November 6, 2000

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Appraisal Software Ends HR Paper Chase

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By Judith N. Mottl

More on online collaboration:

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In choosing the right solution, Gartner's Lehman says, companies must determine goals, product features, and expected results. "Companies have to be careful because there's a real difference between having a robust app to help you manage and improve your performance reviews, and a Web-based process that just automates the process," she says.

Steve Ostiguy, manager of organizational performance at Textron Financial Corp., a subsidiary of Textron Inc., has experience with both types of products. Ostiguy helped his former employer implement a PC-based appraisal app several years ago. When he joined the $7 billion commercial finance company last year, Ostiguy saw an opportunity to reap even better benefits with newer technology.

In September, the Providence, R.I., company began testing SuccessFactors.com's PerformanceManager, a Web-enabled version of the Austin-Hayne product that Ostiguy had previously used. Textron plans to continue the pilot program at several large business locations until year's end and make it available businesswide in early 2001. Austin-Hayne and SuccessFactors.com merged last February.

"We want to manage performance appraisal and feedback and align employee goals with objectives," Ostiguy says. The biggest plus of the system, he says, is that instead of just an annual review, employees and managers can discuss goals and career planning throughout the year.

Ostiguy has no doubts the app will boost the company's current 75% form-completion rate. Even with the PC version, his former employer saw compliance jump from 65% to 98% within a very short time, he says.

But that's only one part of ROI. Tying objectives and goals to the appraisal process--and changing those goals as needed--is what prompted The Woolf Group to implement PerformaWorks' eWorkbench product this May. Eight executives are using the app, and the company expects to have more than 100 in-house and contract employees on the system by early 2001.

Fast growth demands flexibility, says Pat Walls, director of HR and administration for the Durham, N.C., pharmaceutical staffing and services company. "Our paper system didn't accommodate the changes a growing business experiences," she says. EWorkbench lets HR change an employee's goals and objectives as corporate goals and objectives change, she says.

Users and analysts also believe Web-enabled EPM solutions will boost recruitment efforts. Employees want to work for companies that embrace new technologies, says Marcie Newman, former VP of HR for Web-design company Xpedior Inc.'s Midwest region in Chicago. "Employees in our industry like to feel that their employer is willing to use technology," says Newman, who retired in September.

Other HR specialists say enhanced performance appraisals go a long way in retaining workers, too. "One of the ways you retain people is to keep them on the same page as the company so they understand at all times what's expected. Employees also appreciate being fairly measured on performance," Walls explains.

That's why Xpedior's Midwest region plans to launch an appraisal-performance system in the near future. It reviewed KnowledgePoint's Performance Impact this summer. The system offers 360-degree feedback, as well as a year-round performance review system. Since its 500 employees all participate in quarterly personnel evaluations, the company was swimming in paperwork and losing precious staff time in the tracking process. In addition, the company's business had changed over the past few years, Newman says.

Initially, Xpedior handled large client-server relational database projects that took from six months to two years to implement, so employees worked for a specific manager during that time. Today, the projects are shorter and employees change managers more frequently. While reviews are still quarterly, there's likely to be more than one manager involved.

Xpedior also instituted a career advocate program--where senior executives and managers serve as career counselors to junior staffers--which added a layer to the performance review. The career advocate conducts an annual review with an employee, while project managers continue handling the quarterly review duties.

"The online system cuts down possible paperwork and lets managers share information in a very efficient way," Newman says. Xpedior has KnowledgePoint's software at several regional offices. The Web version would allow for a quick rollout to the Midwest region's 300 employees, she says.

Avoiding possible IT implementation headaches is also leading many users to an ASP model. However, "there are a lot of companies still squeamish about the thought of [using an] ASP for HR information, or Web-hosted scenarios for HR information, believing security is an issue," says Gartner's Lehman.

"They fail to realize that after every payroll they're creating huge, confidential data files, which they then send off-site as part of the payroll process," Lehman says. Appraisal data, she notes, is no more sensitive than payroll. For $4.7 billion Corning Inc., security wasn't as big a hurdle as determining when to rollout, says Hank Jonas, manager of compensation and organizational performance (see story, p. 224).

"The use of technology is no longer an option but an absolute necessity," says Textron's Ostiguy. "We have to incorporate tools like this to remain efficient and sustain our competitive advantage."

Equiva's King emphasizes that an online process doesn't de-humanize it, but actually facilitates stronger communication between management and staff, igniting more involvement in the process from both sides. "We want a combination of high technology and high touch in our performance process," King says. "Having an online system doesn't take away the need for the personal conversation and dialogue, it just lets everyone use the process much more constructively."

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Illustration by Bob Daly
Photo of Ostiguy by Jesse Nemerofsky

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