Any organisation wishing to achieve competitiveness and success needs to be aware of the importance of performance management in business planning. This is what helps an organisation to be effective and stay ahead of its competitors.
Some of the top findings from the High-Impact Performance Management Research carried out by Deloitte revealed that the way most businesses approach performance management is despised and fails to generate expected organisational capabilities. Because of this, there are a growing number of enterprises in the process of changing their performance management approach.
More and more management teams realise annual appraisals are an outdated and inefficient performance indicator. When teams decide that it’s time to transition to a more effective performance management tool, Clear Review offers an intuitive, easy-to-use and seamless solution.
This decision-making process comes with many unknowns and big questions though. One of the most frequent ones amongst businesses considering performance management software is “what’s its value?”
In the following content, we’ll answer this by listing the main business areas that would benefit from performance management software.
What you can expect in this article:
Key Areas of a Business That Would Benefit from Performance Management Software
A useful way to understand the importance and value of performance management software is by analysing which key areas of a business may benefit from it.
1. Project Management
Planning and evaluating projects effectively can be time-consuming. Instant feedback and communication help organisations save time and, therefore, money. As an example, American software company Adobe estimated that the company’s managers spent 80,000 hours a year conducting reviews. That is the equivalent of 40 full-time employees’ wages over a year.
Performance management software makes monitoring project variables and conducting performance reviews an easier job. Not only does it make goal-setting a collaborative effort between managers and employees, but it also helps them visualise the progress of every objective.
Both project managers and employees can update the progress of each goal as it goes along. The software displays this progress visually, which helps to notify managers of things that need their attention such as team members with overdue objectives.
2. HR Reports
Annual reviews and reporting require a substantial investment of time, management hours and form-filling. This can come to an end with the automatic reports that a cloud-based performance-management solution offers.
According to research by Gallup, 71% of employees believe their performance reviews are unfair. In fact, one of Deloitte’s most recent High-Impact Performance Management studies revealed that employees believe annual appraisals and performance ratings are “universally despised”. Still, 96% of companies surveyed claimed they do performance reviews, and 86% use performance ratings.
Performance management software helps the HR team generate insightful reports, avoiding the use of despised performance ratings. Regular conversations and check-ins allow managers to offer fair and transparent feedback about their employees by answering a list of set questions periodically, not just once per year. When generating reports, the software can help the HR team to quickly gather all this feedback, compare the three main pillars of performance management between departments and also run detailed reports that can be downloaded and shared with senior managers for data-driven decision-making purposes.
3. Financial Planning
Having a solid financial plan is imperative for any business. This allows companies to achieve long-term monetary goals such as increasing revenue, reducing fixed costs and so on.
When it comes to estimating the finances of a business plan, performance management software can play an important role. It allows senior managers and employees to jointly set SMART goals and link their own performance and personal objectives to the business’ overall ambitions.
At the end of a financial period, the software can run a Performance Goals Report, which the finance team can use as a reference when planning the year ahead, setting realistic goals and making business decisions in regards to finances.
4. Employee Wages and Benefits
Closely linked to financial planning, performance management software makes business decisions easier when it comes to rewarding employees with higher wages or other monetary incentives. The fact that a business is generating profit doesn’t mean that every employee is making enough revenue on their own, and it’s possible their individual efforts don’t justify the cost of wages and benefits.
Regular check-ins and real-time feedback help managers keep track of their employees’ performances and progress, facilitating the managerial salary-raise decisions and guaranteeing this process is fair and reflects effort.
Such check-ins and continuous feedback also facilitate conversations about employee development and training opportunities. Consequently, performance expectations are regularly reinforced and employees are engaged and feel appreciated. An extensive study on happiness and productivity conducted by the University of Oxford found that employees are 13% more productive when happy. Therefore, happy workers = better performance = higher wages. It’s win-win!
Conversations around Wellbeing Are an Added Bonus of Performance Management Software
A study carried out by Peter Warr and Karina Nielsen of the Institute of Work Psychology from the University of Sheffield reveals that wellbeing and work performance might be reciprocal, meaning that wellbeing causes good performance and good performance causes wellbeing.
The real-time interaction between managers and employees also leaves the door open for conversations around wellbeing, a topic especially valued by millennials, who are believed to represent up to 35% of the workforce in North America. This makes them the largest generation in the US labour force according to Forbes.
Performance management software adds value to various key areas of your business, from financial planning to wellbeing conversations. A time-saving, easy-to-use solution for companies of all sizes, make sure you book a demo with Clear Review today to further understand the real value it can add to your business.