HOW A PERFORMANCE MANAGEMENT SYSTEM CAN BUILD YOUR BENCH AND YOUR BOTTOM LINE STARTING RIGHT NOW

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1 HOW A PERFORMANCE MANAGEMENT SYSTEM CAN BUILD YOUR BENCH AND YOUR BOTTOM LINE STARTING RIGHT NOW The Basics, Drivers and Benefits of Investing in Cloud-Based Performance Management Software WHAT IT IS Performance management software combines performance reviews, feedback communication, career development/pathing, succession planning, and employee recognition into one system. By automating these typically manual, paper-based processes, cloud-based performance software increases operational efficiency, employee engagement, visibility, and revenues, while decreasing time-to-fill and employee turnover. Best-in-class performance management systems seek to support and improve team member performance, not just assess it. Unfortunately, too many solutions on the market today focus on reviewing past performance, rather than developing employees strengths and potential. Deloitte recognized that for many businesses, current processes for evaluating the work of their people -- and then training them, promoting them, and paying them accordingly -- are increasingly out of step with company objectives. In fact, Deloitte found that 81 percent of employers thought connecting performance goals to organizational outcomes was extremely important, yet only half considered themselves successful at it. Once-a-year review schedules, cascading goals, and one-size-fits-all evaluation forms don t make a lot of sense for organizations that have higher turnover, hourly and managerial employees, and decentralized operations/management. 81% of employers believe connecting performance goals to organizational outcomes is extremely important, yet only half consider themselves successful at it Deloitte Service-industry employers are in need of performance management software that is nimbler, real-time and more individualized tools that are squarely focused on fueling performance in the future, rather than assessing it in the past. Best-in-class systems are built on three core beliefs: 1) Employees deserve meaningful feedback about how they re doing in their jobs; 2) Managers need actionable performance data to make decisions about their team; 3) Organizations should have solutions that are easy-to-use and effective. 1 How a Performance Management System Can Build Your Bench and Your Bottom Line Starting Right Now

2 WHY NOW Economic and industry growth is creating a perfect storm in the service industry. Several key trends are making recruiting, developing and retaining great employees more difficult than ever for service-industry employers. To keep team members engaged and the competitive edge for both customers and talent, businesses must adopt performance management software that can help them address, and even capitalize on, four major concerns: Gen Y Workforce/Managers Career management is considered a top priority by Millennials; they want and expect career development and progression, and they ll leave if they don t get it. Individual career development is a Top Five driver of employee retention and engagement even more important than high pay and profit-sharing and with more Millennials entering management positions, your business needs a plan for career planning in order to keep them there. Millennials represent nearly 1/3 of leaders in organizations today - expected to rise as Baby Boomers leave the workforce Bersin by Deloitte Competition for talent (recruitment and retention) More job openings and flexibility means applicants have more opportunities and you have more competition and higher turnover. In order to attract and retain the best workers, serviceindustry brands need to show candidates they offer career advancement and a clearly defined path to getting there. Developing existing team members is better for both your bottom line and your customer satisfaction than constantly bringing in new candidates. Companies with poor employeerecognition programs report 46% higher voluntary turnover Bersin by Deloitte Building leadership bench Deloitte found that career pathing is quickly becoming the mostrequested feature of talent management systems. Companies with career management programs are better able to attract and retain top talent, leading to higher employee engagement and, in turn, a positive impact on the bottom line yet only one in five employers believes employee-development plans deliver high, strategic value to the business. Without clearly defined, consistently executed career plans in place, employers can t expect to see the high returns on engagement, retention, customer service and revenue that they can deliver. 84% of employers don t think building a bench of future leaders/management is easy PMI Impact on the bottom line Effective performance management has a proven and significant impact on key business-success metrics and your bottom line. By strengthening employees skills; improving workplace efficiency and communication; and increasing retention, productivity, and customer satisfaction, performance management software gives your service-industry business a competitive edge, in an increasingly competitive market. Bersin found that organizations with the most mature performance management processes are 20x more likely to report strong employee results and 10x more likely to report better business results. Businesses where employees strongly agree they are able to do what they do best every day report: 44% higher customer satisfaction 50% lower turnover 38% higher productivity Harvard Business Review 2 How a Performance Management System Can Build Your Bench and Your Bottom Line Starting Right Now

