Performance Management: Current Trends

March 01, 2006
Recent research reveals that the majority of organizations are utilizing performance management systems and performance management software, and many organizations are in the process of revamping their first generation systems. According to a study by Development Dimensions International (DDI), performance management systems were active in 91% of 3,600 organizations examined. This article reviews the current trends in performance management, and how companies worldwide are making changes.

Performance Management - A Definition

According to SHRM (the Society for Human Resource Management), " performance management is the organized method of monitoring results of work activities, collecting and evaluating performance to determine achievement of goals, and using performance information to make decisions, allocate resources and communicate whether objectives are met."

Employees likely equate "performance management" with their performance appraisals and yearly discussions with their managers about "how they are doing in their job." But things are changing in this area of HR.

Performance Management - Current Trends

Strategic HR

Increasingly, companies are focusing on "strategic HR" - aligning human resources initiatives with the overall goals of the organization to improve business success. Aligning Employee Performance Management (EPM) with Corporate Performance Management (CPM) has significant benefits: "90% of surveyed companies perceived that improved management of their workforce was key to gaining competitive advantage." - (AberdeenGroup, 2005)

Now, organizations are aligning their employee performance goals with corporate performance goals by utilizing technology solutions.

Increased Integration of HR Functions

Research shows there is a clear movement to integrate HR functions into more holistic, strategic approaches to human capital management. Some integration opportunities include:

  • Aligning employee goals (ECM) with corporate goals (CPM)
  • Linking reward and recognition programs to performance
  • Targeting learning and development toward performance gaps
  • Identifying skills and competencies of top performers for retention and succession planning

Increased Automation of Performance Management and HR Functions

The integration of traditional HR functions has given rise to an increased need to automate them. Connecting these functions at their integration points into clean, close-looped systems, eliminating duplication of data, and streamlining reporting processes is a priority for many organizations.

Online Performance Management Systems

59% of HR executives identify improvement of HCM technology as a key response to their business challenges. Main areas of focus include:
  • hiring management solutions
  • pre-employment assessments
  • employee self-service
  • performance management
  • (AberdeenGroup, 2005)

    Despite the trending focus on online systems, "More than half (52%) of companies surveyed in 2005 are stuck in paper-based performance evaluation systems with annual reviews." (AberdeenGroup, 2005)

    As companies transition to online performance management systems, some key components include:

    • Scalability - deploying on a large scale with solid security
    • Employee self-service - managers and employees can access systems anytime, anyplace, on-demand
    • Integration - connectivity with other HR systems

    Managing employees' performance is a challenge for most companies, large or small. Organizations making the connection between employee performance and organizational performance are taking steps to integrate HR functions with online systems that offer long term ROI toward success for organizations and their individual employees.

    Insala’s vision for human capital management, including performance management, is centered on holistic development for employees throughout their entire career lifecycle. Read on for more information about Insala’s talent development solutions.

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