A technological revolution is happening in the business world. Skill sets in every department are now supported by tall tech stacks, with more tools coming out almost weekly. In the same way that sales software and marketing automation have revolutionized B2B growth, employee performance management is evolving to meet the needs of modern HR departments.
In recent years, the philosophy behind performance management has shifted to focus on employee engagement, collaboration, and innovation in favor of outdated concepts like command & control management.
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For example, this past year, more companies have abandoned the annual review or augmented it with software that collects regular employee feedback. Even financial powerhouses Morgan Stanley and Goldman Sachs stated they would no longer use stack ranking to evaluate their collective 95,000 employees.
As management philosophies continue to evolve, serious changes in performance management software are on the horizon. Here are three ways technology will help you to simplify and optimize employee performance for your team in the coming year:
1. Putting the People Back in People Analytics
It seems like this one jumped from a management strategy to a buzzword overnight. People Analytics is even a class taught at Wharton. Applying a data-driven approach to people management has proven quite useful for managers in a variety of businesses. The strongest predictor of someone’s future performance after all, is their past behavior.
Managers and executives will use technology that can explain everything from how employees feel to what percentage of their weekly or quarterly objectives were completed on time. Managers can focus their efforts in response to aggregated data for small teams, or even thousands of employees company-wide.
But employee data is only half of the puzzle. The other half is following up with questions to provide context. Detailed employee feedback is a missing piece for many people analytics platforms. By combining high-level data with more detailed insights, managers can tap into the human element of performance. Without context, numbers are less meaningful, and managers are often powerless to make improvements.
2. The Return of the Quarterly Objective
“Management by objectives” is nothing new. In the 1970s, Intel’s Andy Grove developed a management process called Objectives and Key Results (OKRs), which was later popularized by Google. Today, managing thousands of objectives among a sea of employees becomes an arduous task without software.
OKR software is nothing new either. Several companies offer enterprise solutions that are quite complex, often involving long rollout times. What we’ll see in the coming year is the optimization of lightweight alternatives for SMBs and mid-market companies who can roll-out a solution quickly and begin to see the positive results afforded by OKRs.
This disruption is indicative of a larger shift in HR software. Tarun Kalra, Principal at Next World Capital commented in a TechCrunch article this past August, “With the transition to a talent-centric economy, the market now has moved beyond a focus on administration and process. It desires a new breed of HR SaaS (software-as-a-service), one which aligns business goals with talent versus aligning business goals with process.”
OKRs are becoming integrated into a holistic management philosophy, with other complementary practices like soliciting regular employee feedback. Taken together, this helps managers delve into the drivers of employee performance. Was productivity low for a certain time period? Why? Asking questions can provide valuable information to replicate what’s working and to learn from failures.
3. CHROs Are Shifting Gears
Chief Human Resource Officers have come under fire. There has been a recent shift in thinking away from seeing people as resources and toward direct relationships with valuable employees. 2017 will see more HR departments shifting into People & Culture roles, and this isn’t just a surface change.
In his analysis of trends reinventing the HR software market, Josh Bersin describes this shift as an evolution from talent management to people management. In his predictions for Top HR Technology Disruptions in 2017, Bersin discusses how emerging tech follows evolving management and HR philosophies.
For example, in the 80s and 90s, HR Tech was very process-oriented to streamline performance evaluations and create standards for compensation and rewards. But as technology and automation are becoming more prolific and American manufacturing has receded, businesses are no longer purely focused on “man-hours.” In the knowledge-worker economy, the true distinguishing factor is innovation.
By the new millennium, talent management systems emerged that were hosted off premises. Today the market for these cloud-based talent management systems has exploded, and for good reason. The philosophy has shifted from measuring performance in blue-collar jobs to influencing performance by focusing on employee engagement and innovation.
The Irreplaceable Human Relationship
In the coming year, we will see software emerging that helps teams collaborate more efficiently. This is especially useful for those who work remotely. We will also see innovation in employee/manager communication that allows people to quickly align around objectives and receive mentorship that helps them achieve their goals.
At the end of the day, no technology solution can replace the human relationships that form your company culture and the healthy rapport between managers and employees. But technology can help you maintain visibility into the lives of employees and provide them with the guidance they seek.
As performance management continues to be redefined philosophically and strategically, one thing remains clear: a streamlined feedback channel between managers and employees is the mechanism that will drive this next phase in the evolution of employee performance management.
David Hassell is a serial entrepreneur and the CEO of 15Five, performance management software that allows businesses to maximize their talent by creating a culture of feedback. Through a lightweight weekly check-in, 15Five delivers a full suite of integrated tools including continuous employee feedback, objective tracking, pulse surveys, and peer recognition.
Top Human Resources Software Recommendations
Rippling is the first way for businesses to manage all of their HR, IT, and Finance — payroll, benefits, computers, apps, corporate cards, expenses, and more — in one unified workforce platform. By connecting every business system to one source of truth for employee data, businesses can automate all of the manual work they normally need to do to make employee changes.
Paycor’s HR software modernizes every aspect of people management, which saves leaders time and gives them the powerful analytics they need to build winning teams. Paycor provides a full suite of HCM solutions with a single source of truth for employee data, so users never have to switch platforms, log-in to multiple systems, re-key data or open multiple spreadsheets. Everyday processes become simplified, allowing organizations to focus on their most important work.
GoCo is modern HR, benefits, and payroll, built for flexibility and ease-of-use in mind. Manage records, performance, time off, onboarding, benefits, and more all in one place. GoCo is a secure, compliant hub for sending, digitally signing, and organizing your sensitive HR documents and data. Unlike other HRIS platforms, GoCo is built to be flexible enough to support existing processes, policies, and providers, so you don't have to change the way you work just to adopt a modern HR system.
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