Summary Report. Best Practices for Driving Employee Performance. Taleo Business Edition. All rights reserved.

Summary Report Best Practices for Driving Employee Performance Taleo Business Edition. All rights reserved.

TABLE OF CONTENTS I. Introduction... 4 II. Goal Management... 5 III. Performance Reviews... 6 IV. Access and Administration... 7 V. Compensation... 8 VI. Reporting and Analysis... 9 VII. Summary... 10

A manager is swamped with work and has not had time to meet one-to-one with his staff. Since budgets have been cut, he has had to take on more responsibility and ensuring that his staff is aligned with company goals has taken a back seat. He notices that one of his top performers seems disengaged. Annual reviews are another task this manager has to complete in a timely manner. Communications with his top performer have been done via emails or in meetings, with no way to gather those communications into a central repository. To be sure that he is providing adequate feedback to this individual, he has to sift through his emails and piece together a chronological log as a reference. The manager also refers to last year s review template but since it was put together at the last minute, he doesn t feel like it does a good job of keeping his staff aligned with company objectives. He s not even sure if he approved training requested by his top performer which could have kept this individual engaged. If only there were standard policies or processes for annual reviews, maybe the tasks would be easier and more effective. How is he going to keep his top performer engaged? Or from leaving the company?

I. Introduction Most companies today have a process for assessing employee performance. Generally, this is conducted annually as a performance review where a manager writes down areas where the employee performs well and where he or she could improve. The employee looks it over and either discusses it with manager or signs off on it, and that is where the process ends. Performance management not only includes assessing how employees are performing in their jobs, but also aligning individual goals to overall organizational goals, and keeping employees satisfi ed so you can retain them. It ensures that everyone is performing their best so resources can be focused on growing the business. Despite the importance of performance management, sixty-one percent of line managers do not feel that the process they have today is driving greater performance. The biggest complaint from managers is that they are not given enough guidelines on how to assess people and the biggest complaint from employees is that the process is not equitable and fair. 1 Without strategic performance management, employee retention might become a major challenge for some organizations. As the economy improves, turnover will rise as unhappy workers begin to feel confi dent enough to leave. Sixty percent of employees in a Manpower survey said they intend to leave. 2 Technology can help you establish consistent performance management processes based on company goals, competencies, and skills that your organization defi nes. Using those as the foundation, you can then align these with individual employee goals so that managers have guidance for reviews based on company standards and individuals understand how they impact your overall performance. Software as a service (SaaS) enables organizations of all sizes to take advantage of sophisticated features and functions that were once only available to large enterprises. SaaS technology can be the foundation for a number of variations in the structure and operation of an HR department. Much of the costs and resources have been taken out of the equation since there is no longer an investment of infrastructure needed the Internet becomes the infrastructure. Advances in security and availability have set the stage for you to transform the way you manage employee performance. In this paper, we ll look at best practices in performance management and the technology behind these practices. You will see how your business can gain better insight into your workforce and retain top talent based on performance. 1. The Business Case for Performance Management Systems, Bersin & Associates, (January 2008) 2. 10 HR trends, 10 HR goals for 2010, Business Management Daily, ( January 2010) 4

