The Cure for Pain. Taking the first step toward automated people processes opens up a world of opportunity WHITE PAPER

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1 The Cure for Pain Taking the first step toward automated people processes opens up a world of opportunity WHITE PAPER

2 The Cure for Pain: Taking the First Step Toward Automated People Processes Opens Up a World of Opportunity For growing companies, paper-based people processes can cause a lot of pain for business owners, HR people, line managers and even the employees themselves. All too often, the annual review process is merely a bureaucratic paper-shuffling exercise that does nothing to improve business or employee performance. Conversations between managers and employees that could improve productivity rarely happen. Maybe your performance and talent management process is causing you a headache and holding your company back from future growth. Perhaps you are taking the first steps in creating this process and want to make sure you get it right from the start. More than half of small businesses report that they will enter new markets and launch new products and services in the year ahead. Small businesses are on the move. To be successful, their talent management processes must be able to keep up with the pace. Getting started with talent management for small businesses is a three-step process that starts with GET INSIGHT into your talent and business with Success Practices AUTOMATE your processes with Professional Edition TRANSFORM your business with strategic talent management with Enterprise Edition automation and moves on to insight and ultimately transformation. Automating the entire employee lifecycle recruiting, performance and compensation can remove the inefficiencies in the process and allow your people to focus on what matters: improving performance for your company and people. Business and HR leaders will know that the company s goals are aligned with individual performance. Line managers will be able to create performance reviews filled with details and relevant feedback quickly and easily. Managers can then focus on having meaningful development conversations. Employees will know exactly what is expected of them and focus on work that drives the business forward. Your people processes shouldn t be causing you pain. Automation is a cure for your pains, but it also opens the door to a world of opportunity for small businesses. You can tear down the walls that silo other people processes, like performance, compensation and recruiting, and centralize feedback in a place where employees can refer back to it at any point in time. You can also gain the kind of insight that allows you to transform your business and move it along the path to maturity. Automation is a great start and only the beginning of the benefits. 2

3 the price of time lost Consider how much time it costs one manager to keep up with performance reviews. Let s look at Jonathan, the director of field operations at ABC Widget Company. He has eight employees, and he actually works hard to give his people meaningful feedback on his paper review forms. What s the cost of this effort? Jonathan s salary: $60,000/year, or $28.85 an hour (assuming a 40-hour week) Time Jonathan puts into developing each review: Three hours x eight employees = 24 hours a year Cost of Jonathan s time: 24 hours x $28.85/hour = $ What if Jonathan could develop better reviews in one hour instead of three? That alone would save the company $461.60, and it doesn t include the time savings of faster reviews and approvals. The Price of Paper: How Bad Could It Be? As companies grow, they take gradual steps in their people processes. Performance management allows a company to prepare for the future, engage and develop its employees and centralize performance data. The first step is simply to have a performance review of any kind. In a small company, managers can know all of their employees pretty well. Conversations about development and productivity happen on the job, in the workplace. Not a lot of process is required. As companies get bigger, informal processes no longer work as well. Managers and employees begin to say that they aren t getting any feedback. So what happens is a formal appraisal process is created. It s usually paper-based. A manager completes an evaluation form. An employee completes a self-appraisal form. They get together for an hour and talk. The manager and employee may agree on some action items. Some sort of a raise may be awarded. Then everyone goes back to business as usual, and, for 11 ½ months, no one really thinks about what happened. In most companies, what began with the best of intentions soon becomes a pointless exercise for everyone. What are the disadvantages and the downside risks of a paper-based process? It wastes time. Few things in the world are more intimidating than a blank sheet of paper. If a manager is really putting effort into giving an employee meaningful feedback in a paper-based process, it can mean hours of work. Automation can help a manager provide better performance feedback with 62 percent less cycle time. 1 It wastes money. Moving performance reviews around your company to get all of the required approvals and reviews is inefficient and costly. Companies that replace manual processes with performance management automation achieve a cost savings of 20 percent. 2 It s a huge legal risk. HR people may know what you can (and can t) discuss in a review, but many line managers may not. By the time someone who knows better can review an appraisal, the damage may already be done. It gets lost. How many times has an employee s performance review gotten lost in interoffice mail or simply been misplaced? It s the law of averages. As a company grows, paper processes start to break down under the increasing volume. It does nothing to improve performance. The big knock on a paper-based performance review is that it is built more on a manager s opinion than on hard data or achieving outcomes that benefit the business. Research from CedarCrestone backs up this perspective. Organizations with more automated people processes achieve up to four times higher net income growth, sales growth and sales per employee than organizations with few (if any) automated processes, researchers found. The growth of small businesses can be seriously impeded by the inefficiencies of paper. In today s business environment, companies are under lots of pressure to increase productivity and reduce costs while continuing to provide superior service. The simple waste of time and money is a cost that can t be ignored. Fortunately, there is a better way. 1 CedarCrestone HR Systems research 2 Ibid. 3

