Making Reviews More Efficient and Fair – performance-appraisal software
Ideally, performance-appraisal software streamlines the evaluation process, reduces paperwork, and encourages objectivity. But the gains aren’t givens. Managers have to spend some time tailoring the systems to their own workforces. If they don’t, says Gene Drumm, senior partner with the Vector Group, Inc. in Denver, “it’s a more efficient way of doing a bad process.”
The problem, Drumm says, is that many software programs have a generic set of questions that too often aren’t customized for the jobs being evaluated. It doesn’t have to be that way. Despite charges of “cookie-cutter” evaluations, managers have the option of customizing most programs so they accurately reflect the goals and values of the organization and, perhaps more importantly, so they fairly evaluate the jobs being appraised.
Independent research on performance-appraisal software, as yet, is virtually non-existent. Anecdotal reports tend to focus on speed and objectivity. For example, Walker Information, a survey firm in Indianapolis, developed its own 360-degree appraisal software for in-house use only, three or four years ago, according to Ray Becker, senior vice president for organizational effectiveness and ethics. “It’s easier, faster and uses less paper.” Appraisals done with paper-and-pen would take about six weeks from the beginning of the process to the time that final reports were issued. Now reports can be completed in one day. As a result, Becker says that more appraisals are completed on time. As for the outcomes, “Some employees don’t like the results, but they’re happy with this system.”
For managers, many of whom are uncomfortable giving feedback, performance-appraisal software helps to pinpoint areas that need improvement and to communicate the information to their staffs. According to the “2000 Performance Management Survey,” conducted for the Society for Human Resource Management, only 33 percent were satisfied with coaching efforts. The survey also found that only 34 percent were satisfied with their developmental planning. Yet, if companies focused on the developmental side of performance management as identifying training needs or coaching, they got far more out of the evaluation process, says Scott Snell, professor of business administration at Penn State University. When goals are agreed to by the employee and the manager, he says, employees are more likely to accept the standards, because they had some input.
Since software-based performance-appraisals tend to focus on results and actions rather than personality traits, employees are more likely to view them as fair. They provide objective facts that can be used to craft individual development plans, and to help employees not only improve performance but also focus more closely on achieving the organization’s key goals.
Company Name: Red Hat, Inc.
Location: Durham, North Carolina
Number of Employees: 575
Type of Company: Linux operating system developer
Web address: www.red hat.com
System: Performaworks Performance eWorkbench
Moving from paper to Web-based performance appraisals was a natural decision for Red Hat, the fast-growing company that took on Microsoft with its Linux open source operating system. “Everybody at Red Hat has Internet access,” says Karen Clark, director of corporate human relations. Given the company’s business interests throughout the world, it was important to provide real time access to a performance management system to every employee from any computer at any time, she says.
Ensuring around-the-clock access meant putting the system on the Internet. The data actually resides on Performaworks’ server, Clark says, which allows employee access from any computer–not just those issued by Red Hat. Since the system can handle a million users simultaneously, continued growth won’t become a problem. Red Hat has no limit on the number of hits to the Performaworks system, says Sandra Gault, vice president of marketing and business development for Performaworks.
The Internet-based system also has the advantage of openness. Employees can see their performance evaluations and track progress toward goals. This allows them to make strategic changes to improve their progress, question comments, and correct mistakes in the documentation. Ultimately, a more accurate appraisal is achieved.
The Performance eWorkbench system provides a cascade of company goals, from top management on down, so employees enter their own goals to support the corporate objectives. That input increases their commitment to those goals. Additionally, Clark says, they have a view of how their goals align with their manager’s goals and how they all fit into the corporation’s goals. The software also lists the competencies that apply to each job.
As a result, employees and managers can design development plans to help employees achieve those goals and can document their progress, thus helping employees maintain a more consistent focus on what’s really important to the company. That information is then used for performance reviews, providing accurate, objective data over a 12-month period. In contrast, performance appraisals using the old paper-based method tended to focus on events of the past 6 to 12 weeks, Clark says.
Red Hat tries to avoid ranking employees against each other. It does rank them as high-, middle-, and low-end performers within their groups. Unlike some programs, the Performaworks’ eWorkbench ranks employees only against the goals they set for themselves. “It’s very specific’ Clark says. There are no generic questions, so the rating criteria are guaranteed to match the actual job. Performance-appraisal software is just a tool to streamline an existing process. It doesn’t replace face-to-face communications.
