We Are Doing Performance Management All Wrong

23 comments

OK…this is getting ridiculous.  So far, I have counted 13 vendors that have pronounced their “endorsement”, “lauding” and “praise” for earning top marks in a recent Bersin research report (the list includes Authoria, Saba, SumTotal, Learn.com, SuccessFactors, Taleo, Softscape, Plateau, StepStone, Cytiva, Cornerstone OnDemand, iCIMS, and Halogen).

This is not to criticize the research.  Heck…I haven’t even read the report.  Truth be known, Bersin & Associates has a strong reputation for quality research and Leighanne Levensaler is one of the brightest analysts in the industry.  The problem is that we are looking and evaluating performance management all wrong.  Without using the “C” word (“commoditized”), most of the performance management products are “me too” (hence why practically every vendor is ranked as “strong” in the report or at least the vendor press releases).  They all have very comparable process functionality (Oracle and SAP included) and the only real differentiation occurs 1) in how they integrate with other suite components and 2) the user experience. 

Performance management should not be about automating the performance review!  I have recently come to the conclusion that companies looking to simply automate an appraisal will miss the real value with performance management.  Nor is it about creating a better user experience to complete forms.  Usability is so overrated in my opinion.  We will never be able to cater a single browser page to every user.  As I have learned through the development of the Center of Excellence and working with clients in difference industries, every user is different in they way they interact with systems.  Some want a browser-based experience, some want to use email to transact, and some want to use RSS to have the information delivered in their own custom workspace.  Manufacturing and healthcare verticals want “stupid simple” while retailers want process efficiency and innovation.

Now that I am off my soapbox, what we really need is more products like Sonar6.  Performance management should be about making, supporting and visualizing decisions for all levels of management that drive corporate performance.  It should cater to every talent stakeholder and answer the question that are important to them such as…

  • Managers – How do I reward and penalize individuals and teams based on performance?
  • Directors – How do I analyze and compare the performance of my team against other departments and divisions within my company?
  • VPs – How can I model my group against other high-performing regions, geographies, roles and skills to drive my company’s performance?

To get performance management right, (and talent management for that matter) we must first start asking the right questions.

  • http://blogs.gartner.com/thomas_otter/ Thomas Otter

    Agreed.
    I was on a related rant earlier today.
    http://blogs.gartner.com/thomas_otter/2008/10/30/pondering-integration/

  • http://www.enterprise20link.com/ Gopi Padakandla

    Good insight Jason. Visionary TM vendors are already packaging powerful Analytical and Dashboard capabilities to address some of the questions that you raised.

  • http://www.hrinterop.org Chuck Allen

    This is a pretty stark assessment of performance management offerings. I hope it is not as bad as a field of “me too” offerings differentiated by integration and UI.

    The message of performance management not being about performance reviews is one now repeated with frequency even apart the discussion of vendor’s performance management solutions. A couple of the most recent rants I’ve seen following this theme:
    http://online.wsj.com/article/SB122426318874844933.html
    http://www.missionmindedmanagement.com/leadership-gut-check-performance-reviews

    The old lesson being of course is that technology can’t get it right if you don’t know what is right to do. It does make me wonder whether it is good, bad, or unavoidable for a certain performance management approach/assumptions to be bundled within a particular vendor solution. Is this a question of picking your management approach with your vendor solution or is there genuinely such a thing as a non-me-too offering configurable to performance management approach.

  • http://talentedApps.wordpress.com Meg Bear

    ok now we are talking. Jason and Thomas are firing up and getting strategic, sweet! I had a similar conversation at HR Tech with Jason A.

    I think the problem is that many of us have lost sight of the goal as we implemented the tactic. Of course you need solid performance data to do what the kind of big thinking that you are talking about. It’s just that you need to make good use of that data and know what the point of collecting it actually is.

    To my mind, the fact that we have a lot of good performance management systems is a wonderful thing. Knowing what to do next is the key. I like your list. I have a list of my own but of course I don’t intend to share it, instead I’m planning to save it for the second coming (and maybe even the third). [grin]

  • Bill Kutik

    Let me address your first, and less consequential point: the fact that so many vendors got to brag about how they came out in Leighanne’s report.