4 Automation: The Cure for Pain Automating your performance management process is a lot easier than you would think. A cloudbased solution is an affordable, easy-to-implement and scalable approach. All your people need is an Internet connection and a browser. It s that simple. Across the board, automation eliminates the price you pay for paper processes and helps you: Save time and money. Automation makes it easier for managers to provide professional, meaningful feedback. A manager can easily rate goal achievement and assess performance against job-specific competencies and core company values. Built-in writing and coaching assistants help managers spend less time writing reviews and more time doing work that delivers value back to the business. Reduce risk and improve consistency. Every small business has compliance fears about performance reviews. Automation minimizes legal exposure with a built-in legal scan function that searches out language that could pose a problem. Review templates also make it easier to standardize performance criteria and feedback. Increase efficiency. There are no paper forms to lose. You can route and track review forms automatically. Employees can have instant online access, which makes it easier to refer to feedback and improve performance. It s also easier to automate routing, writing and sign-off from department heads and HR. Improve review quality. The goal of a performance appraisal is to guide the manager and the employee in a productive conversation. With automation, coaching tools help managers conduct meaningful and effective appraisals. Your managers will be better equipped to engage their people and to offer clear development plans. Line managers will find it easier to deliver great feedback, which is key in small organizations where junior managers need to develop their coaching skills. Expand the scope of feedback. With 360 reviews, the review circle is more than just the manager and the employee. It can also add perspectives from co-workers and customers to capture every point of view. Your people can benefit from cross-functional feedback that makes it easier to improve career development. Look not just at individuals but also at teams. No employee is an island. Everyone has a place on a team, and teammates need to be able to pull together in the same direction. Performance management automation makes it easier to rank team performance and quickly evaluate individual and team performance against goals, core values and job-specific competencies. Focus on strategic goals. When automating talent processes, small businesses should always consider the business goals they want to achieve and how the business will get there. Automation on its own does not provide great value. Connecting individual performance to achieving business goals is the ultimate business benefit. According to human capital analysts at Bersin & Associates, the process improvement aspects of performance management automation can be enough to cost-justify a system, 3 but the benefits go far beyond efficiency. Motivating employees with clear feedback can increase productivity. Aligning company goals with individual performance also allows a business to lay the groundwork for both growth and bottom-line performance. The best part for businesses is that these are results you can measure, especially if you use these tools to incorporate best practices for HR, managers and employees. However, it is important to remember that not all performance management automation solutions are the same. Automation is more than just recording performance data. The right tools turn the performance management initiative into a proactive developmental process. 4

