Lots of companies claim that “people”—by which they mean experienced and motivated employees—are their No. 1 asset. But are they sure they’re actually recruiting and promoting the cream of the crop?
Sure, companies have long conducted annual reviews to assess the quality of their workforce and have strategies for luring and evaluating prospective hires. But these processes often are handled manually, with paper forms or Word documents. That approach can lead to inconsistent and incomplete data.
Take PolyOne, a plastics manufacturer that is the product of a 2000 merger of two companies. Three years ago, PolyOne didn’t have a standard way of rating employee performance. Some managers filled out the minimum required on the evaluation forms; others rattled on for pages. “Performance reviews were almost seen as optional,” recalls Jeff Hudson, manager of organizational development at the company, based in suburban Cleveland.
Of PolyOne’s 4,200 workers, 57% had a performance rating on a 1-to-5 scale in the company’s SAP human-resources system. “But we didn’t know what that data was based on,” Hudson says.
Hudson led the team charged with implementing a performance management system. First, PolyOne standardized its paper-based system companywide. “We had to lay the groundwork for the expectation that everyone needed to get reviews and performance feedback,” he says. Then, in 2004, his team rolled out SuccessFactors’ goal setting and performance management system to rate PolyOne’s 1,200 professional employees worldwide.
One key for Hudson: The system allows “cascading goals,” in which the overall objectives of top leadership for a given year translate to the next level of management, so that (in theory) everyone has goals that are linked to the company. For example, say the CEO sets a goal of boosting net profit by 5%; each business unit’s general manager may then be required to increase margins by 5%, and so on down the line.
The results? For starters, all of the targeted employees have been rated in the system, and on schedule. According to Hudson, managers say they loveSuccessFactors’ writing assistant, which coaches them on filling out reviews, and employees say they appreciate the more comprehensive feedback.
But Hudson also claims that the system has helped PolyOne’s financial health. In 2003, the company lost $251 million on revenue of $2 billion—whereas last year it posted a $47 million profit and grew revenue to $2.5 billion. Hudson concedes that many other factors played into the turnaround, including the overall U.S. economy. But Hudson is convinced that the system has made performance a tangible objective for PolyOne’s employees. “Now employees are getting feedback that isn’t random,” he says. “It’s tied to goals.”
Whereas traditional HR information systems are designed to be repositories for important but mundane details like name, rank and serial number, talent management software aims higher, with the goal of helping to automate processes to retain, reward and attract the best individuals for a job.
Kaiser Permanente, one of the largest health-maintenance organizations in the U.S. with 160,000 physicians and staff, used to track its top 500 managers’ performance reviews in a desktop database and their compensation history in three-ring binders. The old way, says Kevin Hastings, senior business consulting manager at the company, “was prone to error and required significant legwork. And we had no reliable archiving for the data.”
Last year, Kaiser Permanente started using Authoria’s Web-based tools to automate the processes. Hastings says there’s been a learning curve with the change—and pushback from some executives who thought learning a new review system was a hassle. “Any change is a distraction for them,” Hastings explains. But, he says, the system has already standardized the process and allowed Kaiser Permanente to analyze employees more consistently.
