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Dramatic changes in managing employee performance drives demand for new software

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Dramatic changes in managing employee performance drives demand for new software

New software applications should focus more on development than appraisal.

Dramatic changes to how organizations manage employee performance are driving demand for software that focuses more on employee development than appraisal, according to new research from research firm Bersin by Deloitte.

Many leading-edge organizations are moving away from viewing performance management as a once-a-year event where employees are assessed and evaluated. Increasingly, organizations view effective performance management as a series of ongoing activities that include goal-setting and revising, managing and coaching, development planning, and rewarding and recognizing. However, support for such activities across current performance management solutions varies widely, according to the study, which looked at more than 120 performance management features from 46 providers of performance management software.

"Performance management software was the most noted software application area targeted for investment in 2014 and 2015."

"Performance management software was the most noted software application area targeted for investment in 2014 and 2015," said Katherine Jones, vice president, human capital management technology research, Bersin by Deloitte, Deloitte Consulting LLP. "According to our recent research, 67% of the companies studied stated plans to purchase performance management software either for the first time or to replace existing solutions. A key reason for this interest is that the one-and-done annual view of performance management is rapidly falling out of favor as progressive organizations seek to support performance on an ongoing basis — and they need software to support this next-generation approach."

The new research looks at many aspects of performance management. However, the research one area was identified as becoming increasingly important: continuous coaching.

"There are many factors contributing to this focus on continuous coaching," said Stacia Sherman Garr, vice president, talent and HR research, Bersin by Deloitte, Deloitte Consulting LLP, and a co-author of "The Guide to Performance Management Software 2015." "Work is becoming more dynamic and fast-paced. We see the rise of a large, young generation of employees, along with a skills gap in both developed and emerging markets. Finally, we see coaching as an increasingly large part of the employment value proposition, where employees want to receive individual feedback and feel valued by their organizations for their unique contributions."

Despite this increased focus on coaching, the study shows that only a subset of software applications support coaching management and tracking today. Among the study's other key takeaways:

  • Applications supporting performance management should be agile, simple and responsive to real-time needs – focusing more on development than appraisal, employee strengths instead of remediation, and on data-driven outcomes in place of assumptions.
  • Within many existing performance management solutions, performance goals and the progress toward achieving them are often within the employee's profile, serving as an easily accessible reminder of key responsibilities.
  • The manager's performance dashboard should include both the ability to appraise the individual, as well as see at a glance the entire team's progress on achieving goals.

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