5 Insight: Why Does It Matter? The old business adage says that you can t manage what you can t measure. Employee information trapped on a paper form in a file cabinet is almost always unmanageable and unmeasurable. It s data that can t be analyzed or understood for the benefit of the business. With the right insight you can drive your teams to execute faster on what matters. Automation makes what might have been impossible before become not only possible but also fast, easy and actionable. As the first step, automation provides the infrastructure that allows you to move on to insight and transformation. What do you want your business to accomplish? You can establish goals to get you there. How do you get there? You can connect these goals to employee actions. All of this data is standardized and stored in one central location so you can measure your progress toward these goals with dashboards and reports that deliver data in real time. With this insight, you are better able to influence results. How valuable is this insight? With the right data and reporting capabilities, you can: Make existing resources go farther. With performance data in hand, you can see which activities are productive and adding value and which ones are just distractions. It s easier to focus on what matters and avoid misallocation of resources. Adapt successfully to changing priorities. The only certainty in today s business climate is uncertainty. Businesses need the flexibility to make changes. Automation makes it easier to modify goals during the year and share new directions with everyone on your team. Your business can proactively adapt as strategy changes and allocate resources effectively because you can see several steps ahead. Identify talent gaps. Do you have the right people on your team? Do your people have the right skills for today? Are you developing the leaders you need for tomorrow? Looking at performance data can allow you to identify gaps and serve as the foundation for employee development. This leads to higher-performing employees and improves your company s performance. Pay for performance. Your business must be able to measure execution that goes beyond completion of goals. Your business needs to understand which people and functions are building value so it can invest where it is getting results. This investment could be in salaries, incentive compensation or equity. Increase accountability. Assigning individuals clear and measurable goals that are visible to others sends a strong message to everyone in the organization: Performance matters. Encourage cooperation. Teamwork matters. With access to the right data, employees at all levels can work together more closely and focus their efforts on shared goals. With insight into these areas, you are better able to increase the productivity of your people while reducing costs. Now you are now in a position to take the next step transforming your talent to deliver more value and having an impact on your revenue and business growth which will allow you to move ahead of your competition. 3 Bersin, Josh. The Business Case for Performance Management: A Handbook for HR Executives and Managers. Bersin & Associates To purchase the report, visit 5

6 Transformation: How Talent Management Builds Business Success An integrated approach to talent management can break down the silos that exist in your organization and empower HR, executives, line managers and employees to take talent processes to the next level. Transforming talent processes enables HR to become a revenue engine and gain a seat at the table for strategic business discussions. A unified approach to all of your people processes across the board from the first day of hire onward unlocks potential that is simply not possible with a paper process. The key is taking your company s people processes out of the hands of HR and putting them into the hands of executives, line managers and employees. They define what is done; HR defines how to get there. The HR department, in fact, is the glue that holds the entire process together. Let s look at how transformation might help the ABC Widget Company in the coming year: What are ABC s key business initiatives? To increase revenue by 30 percent. How is ABC going to get there? To meet this revenue goal, ABC will open two new offices and introduce a new product the Super Widget ABC needs to make sure they have the right talent in place to run the new locations, keep the sales and engineering on track and tightly collaborate to introduce and sell the new product quickly. What are the people issues that need to be addressed? ABC needs to know that it has enough people to staff new locations and to roll out the new product. It also needs to increase collaboration to decrease sales cycles and product development time. Above all, the company should track the execution of those goals at all levels to help staff adjust priorities and accelerate success. How does talent management help ABC reach its goals? Goal management: Strategy can be broken down to goals that are cascaded at all levels in the company. Executives can easily track and drive progress while employees understand how they contribute to the general performance of the company. Employee profiles: To staff new locations and keep new products on track, ABC can search employee talent profiles to find key skills and capabilities for these initiatives among existing employees. As a result, it can make sure the company has the best talent assigned to key projects, as well as hold down recruiting costs. Performance management: Do employees have the right job-specific competencies to complete projects? Managers and employees can have fruitful discussions on how to develop those key competencies. Recruiting management: Some positions at the new locations will need to be filled by hiring. Automation cuts through the multitude of unqualified candidates to hire the best ones quickly. ABC reduces the time and cost of hiring, keeps stakeholders involved and fills positions based on the talent profiles of its current top performers. Optimizing interdepartmental collaboration during the recruiting process also increases the quality of hires. Compensation management: To keep employees striving to reach goals, ABC has built a compensation model based on performance. Not only will ABC see performance improve 15 to 20 percent as a result, it will avoid overpaying employees who are underperforming. Collaboration software: Social collaboration software allows employees to reach out to subject matter experts and reduce product development time. Also, employees at new locations can get support from people in other offices to get things running smoothly in less time. As a result, ABC can allocate its best resources toward key projects. 6

7 Conclusion Automation allows a business to take great strides that aren t possible otherwise. But throwing away the paper is only the first step toward the kind of transformation that will help your business take a quantum leap. Performance management is the essential starting point of an integrated approach to talent management that allows you to unify your employee data to create a holistic picture of your people and your organization. In the world of integrated talent management, no one does it better than SuccessFactors. With performance management technology that s rated as industry-leading by Gartner4 and cloud-based solutions that are built on an integrated platform, we re your ideal partner in the journey toward maturity, transformation and success. Let s get started today. Make your move. Make a difference. 7

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