3 WHAT TO LOOK FOR A recent Bersin by Deloitte study found that 67 percent of employers that are in market for talent technologies plan to purchase performance management software in the next 6-12 months, either for the first time or as a replacement for existing solutions. If you re currently using a solution that was implemented years ago or haven t evaluated performance management software in the last 18 months, the landscape has changed dramatically in terms of the industry, technology, and typical workforce demographics and values. When evaluating a performance management solution for your serviceindustry business, consider the eight key areas below, in order to maximize your return on investment. Mobile In order to be effective, performance management solutions today must be agile, easy, and mobile. Like the consumer technology tools they use everyday, performance management tools should be designed to be simple, quick and engaging to use. Solutions that don t offer extensive mobile capabilities like mobile review-form completion and approvals, communication channels, and a free mobile app for managers/admins will negatively impact your operational efficiency, employee productivity and overall retention. Continual/Real-time feedback Once-a-year goals and performance feedback are too batched for a real-time world, and conversations about year-end ratings aren t as valuable as in-the-moment feedback about actual performance. Deloitte found a direct and measurable correlation between the frequency of performance conversations and the engagement of team members, yet only a quarter of service-industry employers actually provide daily or immediate performance feedback and nearly as many don t evaluate hourly performance at all or do it inconsistently. Invest in a system that allows for easy, real-time performance conversations directly with team members. Customization and configurability Your business is unique. Your goals, performance criteria, rating scales, etc. are, too. What s important in one role or at one location isn t necessarily as high of a priority as in another. Look for performance management software that gives you extensive flexibility in configuring the system to your unique needs and processes including custom rating scales, competency weights, unlimited custom review forms, and custom approval workflows you can configure by role. Also consider software that allows you to make most changes on your own, without needing to contact Support or wait for the vendor to update them for you. 3 How a Performance Management System Can Build Your Bench and Your Bottom Line Starting Right Now

4 Built for managerial and hourly employees Select a software system that was specifically designed to handle both managerial/salaried and hourly employee performance management, since your hourly and managerial employees performance is based on completely different criteria. Hourly employees typically haven t been served by performance management software, yet these are the employees on the frontlines with your customers. Look for a system that s focused on improving performance for your frontline employees, in order to have the biggest impact and most immediate impact on customer satisfaction. Development and planning tools The real goal of performance management software shouldn t be to review past performance but to improve future performance. Invest in systems that focus more on employee development vs. appraisal; strengths vs. remediation; and data-driven outcomes vs. assumptions. In addition to robust performance review functionality, find a system that excels in ongoing performance activities, such as goal setting and revising; managing and coaching; personalized development planning; career pathing; succession planning; and rewarding and recognizing great performance. Ease of use Ease of use is crucial to an engaging user experience and companywide adoption. Especially in the service industry where turnover is high and workforces are typically younger and more diverse technology has to be easy, intuitive and engaging; users have to be able to pick it up quickly and actually want to use it, otherwise your investment, including all of the time you spent implementing and training on it, will go to waste. Look for systems your entire team will find easy to use, and be sure to talk to references about their teams experiences actually using the system day-in and day-out. Customer Support Service-industry businesses understand better than anyone the importance of great customer service. When evaluating performance management systems, the support your team will receive both in initial implementation and ongoing service is just as important as the product s functionality. Ensure the vendor will support employees, frontline managers, and corporate/admin users; has a reputation for fast, friendly service; offers multiple channels for communication and customer feedback; and provides a clear plan for implementation, change management and ongoing manager training. 4 How a Performance Management System Can Build Your Bench and Your Bottom Line Starting Right Now

5 Fully integrated Performance management is the No. 1 software application targeted for investment over the next year. More than two-thirds of technology buyers plan to purchase a performance management system during this time, with 75 percent of them wanting to replace their existing standalone solution with an integrated performance management suite. An all-in-one system is crucial for increasing overall performance-management efficiency, effectiveness and user experience. By integrating separate functions into one, fully connected system, an all-in-one performance management software suite provides a simple, seamless experience while increasing data consistency, accuracy and compliance. 5 How a Performance Management System Can Build Your Bench and Your Bottom Line Starting Right Now

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