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  • Strategic HR: Systems for Managing Your Human Capital

    Game Plan

    In-Depth

    Performance Management

    “You can’t manage what you don’t measure,” is one of the most widely quoted business aphorisms. Its popularity is supported by the widespread use of results-driven management techniques to improve employee performance. These systems come in a wide variety of flavors—MBOs (management by objective), TQM (total quality management), Six Sigma, Lean—but they all rely on defining measurable goals for individuals and teams, documenting the progress toward those goals, and then reviewing the results at a specified interval.

    An Annual Review No Longer
    Traditionally, an employee review occurred annually. It focused on the employee’s progress toward achieving his or her MBOs; it might also include a survey of 360-degree feedback received from co-workers, team members, department heads, internal clients, and so forth. It was time consuming to assemble all of the data, so more frequent evaluations weren’t practical.

    Today, performance management (PM) software systems make it much easier to solicit and gather performance data in many categories. According to Erin Osterhaus at Software Advice, “Employee review software functionality includes: performance notes, goal tracking, information sharing, stack ranking, electronic record-keeping, interdepartmental communication, real-time reporting, and performance rating.”

    As such, it is possible to conduct shorter, less formal reviews on a more frequent basis. Employers can even flag specific issues and deal with them as they come up.

    Buyer Beware
    While acknowledging the importance of PM, experts are also noting that existing systems may not be getting the job done. Gallup surveyed more than 50,000 employees, and more than half, 54%, said that their company’s system was not effective. 

    Gallup also noted a strong correlation: People who liked their bosses also tended to say the PM system was working well. Presumably they were getting positive reviews.

    In Forbes, Sylvia Vorhauser-Smith notes a similar number. “In a large survey conducted by WorldatWork, 58% of organizations rated their performance management systems as ‘C Grade or below.’” She attributes the low score to systems failing to keep up with the changing nature of people and technology. Briefly, people want more respect and less perceived judgment. And they are alienated and overwhelmed by too much data.

    Fortunately, a solution may be at hand. According to Vorhauser-Smith, as large companies begin to acquire the specialized HR software vendors, TMS packages are beginning to benefit from big data and analytics capabilities. For example, "Activity lists are being replaced by composite dashboards, lengthy reports by simple performance heat maps—yes, pictures, literally replacing thousands of words.”

    For small-business owners, this implies that it may be wise to wait for the next generation of PM software before investing. After all, it’s still possible to produce these important and necessary reports on paper.