For many employers and employees, the annual performance review is one of the most dreaded days of the year. All too often, managers aren’t even sure how to assess employees when they are confronted with a blank performance evaluation form. Even employees who believe they are performing well will walk fearfully into the annual review because they aren’t sure on what basis they are being assessed. Everyone involved in the performance management process has wondered the same thing at least once: Why bother?
For companies in the mid-market segment, businesses with roughly 250 to 3,000 employees, performance management may seem like an unnecessary annual bureaucratic exercise.However, nothing could be further from the truth. According to Josh Bersin, a leading analyst in the human capital industry, the business impact of a consistent, companywide performance management process is significant. “Organizations with such processes have experienced less downsizing, have lower turnover among high performers, and have nearly twice the revenue per employee as organizations with no formal or consistent performance management practices.”
The impact of a solid performance management strategy is highlighted when we look back to the recent economic downturn. Many businesses were forced to make abrupt changes in strategy and found it difficult to align employee performance with corporate goals. Organizations that conducted layoffs let valuable employees go because of a lack of visibility into which employees were high or low performers. Performance management technology could have helped these organizations respond faster to economic changes and make better decisions.
While many enterprise-class organizations have already moved to adopt technology to support the performance management process, the mid-market sector is less likely to have done the same. However, these companies should consider how performance management technology can significantly enhance their performance processes through:
- Improving efficiency and compliance: Automation helps managers to provide constructive feedback to employees on a more frequent basis, in less time. Manual processes are error-prone, and errors could lead to serious compliance issues.
- Making performance reviews relevant: Technology can transform performance management from a once-a-year event into an ongoing process that also includes development plans and learning opportunities.
- Maximizing productivity and paying for performance: Top-performing employees are valuable assets. Technology solutions can encourage better performance, focus individual efforts on key business strategies, and make it easier to recognize and reward your best employees.
If you would like to learn why creating a performance-oriented culture that is supported by technology is crucial for business growth, download our whitepaper: Performance Management Solutions for the Mid-Market Organization: Why Bother?