Leveraging New Technology to Effectively Implement an Online Employee Performance Management Appraisal Solution
Smart companies know people are their most important asset, and they understand that managing employee objectives in relation to corporate strategies is critical to developing competitive advantage. They have realized that competitive advantage cannot be achieved simply by working harder or improving employee communication – it requires that each employee achieves the right goals for today and develops the right set of skills and competencies for tomorrow. These two themes; achievement and development, are in large part the answers to dealing with the employee performance management challenges many organizations are all currently facing.
As such, an effective employee performance management system must comprise of two elements. The first element must be employee centric and should enable each individual employee to understand not only what is expected of them and how he/she would be held accountable for but also provide an assessment of the competencies, skills and identify the necessary training & development plan to excel. The second element must allow the enterprise to keep track of the various skills and competencies that are available across the enterprise, assist in budgeting and planning for the overall improvement in these through focused and targeted training initiatives and allow for an overall employee performance evaluation that goes beyond the standard, paper based, five point annual employee rating process.
The employee performance system must go beyond the dreaded annual reviews or periodic unfocused training, but is able to implement a dynamic process that is adaptable to the changing nature of roles within the organization. The system must be able to break down the corporate goals into manageable and actionable items for individuals and teams to have an impact on, allow for a collaboration between individuals and their managers, permit periodic updates and alterations as goals are met and priorities change, facilitate an open forum for discussion and growth, provide a forum for meaningful feedback from immediate supervisors as well as a variety of other sources, and manage the process across the organization. Of course, talking about it is not enough. In order to make it happen, a sound technology infrastructure must be in place to implement an effective design with an efficient delivery medium that provides actionable reports that facilitate real improvement and growth.
Employee Performance Management is more than simply carrying out an annual appraisal of an employee's performance; it is an ongoing method of managing and developing all employees across the organization. Just going through the motions of an end of year evaluation does little to align employee objectives with the overall goals of the organization and even less in guiding important training and development of critical skills and competencies.
In addition to be able to provide an overall ranking of employees, an effective employee performance management system must have the following characteristics:
It must deal with achievement - determining what performance is expected of the employee. The definition of performance must encompasses not only the objectives but responsibilities, objectives, standards that must be adhered too, the needs of internal and external clients that must be satisfied and the expected behavioral observation the employee would be expected to demonstrate in that position.
It must deal with effective communication of those expectations to the employee, and be able to assist in discussing them so that the employee believes that these expectations can be met.
It must have an ability to identify an employee training and development improvement path with focused training whose achievement would be considered as the responsibility of the individual as well as the supervisor; organizational training budgets would be such that these training objectives can be met.
It must have an ability to conduct periodic evaluations as these are useful in focusing attention on the task at hand by providing incentives to accomplish what is expected.
It is reasonable for the employee to demand support from the manager in meeting the set objectives. In order for this to happen the manager must create an organizational environment that promotes the achievement of the performance objectives and behaviors. Ensuring the employee is on track requires: regular, high-quality feedback; periodic reassessment, such that the employee is constantly moving forward; and any resources that are required to succeed in the defined goals. This way, the employee and the manager are focused on achievement; thus, working cooperatively to consistently improve the employee’s performance.
Goals/Objectives should be established using the SMART acronym rule: specific, measurable, achievable, realistic and time-based.
Who is responsible for Effective Employee Performance?
Traditionally, it has been the manager’s responsibility and prerogative to manage his or her employee’s performance, conducting assessments and plan development. However, in recent years, enlightened organisations are ensuring that employees are heavily involved in their own evaluations and development scheduling, helping managers understand what has helped and hindered the employee during the course of the evaluation period (as short as a few weeks or as long as a year depending on the circumstances).
Other organizations have taken the employee performance review another step even further to try and gather a more complete picture of the employee being evaluated. Rather than restricting the performance evaluation only to the immediate manager/team leader, many organisations are undertaking 360º evaluations. 360° evaluations are designed to involve people in positions all around the employee in the assessment of the employee’s performance; thus, soliciting feedback from a variety of sources in the hopes of establishing a clearer picture of performance. These types of evaluations frequently include the employee’s colleagues in the department and the employee’s peers in other departments in addition to the manager and the employee themselves. In the event that the person being evaluated is a manager, a 360° evaluation will typically include the immediate employees, directly evaluating their manager’s performance.