    This is a consequence of her not doing an overall vendor rating chart, as she did last year in her Talent Management Suite Vendor report. There it was clear that in each market category only one vendor got three-and-a-half stars.

    Of course, that didn’t stop some with three-and-a-quarter from bragging!

    Absent that over-all comparison, you have the free-for-all you’re experiencing. Me, too.

    If you do get to read the report, you’ll see there’s a lot more going on than just facilitating annual reviews. Oh, and you just won a trip to New Zealand!

  • Maksim Ovsyannikov

    Jason, very timely, as always! Here is my take on all of this – asking the right questions is definitely very important and it will allow us to evaluate process and vendors better, in a new light. But shouldn’t HR start asking these questions as well? Basically, analyst reports ask questions that the buyer asks – so then, in this case, should we first educate the buyer to start asking different questions?

  • Ian Alexander

    Jason, your criticism of PM software could be leveled at virtually every application software vendor (people want to interact differently, are we automating the right process). We’re all automating a process. We wouldn’t be doing that if there wasn’t customer demand for that process to be automated.

    Our whole theme is, you need to turn that old review into an integrated year round process.

    I’ve been marketing this stuff for 15 years and it’s always been about the whole process, not just the review (for me and the competitors that have lifted from the standard KnowledgePoint set) .

    Cytiva writes white papers and gives webcasts about how to go about implementing tech solutions and we say up front “technology will hurt you more than it helps if you don’t do it right.”

    It’s a people process. It’s a change management skill set. It’s a cultural shift. And by the way, when you’re prepared to deal with all that, our software will make easier and more efficient.

    Sonar6 gets you to the same dead end if you don’t understand that. I’m with you on form automation, that’s 1st generation, “horseless carriage” stuff. But I could not disagree more that usability is overrated. It’s all about usability.

    Bottom line: Vendors are meeting demand. Clients are driving development and asking for what we are giving them (there are so many non “decision support” aspects that the PM process must deal with including legal documentation and more).

    I think you way over-simplify the process, problem and vendor landscape. We don’t automate theories, we automate the real world.

    And to be clear, Cytiva never referenced any “top marks” in our press release. It’s not fair to paint us with that brush (the first time we’ve been mentioned in your blog and it’s a slap?)

    Readers be the judge of whether we over-hyped the fact that our gen 1 product was included and respected in the report:

    Cytiva’s SonicPerform Recognized in New Bersin & Associates Report: The Essential Guide to Performance Management Systems

    Leading analyst firm “impressed with the clean, streamlined user experience”

    EMERYVILLE, CA– October 16, 2008 – Cytiva Software, Inc. (CRX:TSX.V), a leading provider of on-demand talent management solutions, today announced its inclusion in an important research report by talent management research firm Bersin & Associates.

    Entitled “The Essential Guide to Performance Management Systems,” the report includes general performance management market information, implementation best practices, and system vendor profiles.

    In addition to recognition for SonicPerform’s “clean, streamlined user experience,” the report points out that “SonicPerform represents the culmination of the work of a team of performance management software veterans (including executives from KnowledgePoint – pioneers in performance management software) with over 75 years of combined experience building and implementing systems in thousands of organizations.”

    “Bersin & Associates is doing some of the most enlightened and useful research in the performance management arena these days,” said Jason Moreau, CEO of Cytiva Software Inc. “We believe our recognition in this report validates our approach and effectively places SonicPerform on the map as a vendor to be reckoned with in this fast changing performance management space.”

    Cytiva’s SonicPerform was designed for mid-sized organizations and sits in the middle of Cytiva’s talent management suite that includes the SonicRecruit applicant tracking system and the SonicOnboard employee onboarding portal.

    The Sonic suite of talent management applications represents an extremely attractive alternative for mid to large sized organizations in the midst of financial uncertainty, by providing world class functionality, high levels of service and robust configurability at an affordable price.

