Improving an organization's performance rests on its business processes. But what drives these business processes? People and their interactions with customers, suppliers, and fellow employees are the engine of every company. Future investments and systems should focus on enabling these constituents to act in alignment with an organization's strategic goals. How best to improve the workforce's contribution to the business is the place to start.
Why hasn't more attention been paid to this area? A high-level directive to reduce overall corporate costs, with management focusing specifically on reducing the number and cost of employees, has kept most organizations from leveraging human capital for improved performance. In addition, ERP systems, including the automation of human resources (HR) activities, have promoted automation and efficiency improvements over strategically investing in the systematic improvement of employees' performance.
Most organizations and management focus on automating business activities for the employee — "Doing more with fewer people." But gaining more efficiency with existing business processes becomes a self-diminishing mission. Employees who only have so many hours in a day to complete assigned work need more than efficiency improvements; they also need ways to improve the effectiveness of existing tasks and procedures.
Just as organizations look at metrics such as revenue per employee, the majority of workforce analysis focuses on the costs per employee and where additional direct cuts can quickly bring financial savings. But you must balance this approach with how your employees are contributing to the growth and maintenance of your company by also looking at metrics such as revenue, customer satisfaction, profitability, and so on. Obtaining a 360-degree view of your employees will help you leverage their competencies to determine a performance improvement agenda.
The Workforce Performance Imperative
The initial wave of performance management involved the business and operational processes of finance, operations, and IT, but you can also apply the same principles to your organization's workforce with impressive results. Looking at ways to improve employees' contributions based on their specific roles and responsibilities is the starting point. Organizations haven't done a stellar job in linking employees' qualitative goals with their quantitative results — even using separate systems to measure performance. This situation is the driving force behind workforce performance management.
Improving performance requires streamlining the people and operational activities of specific business processes. This may sound simple but, even after decades of technology innovation, many departmental and functional tasks are only now getting to the point where they can be automated. Furthermore, disparate systems measure the results of the business and contributions made by people. Even worse, the ability to both qualify and quantify individual performance isn't consolidated into a single employee view.
The first step in taking on a workforce performance improvement initiative is to reach internal agreement on what you're trying to accomplish and the measurable benefits you expect to see as a result. In my opinion, workforce performance management is the practice of managing the effectiveness and value of employees to the organization.
The confusion between when to improve efficiency through automation and when to improve the effectiveness of the existing workforce has many organizations questioning their next steps. The constant demand to invest in ERP systems — including HR, employee self-service applications, and other related applications — has made many organizations lose sight of the ultimate goal: aligning employees' actions with the company's. Automation alone won't help you understand employee results, optimize future employee behavior, and align employee actions with company direction through goals and rewards.
But inconsistent information is a major roadblock to assessing existing processes for measuring employee performance, managing compensation, and linking incentive systems to the management of those goals/objectives that improve the results of business processes. This information is derived from data that's extracted out of enterprise, departmentally, and individually managed systems. The lack of a consistent, single-source, 360-degree view of the employee has left organizations with no methodical way to assess performance and contribution to an organization.
Systems are the Missing Link
Data spread across multiple systems is no longer an option for large organizations that take their employees' contributions to business performance seriously. These organizations are now looking to a system that leverages an information management platform that integrates data from multiple systems. This platform can then use a variety of tools and applications to manage the workforce and ensure the performance and process improvement needed to achieve the business goals and targets. This approach is one of the key tenets of a workforce performance management system.
The systems in many organizations are fragmented and in a continuous process of improvement. As a result, the first step is to organize your employee data points into a common foundation that is centered in performance assessment and improvement. You can then use these data sources as an information resource to acquire and deploy systems for workforce performance management.
The applications in this area span the entire employee life cycle from recruitment to retirement, with the critical components including hiring, defining roles and requirements, and managing employee assets and performance targets. These applications can take many different forms and can span across different functions: goals management, compensation and incentive management, training and learning management, and employee asset management, to name a few. The underlying driver is that these applications are based on leveraging employee information to drive improved workforce performance.
The market for these systems has changed significantly in the last six months as vendors pursue mergers and acquisitions to gain key workforce performance management processes. Workscape acquired PerformaWorks (a goals management provider), Siebel acquired Motiva (a compensation management provider), and Workstream acquired Kadiri (a compensation and goals management provider), while Synygy continues to build out its suite of applications. But these rapid changes have also hindered efforts to understand the implications in working with a particular provider in this market. Keep in mind that both large and small vendors still have their risks: Smaller players must be consolidated to form a complete package and larger players have yet to invest significantly into the workforce performance improvements needed by many organizations.
Don't Be Left Behind
What you need to do in your organization is to get a business initiative for workforce performance management approved by your management through a clearly defined strategy and a business case that can demonstrate its value. The roadmap that you build shouldn't be based on a relationship with an existing systems supplier or previous consulting implementation skill set, but on achieving the value of improving workforce results.
More automation isn't the point of this process, but rather improving the methods you use to manage the people assets of your organization and help align their efforts. A solid information platform can help you assess your performance. Before you commit millions to upgrading your ERP, CRM, or HR automation systems, determine whether you've addressed improving workforce effectiveness. If not, your competitor just may be, and your best employees may just leave and find a new home for their careers.
Mark Smith is the CEO and senior vice president of research at Ventana Research, an advisory services and research firm providing insight and education on best practices and technology in performance management.