360° degree multi-rater employee performance evaluations can involve many participants in the evaluation for each individual employee. Peers are considered people at approximately the same level as the employee with whom the employee has frequent interaction, but who are not direct clients of the employee. Reviews may be solicited from other parties from across the organization. Internal clients are frequently included as they have a good understanding (and usually well-formed opinions) of the quality of service provided by the employee. These are people within the organization who receive something from the employee such as; information and/or products and services. Despite serious risk occasionally and most frequently in sales organizations, the evaluation may include external clients. Overall it is less common than involving other groups as it can have a negative impact on the relationship between the employee and his or her clients.
Generally, the benefits of regular feedback from a variety of sources in a 360º evaluation out-weight the risks. In addition to a direct supervisor’s evaluation, the employee receives valuable insight from those around them, offering new perspective from multiple sources.
What are the critical elements of employee performance management?
If we now know who should manage employee performance, the next question becomes what are the more granular elements of performance that should be managed. Having already established that there are two distinct dimensions within performance management, further digging is required to provide more actionable direction. From the achievement side we can further break it down into the evaluation of two aspects; the results of the employee’s performance (what they achieved) and their behavior in achieving the results (how they achieved it – or their behavioral competencies). Behavioral competencies can be simply described as those behaviors in a position or an organization, which drive the organization towards its strategic goals. (Competencies frequently also include skills and technical knowledge, but for the sake of brevity, we will deal only with behavioral competencies in this article).
From the employee development side we focus on what competencies and professional and technical skills that are to be developed by itemizing development activities for each as well as target dates for completion. The development activities can then be tailored to any gaps between the employees current level of proficiency or to the future positions the employee would like to occupy.
Managing Results
At the beginning of the evaluation period it is essential to fix the employee’s objectives. For the employee to be committed to the achievement of these objectives, it is critical that he or she be involved in their establishment. Only if both manager and employee accept that the objectives are both realistic and challenging, will they provide the stretch needed to ensure commitment. Of equal importance, the achievement of the objective must be measurable such that both employee and manager know when it has been achieved. For this to be true, the objective must be quite specific and the expected completion date for the work must be clear to both. Furthermore, the objective will be motivating when it clearly contributes to the departmental or organization goals.
The purpose of some positions is not to innovate, but is to maintain work standards. As opposed to objectives, standards must be maintained on a consistent basis and are a continuous process. For example, an insurance underwriter may be held to writing so many policies per year, or a receptionist whom must answer the phone within three rings. The standard must be clear and measurable, but unlike objectives there is no time for completion as the work must be continuously carried out to that standard.
Planning for development requires both parties to reflect on the employee’s current set of skills and competencies and at what level of proficiency they currently possess versus what are the priorities for training and development in relation to current and future positions. It could be that an employee is lacking in a specific skill or competency that is required for the position they are currently in. In this situation, development of this particular skill or competency will be top priority for the current period, with specific development activities and targets assigned to ensure that the requirements are met. On the other hand, stretch targets for development may be agreed upon in order to develop the requisite competencies for preparation for promotion.
For an employee to be clear about what is expected of them, priorities may be assigned to the objectives, standards, and/or development activities so the employee understands where to focus their attention. The manager and the employee agree the resources and organizational support needed to carry out the work, and it is the manager’s job to make sure the employee receives them.
At the end of the evaluation period, the manager and the employee must assess the context in which the employee has been working. Perhaps there have been external forces that have impacted the employee’s ability to achieve assigned targets for achievement and development. Has the economy helped the employee? Has the organization given the priority needed to the employee’s activities? Did another project interfere with the employee’s ability to carry out their task? Only when there is an understanding of the context can the manager properly assess the data gathered on the employee’s performance. At this point it is important for the employee and the manager discuss the achievement of the objectives or standards as well as development activities and assess the responsibility for successes and failures.
While both elements of achievement and development may have been altered during the course of the evaluation period and thus assessed on an interim basis, overall scores provide guidance and are useful from an administrative purpose. The manager may be asked to allocate an overall rating or score. This is most frequent when the performance evaluation is directly linked to base or incentive compensation, and can be effectively broken up by achievement and development activities in order to better match compensation methodology.
In addition to interim alterations of performance criteria, organizations frequently demand a more formal mid-period review halfway through the assessment period. The purpose of this review is to assess progress so that the employee is not surprised by their evaluation at the end of the evaluation period, and to force a formalized review by both parties who might otherwise chose not to actively engage in ongoing performance management.
What are the critical elements of employee performance management?
Managing Employee Performance Behaviour
A critical part of a successful performance management system is the development and assignment of a set of competencies that underpin the success of the firm. As previously stated, a manager should manage an employee’s competencies and that behavioral competencies are behaviors that are proven to help the company or an individual succeed in meeting objectives. Competencies must ensure a link between individual behavior and organizational success. The behaviour must be observable by peers, clients, and others around the employee and must be attainable by the employee. The behaviors demanded must be specific to the position or task and must be consistent with the organizational values.