    The announcement of SonicPerform’s inclusion in this new Bersin & Associates report comes on the heels of the launch of the new SonicPerform Enterprise at the HRTechnology Conference in Chicago this week.

  • Syris

    Thanks for keeping it brief Ian.

    Let’s face it…everyone loves Sonar6 because it looks so different but it is basically a x-y scatterplot on steroids. However, to put it another way: Most EPM vendors are 80% transaction focused and 20% analysis focus (and I think I am being generous here.) Sonar6 is the exact opposite which is why it looks so “different”. They’re analysis tools are fantastic but their feature set is shallow (what…setting goals doesn’t matter?)

    The best thing this market could see would be for one of Bersin’s top 13 acquiring Sonar6 for use as their reporting and analytics engine.

  • http://techsphinx.blogspot.com/ Techsphinx

    Conceptually, Jason is on the right track in my opinion. But practically, organisations are buying performance appraisal automation right now. Why, because that is their first issue. I hear it all the time, “if we can automate this first, then we can look down the road.”

    No one seems to understand this as much as SuccessFactors. They really aren’t very fancy or leading edge, all that NextLabs stuff is mostly window dressing for positioning in my mind, but they sure know how to sell performance appraisal automation. And, like it or not, they are selling way more of it than anyone else by far.

    Jason’s point becomes more important once performance appraisal automation becomes widely adopted, which today it is not.

  • Syris

    Techsphinx – that’ s exactly my point about Sonar6. A great tool when you’ve got a bunch of data to analyze, but what about the fact that you have no data because you’ve never automated your performance process? Both sides of the equation matter.

  • http://fersht.typepad.com Phil Fersht

    Interesting arguments here. End of the day, the vendor provides the golf clubs, but ultimately it’s the HR practitioner who is making the shots.

    The HR practitioner needs to be able to configure software to run a performance management process and draw on analytics to add intelligence to the process, provide predictive datapoints etc.

    However, I sense your frustration is more centered on the messaging that reports such as Bersin (and, let’s face it, other research firms are also guilty here) are obsessed with comparing basic features and functionality, and not focused enough on the real business-value these products can/should/fail to deliver.

    In this “new” economy, discretionary spend has already been hurled out of the window. Expensive software investments that deliver limited value beyond automating forms and basic workflows are under heavy scrutiny.

    With every costly license renewal / new purchase, CFOs are asking “do we really need this, and what value does it bring to my company?”

    Hence, it is the duty of analysts/consultants/vendors et al. to drive home that message that these products need to be compared against supporting best-in-class performance management processes. Just look at how the CRM industry has struggled to deliver value in recent years, and you’ll quickly see the issues facing performance management.

    PF

  • http://www.sonar6.com Mike Carden

    Just to address a misconception here. Sure, Sonar6 is great at visualizing people data at all levels of the business, but its basis is a very engaging performance appraisal tool (including goal setting).
    We’d be the first to admit that our feature list isn’t the longest in the industry, but that’s exactly the point: To us it’s more important to focus on the few things that will actually help everyone in the business make better people decisions, than to meet every possible requirement of an HR super-user.

  • http://www.faa.gov Paul Twohig

    Is n’t the measure of impact a bit weak? It seems to involve HR practioners view of what worked. Does the report indicate some quantitative measures of impact and how was cause-effect determined?

  • https://www.sdn.sap.com/irj/sdn/weblogs?blog=/pub/wlg/11871 Harry West

    You never want to see process automation creating a ‘garbage in garbage out’ scenario – but this is a very big risk with Performance Management. Yet it’s easy to understand why IT or HR may perceive PM as just another process to automate. It’s a process pain point that certainly needs to be addressed.

    I hope to see more companies tackling the fundamentals of org design and competencies before expnding scarce resources on automating performance appraisals and other talent-related processes. However, this is often a more lengthy proposition than a simple process automation approach. I think that will always be a challenge in this space.