For managers, eWorkbench can generate reports on demand, in real time, to provide an instant snapshot of progress. That feature is expected to be helpful during Red Hat’s quarterly “mini-reviews.” It can track performance trends, analyze progress toward corporate goals, and provide data to help critique the execution of strategic initiatives. Its usefulness extends beyond performance appraisal to performance management.
After about seven months of planning, Red Hat implemented the system in January 2001. “You can’t just throw software to the masses and expect them to use it effectively,” Clark says. Training classes–five hours for managers and three hours for other employees–are focusing on identifying good goals, writing good goals, how to input and track goals, and how to actually use the software for performance reviews.
If Clark were to do this again, she says, she would try to anticipate more of the questions the Red Hat staff would ask during training. The staff is highly technical, and so are their questions. Most of them relate to security issues. “We have best-of-breed security, that includes encryption, hardware and software firewalls, passwords, and user ID,” Gault says. “Security is checked and verified continuously.”
Performaworks restricts access to the databases on its server, requiring user-level ID and passwords.
Company Name: Quill Corporation
Location: Lincolnshire, Illinois
Number of Employees: 1,200
Type of Company: business-to-business office supplies direct marketer & call center
Web address: www.quill.com
In an environment where salespeople may never see many of their customers, companies must make the most of every opportunity to gain sales. In a brick-and-mortar environment, that’s done with point of purchase displays in the check-out line. On the phone it’s done by offering sale items to every customer. Quill Corporation believes those incremental sales are so important that they figure prominently in employee performance evaluations.
“We utilize the Culture Worx program for our incremental sales program to award points to associates who offer our sale items to phone customers, regardless of whether or not the customer actually makes a purchase,” says sales manager Kim Kelly. “Points also are awarded to associates for actual incremental sales. Every associate who makes a sale is rewarded by earning points.”
Actually tracking these points and using them as key factors in performance reviews, Kelly says, has boosted incremental sales. “More associates are winning points than ever before, and our incremental sales have increased during the past six months.”
HR consultants have known for years that behavior-oriented appraisal and tracking systems foster improvements. Results tracked by such systems are quantifiable and objective, and let employees know exactly how they’re doing in a way that provides more information than the too-often-heard comment, “You’re doing okay.”
The Culture Worx system strengthens relationships between managers and employees not only by helping to provide objective feedback, but also by doing it in real time, continuously. As a result, managers can reinforce positive behaviors as they occur. This encouraging employees to form effective habits and stopping bad habits before they can form.
Kelly’s experience only emphasizes that idea. She says, “The CultureWorx program allows me to communicate and administer our incremental sales reward program in an efficient, effective manner, while at the same time, allowing our people to be proactive” about tracking their own progress.
Traditionally, managers focus upon corporate directives and policies to improve employee performance. This takes up about 80 percent of a manager’s time but delivers only 20 percent effectiveness, according to Craig Muller, chairman of Culture Worx. Kelly adds that there’s “a huge benefit in allowing our associates to take ownership of their incentives. We feel that this truly motivates them.” One of the reasons is that consequences are aligned with behaviors and with corporate goals, so employees see the relationship between
their performance and those objectives.
Coaching is an integral part of Quill’s program. It’s also an area that needs improvement, according to the SHRM “2000 Performance Management Survey.” Only half of the managers surveyed are trained to provide feedback. “Performance software is not a substitute for face-to-face coaching sessions,” Kelly says, “particularly in a high-pressure, high-stress area like a call center, employees need sincere praise, positive feedback, and development opportunities that are discussed with them one-on-one.”
For managers, such realtime, continuous-feedback systems can help them provide specific performance information before ineffective behaviors become bad habits. They also allow them to make strategic adjustments within their departments to better align their work to corporate goals. In the case of incentive rewards, CultureWorx keeps the corporate goals to the fore, helping employees avoid tailoring their goals to particular incentives.
Administrative ease is another benefit, Kelly says. Quill has eight distribution centers in the United States and a warehouse in the United Kingdom. Because the program is Web-based, it can be accessed easily from any location, providing complete information each time. “The program provides an accurate account of all the happenings of the program in one centralized format. As the administrator, I have the choice in how much actual hands-on work I need to take part in.”
