actual performance, eliminating objectivity from a highly sensitive process. Nothing motivates people more than being fairly compensated for their work.
A basic search in Google shows a variety of different vendors offering solutions for basic electronic performance reviews, goal planning functionality or compensation management tools. To be effective, the leading employee performance management solutions integrate these applications to fully leverage the synergies and interdependencies of each function. Additionally, a leading solution will include integrated features and best practice workflow processes to help managers and employees realize their full potential. For instance, SuccessFactors' solution includes a 360 degree review tool, weighted rating scales, role based competencies and even a coaching tool to help managers advise employees.
In all, new performance management technology enables employers to quickly and easily set effective goals for employees and align them to the company's objectives, measure performance against those goals and reward people for their performance to improve motivation and to deliver on the actions that have the biggest impact on the organization.
People Performance Software in Action
Kathryn Beich, Inc., a non-profit organization headquartered in Bloomington, Illinois, is currently using this type of performance and talent management system. Kathryn Beich provides fundraising products to schools and youth sports organizations, such as gourmet snacks, cookies, confections, and magazines, among others. The products are sold by students to help their groups fund new computers, playground equipment, sports uniforms, musical instruments, trips to academic or sports competitions, and other programs that do not receive state or federal funding.
Kathryn Beich employs management, administrative and sales employees who are located all across the United States, many of whom work from their homes. The company found its previous paper-driven performance review process too cumbersome, requiring managers to manually receive, compile and evaluate peer and cross-departmental feedback on their employees' performance. Moreover, the self-appraisal form that employees completed did not match up with the performance review formrequiring too much subjective interpretation by the manager.
Kathryn Beich sought a solution to simplify the performance review process for managers across the country. After researching a number of options the company decided on the Web-based performance and talent management system from SuccessFactors to address these specific requirements:
" Eliminate paper processes
" Reduce the average time required to collect and compile data and conduct reviews
" Free up more time for the HR director, who spent 50 percent of the workday over a two-month period driving the review process
Rapid, Solid Results
One of the immediate benefits was quick implementation. The organization's HR director was able to set up and learn the system just three weeks before the company needed to begin its review process. Managers were able to get started on their employee reviews after just one hour of training and employees needed just half an hour.
As a result of the implementation, managers at Kathryn Beich reduced the time needed to complete each employee review by 50 percent from six hours to just three, and the HR Director leveraged automated reminders and Web-based form routing to increase employee participation and slash her personal workload by 75 percent. Additionally, employee self review comments were more closely related to the actual employee review form, resulting in higher quality feedback from managers.
As a more effective means of driving and awarding top performers, Kathryn Beich leveraged the system's compensation management module to tie financial rewards more closely to employee performance.
Kathryn Beich and others turning to Web-based performance management are also looking to help improve the retention rate for the best and most strategically placed employees. Today, small businesses are especially vulnerable to losing not just key employees, but also the knowledge base and skills that they have brought to the company. A Bersin Associates survey found that 10 million positions will be hard to fill by 2010 because the huge population of Baby Boomer employees will be retiring. Complicating the outlook is the fickle nature of the Gen Y workforce, who change jobs frequently without regard to corporate loyalty and, therefore, with less concern for the company's long-range goals. SMBs are struggling to find ways to retain this new brand of employees, to keep them engaged and motivated.
Where will companies find all the replacements they need? Failing in that endeavor could carry an immense price tag, but doesn't have to be an option. Bliss & Associates, which counsels on executive and organizational performance, has calculated that to replace one employee costs at least 150 percent of that individual's base salaryeven after subtracting the amount the lost employee was earning. First, you will need to pay the new hire more for the same position. Then all the other costs of searching, hiring and on-boarding are factored in, including lost productivity from the lame-duck incumbent; advertising; employment agency fees; referral awards; Internet postings; time spent on arranging, conducting and following up on interviews; lost productivity on the part of executives doing the interviews; orientation time and expenses; training time; and so forth.
Keeping the best employees motivated, and doing so without sacrificing the bottom line, remains one of the best investments any business can make; and that investment requires far fewer dollars today with this Web-based technology.
Ensuring employees have clear insight into the company's objectives, have a visible path to follow in their own individual jobs and have the level of motivation that keeps them moving down that path and toward those objectives is an essential function of management. Technology has made these operations easily accessible, so that small-business owners can keep their employees in tune and on track.