A typical list of organizational competencies assigned to managers (taken from a mid-sized international pharmaceutical company) is: Interpersonal Relations, Team Leadership, Commitment to Success, Influence Outside the Company, Influence Within the Company, Ability to Analyze and to Take Charge, Time and Resource Planning, and Company Vision. These competencies are used to assess whether the management group is behaving in a way likely to lead to organizational success. In order to guide those assigned to individual competencies in their achievement and development, they are defined and broken down into individual observable behaviors that are more easily internalized.
A competency example, Team Leadership:
The definition is;
The individual’s ability to exercise leadership that motivates and mobilizes the team and to create an effective, pleasant work environment
Some of the Behaviors that exemplify the Competency are;
• Clarifies roles, responsibilities, and expectations within the team
• Puts the interests of the team before personal interests
• Encourages team members to share best ideas and practices and to help each other
• Publicizes and rewards individual and team successes
• Uses most competent employee as coach for other members
• Formally devotes time to strengthening the team
• Continuously & quickly shares relevant information
• Takes the time to explain why a given idea is or is not retained
• Remains optimistic in difficult times
Most organizations define the possible levels of behavior within a competency. Some (but not all) examples of levels used by an insurance company are;
Beginner:
– Does not demonstrate any of the behaviors
– Has not been placed in situations requiring the behaviors to be demonstrated
Competent:
– Displays most of the behaviors related to this competency most of the time
Expert:
– Consistently demonstrates all the required behaviors and coaches others in them
Organizations use all sorts of different rating scales when it comes to employee appraisals from a simple check box to indicate complete or not complete to very detailed rating scales with up to 10 different levels. Most organizations use a 5 to 7 point rating scale with different terminology that fits the culture of their own respective environment.
Having defined performance management, the question still remains as to how to incorporate it. From the above discussion, effective performance management requires several key activities be facilitated. In order to be a complete solution, both achievement and development components must be enabled, the process must be ongoing and easily altered to reflect new situations, changing positions, and rolling priorities. In addition, the list of participants must include not only the employee and manager, but also peers and other parties conducting 360 performance evaluations.
A successful implementation of a Performance Management requires a method of developing the model of reporting hierarchies, assignments of performance categories and specific criteria, providing the interface though which the participants interact and manage and are managed, provide and receive feedback, and plan development activities. HR has typically attempted only a small portion of the process we have outlined, utilizing simple tools in an attempt to achieve some of the benefits of managing performance. The most basic (and most popular to date) are paper based surveys whereby participants are asked to provide answers and feedback on hard copy. Newer applications have been developed in attempts to more efficiently deal with these challenges, but most fail to deliver on the complete performance management framework.
The Current State of Affairs
Traditionally, companies have used paper-based systems for conducting various components of performance management. Some develop generic surveys for periodic evaluations and/or reviews. Others maintain more specific documents tailored to positions and functions within the organization. For the most part, managers complete paper forms and surveys, which are then stored in a physical file – certainly not a user friendly experience or a cost effective solution! The degree to which participants enjoy this process is embodied in the dismal response rate a typical human resources department can expect to realize. Moreover, results must be manually compiled and analyzed in order for any actionable insights to be gained. These time consuming systems not only cover a small portion of performance management they are disasters to administer, resulting in unproductive time for human resources staff and participants. Moreover, turnaround time is typically slow and results (compiled from individual hard copies) are mediocre at best.
Several approaches have been developed in order to better administer these systems.
Online Surveys: An effective solution for overcoming certain challenges with paper surveys. While a definite improvement over the traditional method – certainly not a comprehensive performance management system. Human Resources build the surveys with help from a set of survey tools such as; ratings scales and design templates. As a result this method is a top down approach whereby survey questions are administered from HR.
360 Employee Feedback Reviews: These applications are focused only on facilitating a diverse group of individuals to provide feedback and possibly evaluations to individuals. Like the web-based survey, these solutions are at once limited in scope as they are only focused on a single facet of performance management and are often inflexible, suffering from the same top down approach as surveys.
ERP Modules: Many ERP systems such as Microsoft Dynamics GP and SAP Business One have HR capabilities by way of modules that are added on to the core application. These are mostly process based applications, designed to automate the administration of HR functions, such as; employee information, payroll, attendance, and rudimentary evaluation tracking. Typically, the evaluation capabilities of these systems are limited to simply identifying whether they have been completed and perhaps allow for the tracking of aggregate scores or ratings.
