Implementing a performance management system? Avoid these mistakes...

by HCA24 Jun 2009

Australian companies are increasingly adopting performance management systems to help optimise their workforces in this tough economy. An efficient and effective employee talent and performance management system garners crucial benefits for organisations - from greater workforce productivity and retaining top talent to increasing operational efficiencies and lowering HR costs.

But implementing such a system can seem daunting. Here, Taleo Australia's consulting services director, Ian Wood, outlines the 12 biggest mistakes companies make when putting such a system into place. He also offers guidelines on how your business can address these pitfalls, or avoid them altogether.

What to avoid when implementing an enterprise performance management system

Mistake #1: Keeping managers in the dark
Organisations that struggle with user adoption often haven't taken the time to adequately communicate with their managers (the key users of the system) the decisions that went into selecting the performance management system and the benefits of using it.

Fix: Often, managers will perceive a new performance management process or system as yet another burden or distraction - something happening to them that makes their life more difficult. Communication and training that focuses on the benefits to the manager of using the system can help turn resistance and fear into acceptance and excitement.

Mistake #2: Introducing too much change too quickly
Transforming a performance management process touches nearly every aspect of the organisation and can take years to accomplish.  Introducing too many changes quickly runs the risk of overwhelming managers and employees.

Fix: Focus efforts on a few key outcomes (e.g. reviews completed on time and all employees receiving them) and show success in those areas. Enterprise performance management systems can be configured with hundreds of options and features that aren't used because their value is neither established nor understood.

Mistake #3: Creating overly complex performance review forms
Performance management systems have been designed with ease of use in mind but, too often, HR is so enamoured with the bells and whistles available, they configure review forms with too many options which end up confusing (and losing) users.

Fix: Keep it simple. Just because the online review form or system has the option, button or drop-down menu doesn't mean you need to include it for everyone, in every circumstance.  Approach system configuration with the specific end-user in mind. Most enterprise performance management systems support multiple role-based workflows, forms and processes.

Mistake #4: Underestimating change management
Configuring the software is only one part of the work needed to successfully implement a new system. Understanding the change management issues for both managers and employees is just as important. When you ignore the "people issues", users resist change because they aren't realising the benefits of changing their behaviour.

Fix: Develop a solid communication and training plan for senior management, HR, managers and employees. Clearly communicate the changes that are coming and explain why. Don't be opposed to fielding questions, complaints, resistance and excuses for why things won't work. Dialogue is critical to understanding what could be sabotaging the project and offers an opportunity for users to take ownership of the process and avoid feeling as though this new way of doing things has been thrust upon them.

Mistake #5: Failing to adequately plan
No organisation would attempt an enterprise-wide rollout of a performance management system without a plan. Often, however, the things that are not planned for can stall, delay or even kill a successful implementation. Expect the unexpected and have contingency plans that address delays, technical issues and end-user resistance. 

Fix: Get together with peers who have gone through an implementation. Ask your vendor to connect you with a community of successful users willing to share their experience. Plan to roll out functionality in phases that can be monitored and adjusted and expect the full solution implementation to take months, not weeks. Consider what would happen if the system was not fully operational for the next review period and have a back-up plan to ensure employee needs are met.

Mistake #6: Keeping end users out of configuration process
One of the biggest challenges organisations face when selecting and implementing a new system is balancing the wants and needs of the managers and employees with the needs of HR and the business. However, cutting managers and employees out of selection, evaluation and set-up processes can have serious effects on adoption later on. Allow end users to experience the solution and be open to their criticism and suggestions for improvement. Too often, HR falls in love with the "back-end" functionality and shuts out the concerns of end users.

Fix: During the evaluation process ask vendors to stage a demo site geared specifically for managers and employees. Often, vendor demos focus on what the system can deliver to HR and management. None of those features will deliver value if people aren't using the system. Allow a select group of managers and employees to use the system as they would when implemented and incorporate their feedback into your selection and configuration decisions. During implementation, allow a representative team of managers and employees to participate in the configuration of the system.

Mistake #7: Failing to ask questions and uncover issues
Configuration and implementation of a new software system is often the highest point of disruption. Often, there is a time crunch and an impending review cycle approaching creating a stressful environment. Once completed, HR often breathes a sigh of relief, thankful that the implementation 'issues' (and there will be many) have been resolved. But this is a critical time to continue to gather feedback and uncover hidden issues. The technical and functional issues will have been easily detected and solved; it is the people issues that now need to be uncovered and addressed. Some users may only use the performance management system a few times a year, so it is critical to continue to ask for feedback and proactively uncover user issues as those who are frustrated will most likely not speak up, they will simply stop using the solution.

Fix: Create a feedback survey that can be sent via email or completed online to regularly solicit responses. Establish an ongoing, regular forum to allow managers and employees to offer suggestions for improvement and encourage involvement. Creating an environment where managers and employees don't feel as though the system or process is being "forced" upon them, but rather feel they are valued partners with HR in creating a system that works for them will turn nagging and resistance into problem-solving and solution-building.

Mistake #8: Not establishing links to business objectives
Establishing and communicating the business objectives must continue as you move through phases of implementation and adoption.  The business objectives may change over time (phase I - process efficiency; phase II - reviews for all employees; phase III - competency gap analysis for career development) but the need to clearly establish, communicate and measure the results against those objectives will not. Too often, organisations lose sight of the business objectives (i.e., improving the employee experience) and users become unclear as to "why" they should make the effort to use the system.

