Streamlining Performance Reviews
By Esther Shein
How productive are your employees? That's every organization's big question. Employee performance management systems aim to provide an answer. But do their metrics measure what truly matters?
By evaluating employees' degree of engagement, a performance management system can "definitely impact the productivity you get from your workforce in many dimensions" and enhance your ability to retain talent, says Jim Holincheck, a research vice president at Gartner Group, in Chicago, Ill. But, he warns, "It can be a double-edged sword. If you don't use it right, it could de-motivate people and you'll have performance and productivity decline."
Getting Your Money's Worth
Depending on the industry, companies are spending between 20 percent and 70 percent of their budgets on people-related costs, Holincheck says. They obviously want to improve the return on their investment.
Typically in larger companies, "both the manager and the company want to see that they're getting the bang for their buck and make sure they're getting maximum performance from each person," concurs Cathy Shepard, principal in the human capital practice at Mercer, in Los Angeles, Calif.
Performance management systems are especially useful at keeping track of who gets paid what, so companies are able to easily assess whether the people getting higher salaries are performing the best. (article continues)
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