Performance management systems: When points make prizes

Software to help organisations manage performance is growing in popularity. According to technology analysts IDC, workforce performance management (WPM) is the fastest growing sector of the talent management technology market, with organisations set to increase their spend on it by 16% between 2006 and 2012.

WPM encompasses tools such as performance and competency management software, as well as 360-degree feedback. Increasingly, though, suppliers are adding reward management functions, which enable HR departments to take performance data and import it into the system so they can calculate employee reward entitlements.

Getting tough

Personnel Today‘s Tough Love survey (Personnel Today, 14 February) reported that 96% of UK employers have issues with poor performance. So could a software package improve this situation, or would employees feel nervous about a faceless system determining their next bonus?

One company offering the system is Jobpartners, which has developed an online tool, ActivePerformer, to manage employee appraisal programmes, and a product called ActiveRewarder, which processes this data to formulate reward entitlements.

“There is a growing demand for tools that link performance and reward,” says Patrice Barbedette, founder of Jobpartners. “This approach ensures that employees are rewarded appropriately and are motivated to perform to their best by a fairly and efficiently operated benefits scheme.”

Few disagree that linking performance and benefits software helps to make the reward process more transparent as, typically, employees can view how their performance has been linked to benefits. But should it not ultimately be a manager, not technology, that decides how much someone is paid or the size of a bonus?

Barbedette says it is not Jobpartners’ intention to replace managers or HR professionals. Instead, the company’s tools remove the ’emotional’ element of reward.

“Managers are prevented from rewarding employees based on feelings,” he says. “Far from being nervous of using technology to link performance to reward, employees should view this approach as a way of ensuring that the rewards process is completely objective.”

Doug Crawford, head of employee engagement at HR consultancy Chiumento, believes software is important to gain some insight into employee performance, but is only part of the story.

“Managers are comfortable with hard data but that’s the easy bit,” he says. “It is all the other parts [of performance management] such as developing relationships, knowing what motivates people – which isn’t always money – and creating an engaging environment, which are the most difficult but which in the end are absolutely critical.”

Vandy Massey, managing director of MSA Interactive, which provides online assessment tools aimed at boosting performance, says it would be highly unusual to use systems like this solely as the basis for reward. “However, if well-managed, they can create a more stable basis of measurement on which to judge reward levels,” she says.

“Well-managed” is the key.

Rescue mission

Alison Gill, co-founder of talent specialist Get Feedback, recalls how her company was brought in to advise on a performance management process linked to pay that had gone disastrously wrong. The organisation had implemented a software system to calculate pay and bonuses on the basis of a forced one to 10 rating system.

“Managers who were not good at performance appraisal would use the reward system to give the message ‘you are under-performing’,” she says. “The highest scores were then given to those employees the managers most wanted to reward for progress rather than those who were performing the best. The result: a demotivated set of high-performers.”

Gill points out that organisations striving to link pay to performance often make a basic error. “They mistakenly focus on competence because it is easier to measure,” she says. “There is an integral link between competence and results but both require separate measurement, reporting and action.”

Early days

Reward management systems are certainly not a cure-all for poor performance. And it is still early days, with IDC reporting that many companies still have not made the move from paper-based performance management systems to software.

The reward management aspect of a system will only ever be as good as the performance management system that feeds into it, and the latter can only be as good as the managers conducting appraisals and managing the whole process.

“Good performance management should happen every day of the week,” says Crawford. “If organisations are serious about getting the best from their people, they need to provide much more support to managers and ensure they are assessed on the quality of the climate and levels of employee engagement that they create, and not predominantly on the personal outputs they deliver.”

Download the Tough Love survey, go to

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