II. Goal Management To ensure that your workforce is performing at the highest levels, you need to make sure that everyone is working on the right goals. However, this is diffi cult to do if your organization has not established clear objectives or if employees don t understand them. One of the most important tasks of executive management is to set the strategic goals for the organization. Goals defi ne the results that your people aim to achieve and form the basis for best practice performance planning, appraisal, and rewards processes. 3 Once the business strategy is set with defi ned goals, executives, managers, and supervisors then set goals that align to the business strategy. Finally, individual goals are defi ned and aligned through the chain of command back to the overall organizational goals. Harvard Business Review cited that 37 percent of employee activity is not aligned with business goals, totaling approximately 15 hours a week out of a 40 hour work week spent working against business goals. 4 Employees need to understand how their job contributes to the success of the team, the department, and the company as a whole. With alignment, you can ensure that your entire workforce is focused and engaged to deliver on your business goals. Traditional goal planning, however, where goals are set once or twice a year often means misalignment and chaos since the goals are not changing with business strategies. Goal management is a constant process of communicating shifting priorities to your workforce. Without a proactive approach, employees may end up disengaged, wasting effort on redundant tasks, or working on projects that are not directly aligned with business objectives. Five Steps to Effective Goal Management 1. Defi ne Business Strategy 2. Establish Quantitative and Qualitative Employee Goals 3. Defi ne Employee Expectations 4. Align Employee Goals to Broader Organizational Objectives 5. Communicate Shifting Priorities Taleo Perform has helped us standardize the format of our goals and has provided visibility for management for alignment to those key goals. John Keathley, Director of Recruiting and Special Projects, Fair Trade USA 3. Alignment Drives Employee Engagement and Productivity, Taleo Research, (2009) 4. Harvard Business Review, (2008) Taleo Business Edition Summary Report Performance Management Best Practices 5

III. Performance Reviews In a paper performance review process, information can often get lost in the email or paper trail. Lack of current information on business goals puts both employee and manager at a disadvantage. When performance reviews are automated and integrated with individual and organizational goals, performance management transforms and everyone benefi ts. What was once a dreaded annual exercise becomes a proactive process that ensures everyone in your organization is on the same page. Employees feel valued, managers get a clear line of sight into business objectives, and executives know exactly how the workforce is performing. Keeping employees engaged can be challenging in the public sector. Taleo Perform gives us structured processes and an effective tool for managing employee performance. Employees love the additional feedback they get on their performance reviews. Peter German, Director of HR, Washington County, WI Provide Continuous Feedback Since your people can be your greatest competitive advantage in driving business objectives, you need to ensure that they are engaged and motivated. Performance management transforms what used to be a once per year conversation into an ongoing dialog between managers and employees. Employees get the feedback they crave, so they know they are making an impact. Any changes to goals or objectives can be communicated as they occur, so your employees stay connected and can keep up-to-date on shifting priorities. Ensure Performance Review Compliance In certain industries, like the public sector or healthcare, documentation is critical for remaining compliant. The ability to quickly access all relevant communications between employees and managers not only proves compliance but also contributes to reduced costs. Automating performance management can also increase review completion rates by up to 70 percent. 5 Reduce Exposure Putting processes and standards in place for performance reviews enables you to ensure fair and equitable performance reviews. It also protects your organization from possible risks of employee litigation. You know that performance reviews are completed within organizational policies, and that all information is secure and confi dential. 5. Recessionary Management Survey, Human Capital Institute, (2009) 6 Taleo Business Edition Summary Report Performance Management Best Practices

IV. Access and Administration A critical key to ensuring that your performance management strategy is effective not only includes automation, but also easy access to information. Employees, managers, HR, and executives need the ability to retrieve information on performance so they know at all times how the workforce is contributing at a division, department or individual level. In addition, administration of performance management processes should be driven by best practice workfl ows that guide everyone through each step. Give Employees Their Own Website An employee portal, or website, provides self-service so employees can review company messaging, submit self-assessments online, and access up to date performance information. Employees can also update career goals and expertise as well as indicate desired advancement and relocation. The portal helps ensure performance expectations are in alignment and information and feedback are accessible to all stakeholders. This makes it easier to you to identify internal candidates for open positions. Gain Easy Access to Employee Records Managers can track and review employee data, create and assign weighted goals, as well as create and manage performance reviews. All activities are in alignment with organizational policy so managers don t have to recreate the wheel whenever they execute performance reviews. Customize Workflows to Your Specific Needs With customization, you can hide fi elds, use a drag-and-drop interface for templates, and control settings to system templates for automated notifi cations. This gives you the benefi t of using best practices while also tailoring performance management to your unique business. 5 Recruiting: Reducing Direct Costs and Reaping Results 6 Social Networking: How It Changed Recruiting and the Next Generation of Online Tools, Taleo Research,Survey Taleo Business Edition Summary Report Performance Management Best Practices 7

