Employers are investing in innovative technology to redesign they way they manage the performance of their employees.
According to research by Josh Bersin, human resources (HR) technology specialist at Bersin by Deloitte, performance management is set to become the hottest and most disruptive area in HR.
More than 60% of major companies have either redesigned or are redesigning their performance management process, and are making use of mobile apps to change the way they assess employee performance.
Companies are abandoning the traditional annual performance appraisal and associated goal-setting process for more effective models based on regular feedback.
Businesses such as Adobe, New York Life, Cisco and GE have chosen to build their own performance management tools, in the absence of suitable technology from the big HR technology companies, such as SAP, Oracle or Workday.
They have replaced traditional top-down performance appraisals with regular check-ins with line managers and agile goal management, which allows managers and employees to change their goals frequently throughout the year.
Software to boost employee engagement
Since developing its own performance management software, Adobe has seen a 30% increase in employee engagement and, according to Bersin, “a huge reduction” in staff turnover.
“The top-down, once-a-year, global management and performance management is too slow and not developed enough to help the workforce we have,” he says in an interview with Computer Weekly.
Top HR technology trends
Digital technology will change the design and function of HR.
The drive to replace dated HR systems will accelerate.
A new generation of talent management technology will emerge.
Companies will rush to re-invent performance management.
Engagement, retention and culture have become top priorities for businesses, leading to the development of new HR technologies.
Global leadership development, career and talent mobility will take on a new importance.
There will be a revolution in corporate learning and the deployment of new learning technologies.
Source: Bersin by Deloitte
Research shows that rather than improve productivity, annual performance appraisals are often hated by employees and, as such, can reduce morale.
“The symptom is that employees are alienated by their managers and are quitting,” says Bersin.
CEOs are increasingly concerned about how engaged their employees are and are investing in pulse survey apps which track when people are feeling unhappy, unsafe or when managers are misbehaving.
Deloitte Canada, for example, worked on a project with Humanyze to equip employees with smart badges that monitor their location and analyse the stress levels in their voice.
The company discovered that it could help reduced employee stress levels by creating larger, more open conference rooms and letting in more light. The result was an increase in productivity.
Startups challenge traditional HR technology
More than 20 new suppliers and startup companies have come to the market offering next-generation performance management tools.
Companies including TMBC, Small Improvements, WorkBoard and Reflektive are developing innovative mobile phone apps and software that offer a more agile approach to performance management.
They are putting pressure on traditional HR technology suppliers to step up their own investment in research and development (R&D).
Some 60% of large companies have either replaced, or are planning to replace, their core HR systems
There is similar competition for learning management systems as new suppliers emerge offering online video, access to free open source courses and expert-authored training materials.
Companies such as Degreed, Pathgater and Xyleme are offering innovative technology that is able to curate learning materials and make it available to employees through mobile devices.
Applications that offer coaching and mentoring, and help employees with career management, are expected to take off this year, with over 80% of companies saying they want to better talent mobility in their organisations.
“Oracle, Workday and SuccessFactors – the big three HR IT suppliers – are going to have to invest in R&D. All three have gaps that are being filled by startups,” says Bersin.
Data-led hiring and firing decisions
After a period of being “stuck in neutral” in 2015, companies are expected to invest heavily in analytics technology to manage their workforces in 2016.
“A significant number of companies now have people analytics teams and are cleaning up their data and thinking how to use it,” says Bersin.
Companies are interested in using data to find out why certain departments have a high turnover of staff, to identify patterns of theft, or to ascertain what makes high achievers perform well in the organisation.
“People are realising that data in HR is really valuable for making decisions,” says Bersin. “In the oil and gas industries, for example, companies are going to have to let people go. They are going to have to make intelligent decisions about who to let go and who to keep.”
Shift from on-premise to cloud will accelerate
The shift from traditional on-premise HR systems to cloud-based alternatives will continue to accelerate.
Last year marked one of the biggest shifts in HR technology since the introduction of client server technology in the 1980s and 1990s, as thousands of companies moved to the cloud, claims Bersin.
Some 60% of large companies have either replaced, or are planning to replace, their core HR systems, he says.
HR apps will take off
Bersin predicts that mobile apps will come into their own over the next 12 months, covering everything from recruiting, onboarding, learning, performance management and feedback.
They will be designed to be as easy to use as Facebook or Instagram, says Bersin, and will bring rapid business benefits.
“This is the year to be innovative. The talent management market is moving faster than the big technology vendors, and it’s okay to try new things”
Josh Bersin, Bersin by Deloitte
One US retailer, for example, has rolled out a recruitment app that allows people to upload their LinkedIn profile, record a video interview and take a pre-hire assessment on their mobile phone.
The number of applicants applying for jobs has trippled and the quality of candidates has doubled, it claims.
Advice for CIOS
Bersin advises CIOs to pay attention to the big changes in HR software, and to think about it positively rather than to feel marginalised because technology is moving to the cloud.
“This is the year to be innovative. The talent management market is moving faster than the big technology vendors, and it’s okay to try new things. There are new tools available for work-life balance, performance management, etc. They are really interesting tools, and they will pay off,” he says.
The IT department, in particular, will have a critical role in helping HR departments migrate their data to the cloud.
“It is one of the messiest datasets in business,” he says. “Someone in IT has to make sense of it, develop the right security and data policies, and clean it up.”