Each of these approaches has specific shortcomings that will result in limited effectiveness and non-integrated solution for performance management. Given the need for a more holistic framework for implementation, CRG has developed a Web-based solution for integrated performance management. CRG emPerform, is a broad system meeting all of the outlined requirements of effective of performance management is imperative in order to realize the benefits. Conducting review surveys online alone is not the answer. A facilitating 360 º evaluation via the web is a start, but certainly in itself does not achieve performance management. Proper implementation requires all of the above and more.
As we have established, online employee performance management involves many participants across the organization acting as employee, manager, and 360º evaluator. It is also very likely that individuals will wear multiple hats within the organizations performance management system and therefore must be able to act as the subject, the manager, and/or the 360º evaluator. In addition, typical hierarchies do not stop there. It is possible, and even advantageous for further levels of management to keep track of the ongoing performance management within their ranks, and to be able to view progress reports for individuals all the way to the organizational level. Thus, the enabling technology must allow for the interaction of all of the participants within the system, and facilitate the easy access to necessary information.
A certain degree of sophistication and depth of categories are also required to facilitate more robust performance management as outlined in this paper. Achievement may involve the collaborative management of employee responsibilities and how they relate to the position and job description, clients and their individual needs, performance objectives, standards, and level of proficiency per competency. Similarly, development may involve both competencies and professional or technical skills including itemized development activities and target dates for each.
Web Based
A web-based system is more effective in achieving the goals of performance management as well as being more conveniently administered. As opposed to distributing and collecting forms, the application is easily accessed from any location though a browser and does not require any handling.
CRG emPerform, is a Web-based performance management system designed to deliver integrated and performance management across the organization through an efficient, user friendly interface. All participants are able to access the system from anywhere in the world over the Internet, updating and managing achievement and development in a collaborative way. Managers and employees work off of the same Web pages and are thus able to view any updates the other has made, allowing for the joint creation of the performance criteria and development activities for the period. Information rich reports are generated right from the Web, allowing for changes and improvements to be made in a timely fashion providing an ongoing mechanism for continuously improving performance across the organization.
Centrally Administered
For some years, management scholars and practitioners have been arguing that HR must be managed more efficiently in order to free up resources for more strategic and value added activities. CRG emPerform accomplishes this in a number of ways.
Frequently, Human Resources is responsible for performance management. Sometimes it is line management or Administration. No matter who is responsible for the process, CRG emPerform allows for the assignment of performance measures by positions, by functions, and by level. So the Competencies may vary from position to position or from one function to another. Those responsible for the process can ensure that the managers and evaluators are all using the appropriate criteria, even when they are on the other side of the continent.
From an administrative standpoint, human resources must be able to manage this process without difficulty. It is imperative that the performance measures are efficiently allocated to employees throughout the organization as per the performance management design, while allowing for flexibility and collaboration within the employee / supervisor relationship. These goals are best served with the development and administration of performance category dictionaries and the allocation of individual measures to employees via their position within the organization. For example, HR resources might have developed a competency dictionary for the organization made up of 40 competencies including detailed descriptions and identified behaviors. In order to get the correct competency to the correct employee, HR uses positions as a means of allocating them. Thus, all employees in the position ‘Sales Support’ will be given that set of competencies that HR has identified as being most critical for that position. CRG emPerform allows the same to be done via other employee locators across the organization, such as; level and function.
Collaborative Appraisal Process
As it is often advantageous for performance management to be a highly collaborative process, CRG emPerform has been designed with a single interface for both employee and manager. Web pages displaying the assignment performance measures, comments, and additions are viewable by both individuals involved in the process. While an employee is setting their objectives, commenting on the environment within the reporting period, assessing their competencies or evaluating the achievement of their objectives, they are able to view their manager’s comments (the reverse is also true for the manager). However, they can only complete or edit their own portion of the page to ensure that the comments of the other party remain intact. By facilitating collaboration between the manager and the employee, CRG emPerform significantly increases employee buy-in by allowing them direct input and interaction at all stages of the process.
Complete Flexibility
As performance management models and methodologies differ widely from organization to organization it is imperative that the system to be implemented is flexible in order to accommodate the conventions and culture already developed. Items of contention may include; timelines that may or may not mandate interim updates or ongoing management, performance measures and development options covering many categories in addition to objectives and competencies, rating scales may need to be customized in order to accommodate internal conventions and descriptions for each level, and specific directions and definitions may be needed to direct participants of specific requirements for individual sections or of the process. These among other issues, are necessarily customizable by HR in order to provide the best solution for each specific circumstance as opposed to being forced to utilize a standard methodology. HR professionals are focused on developing the correct system for their organization – not adapting to methodologies available within a software package.