V. Compensation It s no secret that top performers directly infl uence the overall performance of your organization. In fact, high performers increase profi ts by up to 49 percent. 6 Once performance data is in place, you can use tools to assign compensation cycles that fi t your budget and meet your guidelines for merit and bonus allocation. Managers can distribute compensation to employees, submit plans for approval, and complete these tasks in a more effi cient and timely manner. This enables you to develop a pay-for-performance strategy to reward employees for meeting key objectives, and reap the benefi ts of reduced turnover, reduced costs, and sustained competitive advantage. Taleo Comp gives us a tool to help managers ensure that compensation funds are allocated to the right people, and helps them make an educated decision about how to retain the best talent. Jennifer Roelke, Director of HR, AC Moore Allocate Cycles to Fit Your Organization Defi ne your organizational guidelines to ensure that compensation is fair and equitable. Create annual, anniversary, market or one-off compensation processes to suit your business cycles and ensure that employee rewards encourage continued performance. Plan Effectively For Increased Efficiency Real-time worksheets enable you to allocate merit, bonus, stock, and other adjustment rewards based on performance metrics and organizational guidelines. Using automatic workfl ows based on your organization hierarchy enables you to easily process any exceptions. Gain Control and Oversight Archiving compensation events for individual employee profi les helps maintain accurate, historical compensation data so you can get insight into your compensation process and immediately make corrections if necessary. Retain Your Best Employees When high-performers are rewarded, they respond to recognition. You ensure that they remain satisfi ed and are properly motivated to continue delivering on your organizational goals, and retain them as valued employees. 6. Talent Retention: Six Technology Enabled Best Practices, Taleo Research, (2009) 8 Taleo Business Edition Summary Report Performance Management Best Practices

VI. Reporting and Analysis A good performance management solution provides the ability to capture and report metrics. You can view key performance and compensation metrics through intuitive graphs, tabular data, and custom reports. Immediate visibility into the historical and real-time performance of your workforce means you can manage your most valuable asset effectively. Essentially you gain intelligence about your talent to optimize your workforce and understand the business impact of your performance processes. This Talent Intelligence enables you to: Drive immediate action by aligning talent management processes with business objectives. Gain visibility into your workforce and put the right people, with the right skills, on projects that drive business objectives. Improve the quality of hire by identifying your top performers, where they came from, and their tenure. Ensure future success by building a strong leadership pipeline. Companies fi nd that talent intelligence equals business results: 7 26% more revenue per employee 41% less turnover in high performing staff 17% less voluntary turnover 7. Talent Management Factbook, Bersin & Associates (2009) Taleo Business Edition Summary Report Performance Management Best Practices 9

VII. Summary As you are tasked to do more with less in your organization, you may not have the human resources staff or budget that larger companies have for performance management. From goal management to performance reviews to compensation management, web-based solutions offer ease of use, increased effi ciency, and dramatically lower costs. Solutions like Taleo Perform and Comp enable HR professionals to automate performance management to increase workforce productivity, drive business results, and create a strategic advantage. 10 Taleo Business Edition Summary Report Performance Management Best Practices

CONTACT taleo.com info@taleo.com 1.888.836.3669 U.S. 1.888.922.5665 International 1.888.561.5665 Customer Service ABOUT TALEO Leading organizations worldwide use Taleo on demand talent management solutions to assess, acquire, develop, and align their workforce for improved business performance. Taleo and all Taleo product and service names mentioned herein are trademarks or registered trademarks of Taleo in the United States, France, The Netherlands, U.K., Canada, Australia, and several other countries. All other product and company names mentioned herein may be the trademarks of their respective owners. Copyright 2011 Taleo Corporation. All rights reserved. No portion of this document may be reproduced in any form without the prior written permission of Taleo Corporation. TBE_0054_1110