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  • Strategic HR: Systems for Managing Your Human Capital
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    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 as well as 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. According to the Houston Chronicle, PM in companies can often lack credibility, consistency, established goals and a clear strategy. In addition to these, existing systems often fail to motivate employees, lack communication and produce inaccurate performance reviews. They can also be costly and time consuming.   

    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.