Midmarket Blog Series:

Leveling the Playing Field

Automated Performance Reviews Aren’t Just for the Big Guys Any More

Annual performance reviews historically have been about as welcomed - by employer and employee alike - as a trip to the dentist. But with the right strategy and tools in place, it doesn’t have to be that way. Plus, not only can performance reviews be productive and positive, but when they are, the business impact is undeniable.

Human capital industry analyst Josh Bersin, in fact, says a consistent, company-wide performance management process, when done right, will have a significant upside for the entire enterprise.

“Organizations with such processes have experienced less downsizing, have lower turnover among high performers, and have nearly twice the revenue per employee as organizations with no formal or consistent performance management practices,” Bersin says.(1)

Many large, often global, organizations have already adopted technology to improve the performance management process, while small- and medium-size businesses have been more likely to persist with more expensive, usually ineffective paper-based performance management process. Why? Because automating the process used to mean expensive technology, but that is no longer the case.

Cost Savings

Today, moving to an automated performance management strategy not only improves the experience for both employee and employer, it actually reduces cost. In fact, self-service talent management technologies are estimated to save mid-market organizations about 20 percent per transaction over pre-automation performance appraisal costs. (2)

Much like the move to online banking and bill paying has streamlined the consumer experience, using tech tools to power the performance management process can reduce inefficiencies over the manual alternatives. Just as importantly, of course, the performance management process itself will be a richer experience for both the workforce and business line managers.

Breaking the End-of-Year Review Addiction

The bulk of the savings occur when automation helps managers provide constructive feedback more frequently, often in smaller intervals during the course of the year. This is another, related theme that you’ll be hearing Cornerstone talking a lot about in the coming months – the value of moving from a static end-of-year performance review process to an iterative, interim, ongoing feedback model.

Rather than going on memory, managers (and peers) can provide  feedback on an ongoing basis, which reduces the time it takes to finish an appraisal.

A Better Process for a Better Result

Automating the performance review process can lead to other positive results, including:

• Boosting consistency - A consistent framework for performance scores and measurement for employees within similar job functions reduces the likelihood of discrimination lawsuits. Automation helps create an appraisal process that is fair and equitable.
• Creating a paper trail - Having access to historical reviews that poor performers have signed off on can be used as due diligence information to support employee separation and limit legal exposure. With a paper-based process, the organization may not have the right records available. Automation can provide access to these appraisals and also serve as a communications archive between managers and employees. (3)
• Providing writing help - Sometimes managers don’t express themselves well with written comments. Performance management software minimizes that possibility via writing tips and legal word filters that prevent managers from including inappropriate words or phrases that could trigger legal liability.

Moving away from a paper-based, error-prone and generally disliked performance review process is no longer just for larger employers. Today, with technology flattening the competitive landscape, small- and mid-sized employers can also take advantage of those same tools, and reap the benefits.

To read more, download the white paper, “Performance Management Solutions for the Midmarket: Why Bother?”

(1) Bersin, Josh. Talent Management Factbook 2009. Bersin & Associates

(2) CedarCrestone, Value of HR Technologies, 2008

(3) Bersin, Josh. The Business Case for Performance Management Systems. Bersin & Associates. January 2008