  • http://www.paxleaderlabs.org Louise Metcalf

    I see a day when managers regularly involve outside consultants in the annual performance review.

    I am involved in these discussions lately and it appears extremely beneficial as it allows staff and managers to be more honest and open.

    It becomes a safer environment as I am there to ground the conversation and make sure all those questions you mention are asked and discussed whole heartedly.

    It also helps managers develop better performance management habits and confidence as they eventually learn my practices too.

    This is a complex process that requires more than commonsense and more than software. Companies who are serious about it will be demanding this kind of process in the future.

  • http://www.hrmdirect.com/hrm3/blog/ Colin Kingsbury

    A mediocre or rudimentary tool, when used with great consistency, will usually produce more value than a much more sophisticated system applied sporadically.

    A better system will increase participation and user buy-in, particularly if you’re replacing a clunky old system with a much friendlier new one. But often the replacements are more “different” than actually “better,” and the clunkiness is often added back in as specification committees try and accomodate different interest groups without the conflict necessary to eliminate bloat. In this sense, the relative minimalism of a product like Sonar6 can be beneficial, in that it forces users to choose their real priorities.

    Unfortunately, it’s also my experience that the gravitational pull of clients asking for bloatware is often irresistible for vendors. And yet, I also find that the users who resist the bloat and stick to doing a few basics well are also likely to say they’re getting the most out of the tools.

  • http://www.sonar6.com John Holt

    Apart from the product pitch this is a really rich thread of commentary and feedback.

    The overarching themes certainly support our experience in this industry – it’s time for straightforward solutions that automate but MOST importantly engage the business.

    Its true also some of the most successful companies continue to resist technology to exactly Colin’s point – they have a process and a culture that delivers a business based understanding of people and the levers that will increase their contribution to value creation.

    They will move when they find an enabler that more efficiently supports the culture – if it means automation benefits come along with it all the better.

    Bill Ingham’s interview on Bill K’s radio show was testament to this.

    Many others are looking for that fundamental in an “all singing all dancing” software product. Similarly we remain confident of finding the Yeti and Loch Ness Monster some time soon.

    My acid test – look for the organisations that are referenced at the business level not HR.

    When you regularly see CEO / CXX referenced on a vendor’s site (excluding of course the vendor CEO) talking about the impact of their HR Technology investment on bottom line you have progress IMHO !

    Currently when we have a CEO conversation around performance management it takes at least 5 minutes to get them off the soapbox round how much the process “sucks” (actual quote)

    Leading and Managing people is and always has been a business priority owned by the business every day supported by smart HR and tools.

    I’m sure the vendor report was fair and well researched but to Jason’s point – have we got hte measures right?

    Thanks for the provocation Jason !

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  • http://twitter.com/plant05 Alessandro Rossi

    Hi! I do really agree that sonar6 is catching the next big wave in performance management tools. However, if even sonar6 will be able to add some little integration with compensation and goal’s execution maps without losing his value proposition it will be really the next big player to watch

  • JCC

    Just thought I would put in my 2cents on Successfactors. While SuccessFactors marketing talks a great
    story,  this is not a simple tool to
    manage reviews. The actual program has very high start-up fees and
    implementation costs regardless of the story their sales team will tell you.

    You need to be aware that is is every bit as
    complicated as adopting an entirely new cloud based Information System so you
    need to be prepared to build your system into their framework.

    We are a process centric (ISO, CMMI rated), IT
    savy company and even we found the process to be overly invasive on our day to
    day practice with a very low return on investment for small to medium size
    companies.

    Even for small companies
    (20-25 people) , there is a several thousand dollar initial start-up fee plus a
    minimum of $125 PER EMPLOYEE on a annual basis and you could end up spending tens of thousands of dollars on consultants and internal resource cost.. Companies should stay away unless they are willing to invest significant time (minimum of 3 – 6 man months for a small
    company) on “training” and time to integrate your business practice
    into their system in addition to their startup fees. 

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  • Russ

    “Usability is so overrated in my opinion…”
    Clearly, your opinion is not one to be listened to.

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