The Benefits of Modern Performance Management Software
Frustration. Anxiety. Boredom. Confusion.
If any of these emotions describe the process your company uses to administer performance reviews, there’s a good chance those same emotions are found in both the reviewer and the reviewee. Recent research from Globoforce found that 53 percent of employees say performance reviews don’t motivate them to work harder, and 63 of employees felt their reviews weren’t true indicators of their performance.
And employees aren’t the only ones who question the validity of these standard appraisals. Only 8 percent of companies report their performance management process drives high levels of value, while 58 percent say it is not an effective use of time.
That’s right: nearly 60 percent of organizations don’t see reviewing the performance of their employees as a worthwhile use of resources.
Employees don’t trust them. Managers don’t respect them. In other words: performance reviews are broken.
How to Fix the Performance Review Process
Most companies are guilty of treating performance management as a yearly event, despite research showing that organizations that use continual performance management processes have better business results. Companies where employees revise or review their goals at least quarterly are:
- 45 percent more likely to have above-average financial performances
- and 64 percent more likely to be effective at holding costs at or below the levels of their competitors.
Performance management shouldn’t end once a performance appraisal is over. It should be an ongoing process that helps create developmental plans to support an employee’s goals, career interests, and potential, as well as your organization’s business and talent needs.
Modern performance management should be dynamic, agile, and transparent.
Companies must update their performance management processes before they can leverage technology to make smarter decisions about their workforces. Draping new software on top of a flawed process won’t fix the problem.
New Processes, New Technology
Employees want to learn. They want to be good at their jobs, and they want immediate feedback on how to improve. Performance management has evolved into a series of continuous events that include goal-setting and -revising, mentoring and coaching, and development planning.
Thankfully, human resources technology has evolved, too.
But not all systems are created equal. When you compare HR software, there are significant differences between systems. Many still support the traditional performance appraisal process, but more and more are disrupting the industry to bring the benefits of modern performance management into the workplace.
Let’s take a look at some of those benefits:
1. Dynamic Goal Setting
Business moves fast, and annual goal-setting can’t keep pace with the modern world. A goal that was created in January may not be relevant six or even three months later, so individual goals must change to stay in sync with larger strategic goals. If employees hit personal targets that aren’t aligned with the overarching aspirations of the company, then at least some of the moving parts of your business are moving in separate directions.
The right software can simplify the goal-setting process and keep everyone working on the right objectives. Software allows companies to set overarching goals and then attach manager, team, and individual employee expectations to them. Cascading goals align everyone across the organization and provide greater transparency between and inside departments.
As business priorities evolve, performance management software can create a domino effect that keeps everybody on the same page.
2. Agile Feedback and Learning
Facilitating a culture of continuous feedback means everyone knows where they stand on a regular basis. If ongoing feedback seems like overkill, consider how the alternative affects poor Sally:
Sally’s annual review rolls around, during which she discovers her manager was disappointed by something she did several months ago. Rather than discussing the situation and coaching her on the fly, the behavior went unchecked, and was relegated to the annual performance meeting. Not only is Sally blindsided, but she was unable to make adjustments as time went by.
Annual or semiannual feedback is not frequent enough, and it provides very little in the way of transparency or actual direction. Underperformers will assume their performance is fine and not try to improve; great performers who desire frequent feedback will become uncertain and disengaged. Additionally, employees who see reviews as inaccurate are twice as likely to seek new jobs.
Outdated modes of providing feedback hurt businesses. Performance management software provides transparency into employee performance. Since managers can see the status of goals in real time, it’s easy to address issues as they arise and eliminate those unwelcome end-of-year surprises.
3. Relevant Career Development
After salary, career growth is the No. 1 reason candidates accept job offers. This is good news for businesses, because employees content with stagnation aren’t ideal teammates. Top talent is hungry for career development, and companies should do everything they can to provide it. Performance meetings are a time to discuss employee growth, development, and long-term career aspirations, then make training plans that will bridge employees’ skill gaps and help them reach new levels.
Companies that provide detailed development planning and coaching to their employees have a third less voluntary turnover and generate twice the revenue per employee of their peers. Performance management software helps employees gain insight into their career opportunities. Not only can such software match career goals with corresponding e-learning material or classes, but it can also alert employees to internal hiring opportunities in other departments or offices. Employees that want to learn and improve are valuable assets, so invest in them.
Companies must look closely at how they manage and measure employee performance, as well as the technology they use to do so. Modern performance management methods and tools help identify competencies, aspirations, and skill gaps, and then create strong, effective employee performance programs.
If employees feel that they can get the tools they need to succeed from another company, then that’s exactly what they’ll do: they’ll leave, taking their knowledge and value to competitors. Don’t let old performance management methods and technology fuel the turnover fire.