CRG emPerform allows for each implementation to be customized as per the needs and conventions of the organization. The administrator (HR) determines the reporting hierarchies and the centrally administered performance measures and competencies and assigns them to employees. The organization decides what type of timeline they would like to follow, whether 360° evaluations fit the culture of the organization, and it alters the performance measures over time if needed. Similarly, the organization decides what type of rating scale makes sense and will be best received. In addition, the system is designed such that the insight on the ‘front lines’ is taken into account.
Although measures and competencies may be assigned centrally, managers and employees are given the option of making additions to more accurately depict their situation, further develop in a specific direction by identifying additional competencies and development activities, and to allow for the employee to have real participation into their own careers.
Full Circle Appraisal Process
Another key point is the consideration of an ongoing process as opposed to a one-off survey or annual evaluation. As we’ve pointed out, this is central to the implementation of a performance management system; whereby the process continues, building on the achievements and development from one period to the next.
Once implemented, CRG emPerform is ready to go at the beginning of the next period via a quick method of copying performance measures, categories, and all model assignments. If major changes are in order, the administrative function allows for fast and easy modifications to the model. On the other hand, if improvements are to be made, they can be implemented centrally, and all evaluators have immediate and automatic access to the changes. There is no need to send out a whole new set of documents and guidelines – they are instantly available on-line. Managers follow the new process by following the updated instructions outlined within the application.
Secure and Anonymous
Employees, managers, and 360 degree evaluators are assigned user names and passwords to prevent inappropriate access. When they logon to the system, employees are directly to carry out the evaluations that have been assigned to them, they see only the names of the employees they must evaluate - no others.
When they have completed an evaluation, the manager or evaluator has updated a central database for reporting. Reports are available based on the reporting hierarchy established by the system administrator. Managers are able to create reports relating to their direct reports (those for which the manager has bee assigned), employees are able to run summary reports on their own information, and HR is able to create organization wide reports. Only the employee's self-evaluation and the manager's assessment are visible to the employee and manager when they sit down for the follow up meeting.
360º Evaluation in a global economy
In order to develop a clearer picture of the employees performance, the achievement dimension of an overall performance management solution should include the manager, the employee, the employee's employees if the former is a supervisor, internal clients and peers.
In a global economy, managers are supervising employees who are in different locations, across countries and continents. You can imagine how easy it is to manage the performance of someone whom one rarely sees - you may even have experienced this yourself. emPeform Web-based performance management overcomes this huge problem simply and quickly.
Participants can access the performance management system from anywhere, at any time. Which means that the evaluators do not have to be in the same location or working at the same time (irrespective of time zone) in order to be able to assess performance. Providing the evaluators know enough about an employee's performance to evaluate it, they can be part of the evaluator group.
This degree of accessibility instantaneously changes 360 performance evaluations from a highly cumbersome activity to an easy-to-manage process. If your organization is geographically dispersed, there is no need to distribute and collect paper-based evaluations from all the evaluators. The evaluators at all locations (be they employees, peers, colleagues or clients) are notified by e-mail that they have some evaluations to carry out. They log on with a secure user name and password, complete the evaluations on-line and send them directly to the central database that will accumulate the results. When all the evaluations are complete, the manager is able to create reports on the accumulated evaluation results, thus maintaining the confidentiality for the evaluators and providing the manager with the information he or she needs.
Rapidly building organizational capacity
Effective performance management must assess both the achievement of results, the behaviors exhibited in achieving those results, and the development activities undertaken.
With CRG emPerform performance management the manager and HR can more accurately assess employee achievement by accumulating evaluations of all the groups of evaluators (e.g. peers, subordinates, internal clients) to provide a well-rounded view of the employees performance. In addition, the manager can compare these group evaluations with his or her own view of the employee, as well as that of the employee themselves. From this, the manager and employee have excellent information from which to build a development plan for, building the employees individual capacity.
At the organizational level, the organization can know, for example, what percentages of its employees achieved their objectives or were rated as “Beginners” for a particular Competency. From the ratings of the achievement of results, the organization can rapidly pinpoint high and low achieving parts of the organization, and use the former to build the latter.
If it has the accumulated information on the levels of observable behavior for each of the Competencies (something that is very easily done) then it will rapidly see where it’s organizational strengths and weaknesses lie, and can take actions to enhance its capacities. It can build organization-wide development programs to enhance a particular Competency within the organization.
With incomplete performance management systems, both of these capacity building activities (if they were possible at all) would be a very lengthy process. Web-based performance management with CRG emPerform enables the ongoing improvement in capacity within the organization, as HR and individual managers given the tools necessary to effective manage employee performance.
