Performance management for a new generation

Making life easier with HR software

July 7, 2016

We know from recent headlines that performance management is high on the HR agenda. Our recent pulse survey of employers took a step away from the headlines to uncover the real story – what are organisations really focusing on?

Our recent research confirms that employers’ number one focus is on updating performance management technology platforms.

Technology – or more –specifically HR software – can play a role in supporting the effectiveness of any performance management system. Our survey results highlight the benefits of a technology-supported performance management process. They also reveal that over half of our respondents felt that more time needs to be spent on understanding and using the technology currently in place. On the other hand, almost a third identified lack of the right technology as one of the key barriers to their performance management process.

It is no surprise that technology is at the top of the list of changes employers want to make. An overwhelming 47% of respondents to Willis Towers Watson’s Global Performance Management Pulse Survey (November 2015) either intend to make or have recently made changes to their performance management HR software.

Why is a good performance management HR software system so essential?

Our research shows that although most organisations are happy with their performance management policies, their process implementation leaves plenty to be desired. The key challenges outlined by our participants include:

  1. Manager capacity and capability – managers do not have the time or the skills required to facilitate an effective performance management process
  2. Effectiveness assessment –  few organisations align their effectiveness measurement with required outcomes
  3. Positive employee experience  – like managers, employees are also expressing their dissatisfaction with the process

HR software is not the only solution, but it can ease the pressure on all parties involved. We will show you how.

The plight of the manager: under-supported and out of time

Incredibly, 69% of organisations report that their managers are dissatisfied with the current process. After many years of researching performance management, we continue to hear the same key complaint: managers simply do not have the time to manage the process well. It is worth noting that the manager satisfaction statistic is significantly higher (14%) in organisations where leadership feels they have the balance of technology just right (Figure 1).

Almost a third believe their managers are spending too much time on activities that add little value, such as filling in forms instead of coaching and developing employees and seeking meaningful feedback.

How does HR software really help managers save time?

A good HR software platform eases the pressure on managers to handle the administration that clutters the performance management process. Examples include:

  • Feedback capabilities and reminders: allow feedback providers to enter their comments directly onto the profile of an employee, sending reminders at crucial dates within the cycle so managers do not have to
  • Self-assessment capabilities (exist in most technologies): allow employees to record progress and comment against their objectives at any point during the year, taking the pressure off the line manager and helping to focus development conversations
  • Crowdsourced feedback: encourage all colleagues at all levels to provide real-time feedback throughout the year, not just at year end

Figure 1. Manager satisfaction

Manager satisfaction

It is common knowledge that managers play a key role in the employee experience (the relationship with their manager is one of the top drivers of retention for employees globally), yet the burden on managers is a continuous topic for discussion in the HR community. In addition to the difficulties presented by time pressures on managers, over half of our respondents are concerned that managers do not have the necessary skills to support an effective performance management process. Moreover, our research shows that almost half of employees believe managers do not fairly reflect their performance in annual ratings. This presents a real challenge, considering that an increase in manager involvement in the process is one of the most common changes organisations intend to make.

However, organisations are very much aware that managers’ opinions of the process are not very high either (nearly 40% do not see any value in it) and a large number cite this manager feedback as the foremost reason for wanting to change their current process (Figure 2).

Figure 2. Drivers for changes to the process

Drivers for changes to the processn

HR software cannot be substituted for manager development, but it can provide effective safeguards to support both managers and organisations in feeling more confident about increasing manager responsibilities:

  1. Supporting managers in pay decisions – today’s systems allow managers to review the performance ratings of their direct reports, and apportion their performance-related rewards among them. What if the system – aware of that manager’s budget and direct report ratings – displayed how that budget could be fairly distributed based on performance in an easily understood dashboard?
  2. Improved audit capabilities for HR – with a good HR software platform, HR has the option of running easy-to-interpret reports to calibrate ratings and/or the payout of performance-related rewards across the organisation.

Keeping track: is performance management really delivering on its objectives?

When we talk about performance management, we tend to focus heavily on what we can do to make the process better, but what are we trying to achieve? For the most part, participants believe their performance management process is effective, but when it comes to outcomes, organisations fall short.

About two-thirds of organisations use the results of their performance management process as a mechanism to manage short-term incentives and merit-based pay increases. However, we know payouts in most organisations do not deliver the pay differentiation outlined in their pay policy.

Another 41% cite talent programme eligibility (for example, development, succession and so forth) as a key benefit of the process, but 38% believe their performance management process links poorly to these programmes.

Measuring success: so what really drives effective performance management?

When we asked organisations how they measured the effectiveness of their performance management system, the most common measure was how many managers completed the process (76%). A surprising 30% did not measure their system’s effectiveness at all (Figure 3).

Figure 3. How is effectiveness measured?

effectiveness of  performance management systems

We look forward to a time when our employee performance assessment adds optimal value to organisations by aligning more closely with – and supporting – their strategic objectives. However, without the right HR software in place, or an understanding of how to maximise the impact of solutions currently suggested, it is unreasonable to expect HR professionals to meet their goals. Implementing an HR software solution, with the ability to provide better access to key data and metrics, could mean a giant leap forward for many of the organisations we surveyed. HR software can aid in addressing these challenges. We have already discussed how it supports managers in differentiating pay, but what about other talent management processes?

An integrated platform provides managers and HR with one-stop shopping for talent management. It can ensure a seamless interface between processes by feeding performance data into succession management and career development platforms as a starting point.

The missing ingredient: managing employee engagement

Additionally, it is sometimes too easy to forget an important question – what is in it for employees? Organisations agree overwhelmingly that the main objectives of performance management are to:

  • Align individual performance objectives with strategic business priorities
  • Drive high performance across the workforce

While no one argues with the rhetoric, and our research shows a clear correlation between employee engagement and organisational performance, the key is to create a meaningful employee experience. A few critical levers are:

Transparency – In the new world of technological developments and social media, employees expect the same level of transparency from employers as they receive from the external market as consumers. Research on employee opinions suggests we have not quite mastered this, with almost half of employees believing managers do not effectively differentiate between high and low performers.

A good HR software platform can also ensure a more effective cascade of organisational objectives. Good platforms offer the opportunity to show the link between individual objectives and divisional and organisational goals. This should form the basis for meaningful and relevant performance conversations. Not only does it support more engaged employees, but it also provides an easier way for managers to help employees align their individual objectives with divisional objectives.

Coaching and development – Organisations and employees alike expect managers to take responsibility for coaching and development.

A good HR software solution configured with automatically generated prompts across the year encourages the manager and employee to collect regular and timely feedback on employee performance as it happens. This feedback enables much more meaningful development conversations.

Mobile – For better or worse, the line between work and personal time is blurring. Employees are accessing organisational information most frequently on personal mobile devices. A device-agnostic HR software platform encourages employees and managers to engage in performance management on an ongoing basis, rather than revisiting objectives only during the annual performance review.

Optimising programme design is a powerful first step; unifying processes and user collaboration with intuitive HR software is a close second. Built by global HR experts, our Willis Towers Watson Talent Management Software  aligns individual employees with organisational goals to create a balanced system of accountability, feedback and rewards.

About the survey

In November 2015, Willis Towers Watson conducted a pulse survey on performance management. We collected responses from 384 organisations across the EMEA region and covered both current and emerging performance management practices and trends.