Fix: Like any goals, the goals of the performance management process must be specific and measurable. It is equally important that the objectives be defined and communicated in terms of specific business outcomes. Completing all reviews on time, or reducing the number of transactions between HR and managers due to incomplete or inappropriate reviews, may be primary goals of automation. But those objectives alone don't rally the users around a meaningful cause and almost always carry punitive, rather than inspirational, motivation.  Consistently strive to communicate how the performance management activities support the success of the business. In the example of completing accurate and comprehensive reviews on time, there are a number of outcomes that support the goals of HR. To inspire users (and your CEO) also include the outcomes that support the goals of employees (career advancement), managers (more effective teams) and executives (winning against the competition) every time you communicate why it is important to use the system. 

Mistake #9: Unclear roles & responsibilities
Often, organisations assume that automating the performance management process simply means transferring the responsibilities of those administering and executing a paper-based process to "users" who will perform the same basic tasks on a computer. It is important to understand that implementing, administering and utilising an enterprise performance management system will require new roles and responsibilities, not just in HR, but throughout the organisation. Even the most basic deployment may require job-competency development, form design, approval process design, and a host of other system configuration decisions that influence the efficacy of the system.

Fix: Create a project plan that goes beyond indentifying IT and HR resources needed to implement technical parts of the system. Identify those in other parts of the organisation who will be needed or affected by the new system. This can include: organisational development resources which address change management issues; managers or employees needed to help define the job competencies; compensation resources that may need to review market data on current positions; senior management who may want to define the approval processes; or recruiters who may be need to describe job opportunities with the organisation in a completely new way. One thing is certain: automation will require more participation from more areas of the organisation, not less.

Mistake #10: Lack of buy-in from senior executives
Executive sponsorship is often a necessary first step in moving the organisation to an enterprise performance management system. Buy-in from key executives is frequently needed for budget approval and often creates the necessary teeth to get organisational attention for HR projects. But that doesn't mean senior executives are necessarily brought into the concept of creating a performance management culture (see Mistake #12). Until senior executives participate (in reviewing performance and being reviewed), it is just lip service.

Fix: Senior executives may not care about the specific features of the performance management system but they will most certainly care how performance management impacts the bottom line. Create a set of reports that show trend data relating to important business metrics such as reduced costs, faster time to market, or improved customer service scores due to improved employee performance across the organisation. Prior to system implementation, ask your vendor to put your CEO or other senior executive in touch with other C-Level executives who can explain the benefits they've experienced. 
 
Mistake #11: Ambiguity about what to measure
Measuring performance can mean many different things, even within the same organisation. Evaluating skills, competencies, goals, and outcomes for both individuals and teams are all valid methods of measuring performance. However, it is crucial that whatever performance metric is chosen, employees and managers must understand how to observe, measure, and improve performance. Inconsistent and contradictory measurement can lead to confusion and mistrust as employees may feel the system is unfair or biased.

Fix: One of the first steps in rolling out the performance management system will be to examine your existing job descriptions. Without question this can be a major undertaking, but a critical step that will pay major dividends down the road.  Every employee needs to understand the duties and responsibilities of their job and on what basis their performance will be measured. These form the basis for subsequent decisions affecting compensation, advancement and career development.

Mistake #12: Failure to establish a culture of performance
A culture of performance means more than implementing an enterprise performance management system or completing employee performance reviews. Creating a culture of performance often requires a dramatic shift in the attitude of an organisation towards its employees from one of a "workforce" to one that values unique contributions, recognises strengths and invests in developing weaknesses, and understanding the value of each individual. As noted, executive buy-in is an important ingredient but the critical element needed to infect the culture is the development of the manager-employee relationship. Too often, managers are not given the tools, training or support they need to be successful in this new relationship with their employees. The result is abandonment of a process that doesn't seem to be working and employees who are left wondering what happened to their performance management.

Fix: Without a cultural change, performance management may never evolve from the annual performance review. Managers need to meet with each of their employees to discuss performance expectations, goals and objectives, career development, and more. Managers need to become mentors, coaches, and teachers with the employees' performance top of mind. Invest in manager training and development and provide support for those who are uncomfortable with these types of conversations. Encourage managers to allow their employees to review them, and show that everyone is interested in performance improvement.

For more information on Taleo, visit www.taleo.com.

COMMENTS

  • by Bernie Althofer 25/06/2009 2:39:25 PM

    I agree with the comments made by Ian Wood. In many situations where I have spoken to individuals complaining about being bullied in workplace, they often identify two critical issues - job or position descriptions and performance management systems. Ian has identified the link between the two systems. In some organisations, there can be the potential to reward people for outcomes, and forget (probably unintentionally) the benefits of good performance management. Given that performance management is linked to so many other systems, it seems that it should be treated a 'mission critical' to make it work. Some people will argue they are busy and don't have time for 'performance management'. However, there are risks that a poorly managed or poorly implemented performance management system will have an impact on bottom line results. Performance management requires a commitment at many levels, but done well, it has many benefits.

  • by Terry Beath 29/06/2009 8:57:22 AM

    The model underlying many systems assumes a mechanistic system of performance indicators linking to organisational performance measures and objectives as if this is a linear system, which in all but the simplest cases surely can't be true?
    The desire to simplify the human system with mechanistic measures is understandable but the halo effect soon wears off. The time and effort of the system is then justified by activity measures, not outcome measures of the system.

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