Employee Performance Appraisal & Review Software

Employee reviews are arguably the best opportunity an organization has to energize and motivate its employees. Managers get a chance to sit down and have a one-on-one conversation with employees, as well as give and receive 360-degree feedback. For many organizations, though, the process of scheduling, executing, and documenting reviews can be incredibly arduous. Relying on traditional methods, managers and human resources (HR) professionals are left with countless paper forms and records to review and file, which takes away from time and energy spent on the review itself.

There are more than 100 different employee performance management software solutions available for modernizing and automating the evaluation processes in an organization. With so many options to review, it’s no small task to find the best fit for your organization. That’s why we have written this buyer’s guide to help you identify the right solution.

Here’s what we’ll cover:

What Is Employee Evaluation Software?
What Type of Buyer Are You?
Market Trends You Should Understand

The Vendor Landscape
Benefits & Potential Issues

What is Employee Evaluation Software?

Employee evaluation software systems automate the cumbersome--and often time consuming--task of regularly evaluating employees. With the right evaluation and employee management software in place, the challenge of strategically developing your organization's workforce becomes a collaborative effort with tangible results. These systems enable employers to focus on identifying top talent and developing employees to better fit the needs of an organization. Employee appraisal software also makes it easier for managers to track employees’ goals and performance throughout the year, and then share this information with authorized users across the organization.

The HR software market is growing, and the emergence of new strategic companies has pushed all vendors to increase the pace of innovation. One major change in HR and talent management software has been the move toward cloud computing. Cloud computing, also known as Software as a Service (SaaS), is a model in which the software vendor hosts the application on the web, making it easy for you to securely access the application through any web browser.

One key benefit of web-based software is that users can access the system from anywhere. With this model, employees can log in and perform self reviews, view past reviews, view recent achievements against goals set, and schedule reviews without bothering the busy folks in HR. Managers can set reminders, run performance reports, flag top talent for advancement, and then easily share this information among departments. Traditionally, these activities were more limited to the HR department, where a much smaller set of employees had access to older client/server systems.

Employee review software functionality includes:

• Performance notes

• Goal tracking

• Information sharing

• Stack ranking

• Electronic record-keeping

• Interdepartmental communication

• Real-time reporting

• Performance rating

What Type of Buyer Are You?

Before reviewing employee performance evaluation software, it's important to assess what type of buyer you are. We believe that 90 percent of buyers fit into one of these categories:

• Best-of-breed buyers. These buyers work for organizations looking for ways to specifically enhance their review processes. The organization may already have an HR system in place, but needs a better solution with measurable results to monitor, track and review employees. These buyers want straightforward, simple-to-use tools that can be implemented into their complex HR operation with minimal interruption. High functionality is key, and best-of-breed performance appraisals systems are the best place to start.
• Integrated suite buyers. These buyers work for organizations where some of the HR processes have become disjointed and inconsistent. Their current processes for performance reviews may be outdated, and they struggle to easily identify and cultivate key performers. These buyers are interested in improving existing human resources systems across the board to create a more efficient, effective process for both managers and employees. Integrated HR suites with a robust portfolio of applications, including well-developed employee evaluation systems, offer the best solution for these buyers.
• Cost-conscious buyers. These buyers work for organizations looking to roll out a modernized performance appraisal process that engages and motivates their talent to its fullest potential while keeping costs low. Although there are inexpensive on-premise options available, the SaaS model--which runs on a monthly service fee is changing the industry. That means organizations with more limited resources can now take advantage of feature-rich performance appraisal solutions for less.

The Vendor Landscape

Market Trends You Should Understand

When researching employee performance review software, there are a number of market trends you should understand:

• Software-as-a-Service. Cloud computing has changed the way we do HR. SaaS provides a user-friendly, Internet-based option for adding new functionality and accessibility for your employees. By giving them access to employee evaluation solutions anywhere they have Internet access, SaaS connects all parties involved, making the review process much more collaborative. With SaaS, HR solutions are also easier to implement than ever, which means faster adoption and improved user accessibility. Although the best-of-breed SaaS options offer best practices and allow for configuration to meet your needs, it's important to note that specific customization options can be limited.
• Consolidation. Recently, larger software companies have aggressively acquired many best-of-breed solutions to strengthen the arsenal of their integrated suites. For buyers, this means increased functionality and integration with the rest of your HR system. This is especially important in the employee review process, as it broadens the scope of reviews to encompass an employee’s entire lifecycle within an organization. Employee information that previously existed in silos is now centralized and highly visible for managers, enabling organizations to identify top performers and focus their retention efforts strategically. Be sure to lock in rates and service terms, though, as disruption in service can occur when vendors are acquired.
• Strategic HR. Basic HR such as payroll, benefits management, and human resource management systems (HRMS) now serve as the backbone for a much larger, more complex organism. This complex organism, or “strategic HR,” encompasses the functions and processes associated with talent management and workforce management. HR software developers have turned out a number of products aimed at making concepts like talent pooling, proactive management, and strategic development more tangible and attainable for organizations. The emergence of SaaS has had a strong impact on the emerging relevance of strategic HR, and organizations would be wise to tap into performance appraisal systems that put the right tools in their hands.

Benefits & Potential Issues

Thanks to recent developments in the employee evaluation software market, updating processes to engage, energize and retain talent is less daunting. It’s just a matter of performing thorough performance management software comparisons and finding the right system that can handle your unique needs today and in the years to come. By implementing a new system and modernizing your approach to reviews and workforce development, your organization has a great opportunity to build culture, while attracting and retaining top talent.

Many managers lack the time required to effectively execute annual reviews. Reviewing paper records, submitting forms and manually tracking performance throughout the year can be a hassle. Consequently, organizations often miss out on the full value of the information generated in the review process. Not to mention, development and retention strategies are difficult to enforce, and top talent can slip through the cracks. By failing to take advantage of the performance appraisal software available to them, organizations run the risk of hurting their bottom line.

Conversations in the Market

The following topics have been part of recent discussions within the HR market:

• Acquisitions of performance review software providers. After several disruptions in the HR talent management space, starting with SAP’s acquisition of SuccessFactors in December 2011 followed by Oracle of Taleo in February 2012, we’re now seeing acquisitions in the employee performance software market. On March 8, 2012, leading talent management provider Cornerstone OnDemand acquired Sonar6, a talent management vendor known for its innovative and creative approach to employee performance tracking software. This move has the potential to expand Cornerstone OnDemand’s reach to the small and medium sized business market.
• Retaining employees with better performance reviews. Employee reviews are just a piece of the talent management puzzle. In addition to finding a system to engage and retain talented employees, HR departments struggle with how to implement a more effective performance review process. They’re also looking for methods to keep employees engaged throughout the year rather than only during the traditional annual performance review. Managers can use performance evaluations to find new ways to motivate and retain their most talented employees. By tracking performance and progress on employee goals throughout the year, managers and employees become more engaged in the employees’ training and learning process.
• Companies understand the importance of performance management. In April 2012, Globoforce and the Society for Human Resource Management released a survey detailing the importance of employee engagement and effective performance management. Of the 770 HR professional surveyed, 51 percent identified effective performance management as a “very important” workforce management challenge. After implementing a system to track employee performance, engagement, and return on investment of those efforts, respondents reported a 63 percent increase in employee productivity, a 52 percent increase in customer retention, and a 61 percent increase in employee engagement.