Company Name: Gwinnett Health System
Location: Lawrenceville, Georgia
Number of Employees: 3,300
Type of Company: hospital
Web address: http://www.gwinnetthealth.org
System: KnowledgePoint’s Performance Impact
“The old-fashioned, paper-and-pencil performance review didn’t work well for us,” says Steve Nadeau, vice president of human resources for Gwinnett Health System. “Evaluations were late, employees said it was too subjective, and managers didn’t like the system,” he says. The problems carried over into other areas also, potentially affecting the hospital system’s accreditation by the Joint Commission on Accreditation of Healthcare Organizations, which evaluates more than 19,500 health-care organizations in the U.S.
Nadeau saw Knowledge-Point’s Performance Impact solution at an HR conference and decided to do a demonstration project with some of the hospital system’s managers. About nine months later, the system was installed. At the time, Nadeau says, it was simpler to integrate new hires and departing employees into the system using their own mainframe than it was to use Knowledge-Point’s server as a host. “This allows automatic updates using our mainframe” he says.
The hard part came at the very beginning. A development team was formed, consisting of managers and employees, to sort each staff member into one of nine broad job categories, and to develop evaluation criteria for those specific categories. Performance Impact has eight industry-specific competency modules, including one for health care. Many of the competencies were already built into the program, including patient care, diagnostic testing, safety and infection control, food service, and housekeeping. These were combined with criteria developed by the hospital, as well as with standard competencies built into the program. As a result, evaluation criteria are based on the actual jobs at Gwinnett Health System.
As part of the changeover, Nadeau says, the Performance Impact rating system was incorporated into the hospital system’s appraisal program. It uses a 1-5 rating, based on standards set by managers, “and ties pay to performance. Employees have liked it from the start, because it’s less subjective than the old system,” Nadeau says.
Gwinnett Health System uses the evaluation software for employee self-evaluation, too.
The writer’s block that often accompanies performance reviews is virtually eliminated by the Intelli-Text Designer. That module prompts managers to provide observations about their employees’ performance using a high-low scale and turns those observations into evaluation text. Managers have the options of generating their own supporting text or customizing the existing text to ensure that “cookie-cutter” evaluations are avoided.
Although Performance Impact is designed to include 360 degree reviews, Gwinnett’s version focuses on the formal, manager-to-employee annual reviews. For 360 reviews, a paper-and-pencil check-off system is used. “Comments aren’t needed, so it’s easier for employees to do,” Nadeau says, noting that only about one third of the hospital workforce has routine access to PCs.
Version 2 of this system, released last November, moves the software into the performance-management category by supporting multi-level, cascading goals for strategic integration through the organization, as well as individual development plans, goal setting, and tracking. It also has a log to document performance year-round, helping the entire staff to focus on the organization’s key goals. That version features an optional integration module for automatic data synchronization with the HR information services system, more than 2,000 competency-specific coaching ideas, and automatic notification of tasks that are due. Additionally, says Ian Alexander, KnowledgePoint vice president of marketing, “the new Performance Impact empowers employees to manage their own performance and see how their actions support the entire organization,” which has “a powerful effect on employee retention.”
At Gwinnett, classes to train employees and managers to use the software lasted about two months. “For ongoing training–especially for new hires–we have a ‘train the trainer’ situation with an expert in each department.”
For the physical implementation, Gwinnett Health System formed a team of managers and employees from throughout the hospital, to work with the HR and information services departments. “The biggest issue was getting all the pieces in place, planning the information services side,” Nadeau says.
Nadeau hasn’t measured the differences in outcome between Performance Impact and the old paper-based method. That will come once the system has been in use for a full year. Early indications, however, look promising.
Costs of Performance Appraisals
Performance appraisals can be expensive, and it’s not because of the software. KnowledgePoint’s Performance Impact 2.0 Hosted Edition starts at $4,500 for one year, and a site license for the Intranet Edition starts at $8,000-a paltry sum in the grand scheme of things.
The real costs are in the time spent:
* preparing appraisals
* setting goals and objectives
* conducting reviews
* conducting higher level reviews of lower level appraisals
* designing, printing, copying, filing and distributing appraisal forms
* designing and communicating the appraisal process
* training supervisors to conduct appraisals
* dealing with post-appraisal appeals and grievances
As a rule of thumb, Fred Nickols, senior consultant with Distance Consultants, in Robbinsville, New Jersey, estimates performance appraisals to cost $1,500 per employee. That may be a low figure, however. Two senior executives with overseas firms who responded to Nickols’ 1997 Internet survey for HR professionals cited actual costs of $1,945 per employee and $2,200 per employee.
COPYRIGHT 2001 ACC Communications Inc.
COPYRIGHT 2001 Gale Group