Performance Management Software Current Trends

November 29, 2007
Current research on performance management systems shows considerable discontent with prevailing practices being employed by companies, large and small, across numerous industries. Most of the issues are around lack of consistency with the performance evaluation process, lack of quality of performance appraisals and overall lack of perceived value by employees (2006 Finding the Keys to Performance Management: A Study of Current Trends and Future Possibilities, Human Resource Institute).

How are companies improving Performance Management?

Many are turning to performance management software, often part of a larger talent management software suite; in an effort create automated human capital solutions. Such systems typically link performance management, compensation, learning and development, corporate goal setting, succession planning tools, recruiting and other human resources systems.

This trend towards performance management software is evidenced by the following powerful statistic from the 2007 Towers Perrin Reward Challenges and Changes Survey which reported data collected from over 600 companies in 21 countries:
  • 90% of respondents reported an increase over the past 3 years in practicing performance management as a high-tech, not high-touch activity
This trend is further supported by Watson Wyatt’s recent survey Changing Strategies in HR Technology and Outsourcing - 2007 HR Technology Trends which reports that “Many companies are looking to implement technology solutions for their talent management programs.”
The changes typically involve creating employee and manager self-service online through performance management software, according to Towers Perrin.
The study cautions that while technology can increase the efficiency of performance management systems, it cannot replace the necessary quality human interaction required between the manager and the employee. Effective performance management programs need both “high tech” and “high touch” to be successful.

What types of Performance Management Software are currently being used?

According to the survey 2006 Finding the Keys to Performance Management: A Study of Current Trends and Future Possibilities, Human Resource Institute, the most common performance management solutions being used today are:
  • paper-based systems (43%)
  • home-grown technology solutions (30%)
  • email and attachments (16%)
  • commercial performance management software (12%)

With the increasing use of performance management software, it is no surprise that the Workforce Performance Management (WPM) market is growing by 16.5% annually, with $1.8 billion projected to be spent in 2009, as reported by IDC, a global provider of intelligence for the IT market.

Customization and Scalability: Key Issues

“Performance management,” at the highest level, shares many commonalities across organizations in multiple industries. Typically, it is the implementation of the supporting process, where differences occur, requiring software customizations.

The Corporate University Xchange Performance Management Study, May 2007 reports “most organizations are applying significant customizations to their performance management systems.” And the pressure for scalability of such systems is increasing. This CUX study projects that organizations will increasingly buy “commercial software for performance management as the market matures and the software meets more business requirements without needing customization.”

Technology Uncovers Weaknesses in Performance Management Programs

The CUX Research Report on Performance Management also found that performance management software quickly spotlights program inconsistencies and weaknesses. Through easy access to real time data, numerous organizations discover that “many managers and teams have not been capable of writing effective goals. This fact was not obvious when organizations were using paper-based processes.”
Enlightened organizations are welcoming such discoveries and utilizing technology to tackle these issues. And many, based on the research trends reported here, are taking a more strategic approach - implementing comprehensive human capital solutions which include performance management software within a larger talent management software suite. One such option, being used by numerous organizations around the world, is the easily customizable Insala Solution Suite which allows organizations to provide integrated tools and resources to deliver on human capital strategic objectives. Request a live demo to learn more.

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