Contributed by CCHKnowledgePoint

With the current forces of concerns about talent retention, and productivity and profitability, organizational survival hinges on a business� ability to manage resources, move quickly, and remain competitive in a continually changing market. In this environment, regularly evaluating and improving employee performance and productivity has become more than an administrative detail � it�s now a key business strategy.

Unfortunately, the main vehicle for supporting this key strategy, the performance review, is rooted in a history more focused on documenting and measuring employee performance than in truly developing better employees. From creating a record of employee performance to comply with governmental anti-discrimination guidelines during the 60�s, to implementing the pay-for-performance practices that were prevalent in the 80�s, to the "hurry to hire and deploy" tactics of the 90�s, performance review programs have never been taken very seriously, nor have they been truly successful as a development tool.

Today organizations are looking for performance management systems that combine the kind of legal protection and pay-for-performance linkage supported by the traditional process with current best practices focused on developing employee performance, improving employee retention, and increasing organizational effectiveness.

Meanwhile, the performance review remains one of the most dreaded tasks both manager and employee face. Managers typically don�t have time to compose thoughtful evaluations, they�re often under-trained or inexperienced in this task, and many find it difficult to give frank performance feedback. The "blank page" presented by paper or word processor-based review forms does nothing to address these issues. The result is that reviews are typically late and poorly documented. Employees become frustrated because their evaluations are sporadic, often confusing, and lacking in positive goal setting. And the human resources department spends much of its time policing the process rather than adding value to it.

In the past, organizations have attacked the problem by investing more time and money in training, or scrapping their entire approach and starting over. Neither effectively deals with the primary issue of providing real-time support for the most critical link in the chain � managers.

An Integrated Software Solution

Addressing this problem is a new breed of software supported systems that solve many of the problems of paper-based review systems, help ensure reviews are consistent and legally appropriate, and support best practices that result in greater productivity and employee satisfaction. These systems lead managers through the goal setting and review process, automating the tasks of tracking and measuring performance, and helping them with the most difficult part of a review � putting their assessments and development plans into writing.

Whether assisting in writing the review, setting goals, or coaching employees, automated performance management systems provide the manager with HR, legal, and management expertise at the point of execution. This just-in-time learning approach is widely regarded as more effective than traditional "classroom" training, and ultimately results in greater productivity because managers are actually trained as they work with employees.

Most importantly, managers who receive this just-in-time support actually complete their reviews on time, thoughtfully, and thoroughly. Organizations currently using automated review systems report nearly 100% of managers complete reviews on time and correctly. By giving managers online HR expertise and real-time tools to help them track and evaluate performance, the automated performance management system removes many of the barriers that have traditionally undermined the performance review process.

Beyond significantly reducing common problems associated with performance reviews, software-based systems are ideally suited to support performance management best practices. The Wyatt Company, an acknowledged leader in human resource management, has recently surveyed organizations known for their financial success and their innovative approach to human resources to identify best practices in performance management.

A number of common practices emerged from the study. Understanding and implementing the following practices becomes the challenge for performance-focused organizations. Software-aided performance management systems are uniquely suited to enable organizations to meet this challenge.

Simplicity

• Simpler systems are easier to understand and more flexible than complicated systems and therefore gain greater acceptance by employees.
  
  

• Automated review systems allow organizations to create review programs that are as simple and straightforward as is appropriate.  As organizations� needs expand, software-based performance management systems become a perfect "smart" system for implementing more involved practices such as "line of sight" goal setting, 360� feedback, weighted averages, pay-for-performance links, etc.

Alignment with Business Objectives and Strategy

• The most effective systems are linked to key strategic areas such as customer needs, organizational missions and values, and business process improvement initiatives.
  
  

• When a software-based performance management system, like those from CCH KnowledgePoint, enables the organization to link individual goals to departmental and organizational goals, the result is a stronger alignment of strategic business objectives with the performance management system.

Decentralized Control

• When an individual department or business unit is allowed the flexibility to customize systems to reflect their specific needs, employees felt a greater sense of ownership. With systems that are more attuned to the business unit, managers regard the process as a strategic tool to run their business rather than another program they�re forced to administer.
  
  

• A good automated performance management system allows organizations to be as centralized or decentralized as they want. An organization can let departments or business units completely create their own performance criteria and standards, or they can establish basic organization-wide criteria and standards and let departments or business units add more business-specific content.

Training

• Training leads to better creation and delivery of performance plans and appraisals.
  
  

• Software-aided systems actually train managers as they evaluate employees and provide a just-in-time training model that has been found to be infinitely more effective than standard training methods.

Less Emphasis on Rating

• More organizations are moving away from assigning employees an overall rating. Organizations are also committed to a strong link between pay and performance and they intend to strengthen that link.
  
  

• Without ratings, the language used in performance appraisals becomes all the more important. As some systems don�t support a rating system at all, it�s even more critical that the written observations be clear and concise. It can be a problem when the software system merely generates a series of disconnected thoughts that must be edited down and woven together to effectively communicate performance observations. More evolved software systems, like those from CCH KnowledgePoint, help managers create effective evaluation text and are flexible enough to either utilize ratings or leave them out of the process.
  
  

• With a more flexible software-aided system, organizations have the option to utilize ratings to support measurement systems for a variety of different purposes including pay-for-performance links.

Employee Participation and "Ownership"

• Performance management works best when employees actively participate in setting goals, monitoring progress and collecting feedback on their own performance.
  
  

• Many automated performance management systems exclude employee involvement in the review process. However, CCH KnowledgePoint has developed licensing programs that allow organizations to give employees access to use the software to participate in the process.
  
  

• From setting goals, to tracking their own performance, to sharing self-reviews online with managers and team members � this kind of approach fosters a greater sense of understanding and ownership among employees.

The movement towards software-aided performance management continues to accelerate. With software-aided performance management, thousands of organizations have dramatically increased the effectiveness of their existing performance management process without adopting an entirely new philosophy. This ease of implementation, combined with a significant reduction in training and administrative costs, easily justifies the cost of the purchase within the first year of implementation.

Widespread acceptance coupled with the increasing recognition of total performance management and development as a key factor in reaching business objectives, make it clear that software-aided performance management is here to stay. And the question for performance-focused organizations is not if, but when, they will implement this empowering technology.