Monitoring employee performance and evaluating their work is a time-consuming process for managers. As they need to undertake this task along with their usual work, HRs are often required to send multiple emails to ensure that managers and supervisors send their performance evaluation reports on time.
On the other hand, having a robust performance management system within HRMS streamlines the entire process with automated reporting and notifications. So, let us understand the role of HRMS in performance management and the appraisal process.
What is Performance Management and Appraisal in HRM?
Performance management refers to the process of setting performance goals for employees, reviewing them, providing feedback for the work being undertaken, rewarding the performers, as well as allocating training sessions for the underachievers.
It is a crucial part of employee management as it measures employee productivity while ensuring that they remain engaged with the company. Employee productivity is crucial as it determines the success of a business. Hence, companies continuously measure employees’ performance and reward them accordingly.
Importance of Performance Management for Employees
While performance management is critical for businesses to understand employee productivity, it is relevant for the employees, too. It helps them understand the expectations of their employer, as well as whether they are on the right track. They can make necessary adjustments to their work and routine if they understand how their work is being tracked, which is possible only with the help of performance management measures.
Performance management is important for employees due to:
1. Goals Alignment
Having a robust performance management program enables employees to understand the expectations of their organization. They will have a clear idea of the organizational goals and how their personal goals can be aligned to ensure that they are achieved. It also helps them manage their efforts towards their fulfillment, enabling them to have a clear direction.
2. Growth Opportunities
With clear goals in place, employees can also understand how to progress their careers further. They can discuss with their managers which aspects of their profile to improve, to give a boost to their career growth. A robust performance management system enables employees to understand what is working well and what needs to be improved.
3. Fair Evaluations
With the right performance management in place, evaluations are undertaken strictly according to pre-defined rules, resulting in fair appraisals. When the performance management system is impartial and objective, employees will be motivated to work harder as they realize their performance is being evaluated and their appraisals depend on it.
4. Visibility and Recognition
A robust HR management software can also highlight performers, shedding light on their efforts, helping the companies reward their work and loyalty. For example, it is often found that employees working remotely are often forgotten; however, with a performance management system, they get equal opportunities to work and remain visible to their supervisors and managers.
5. Attractive Rewards
As performance management systems provide visibility to performers, they help them secure awards and recognition for their efforts and hard work. As a result, measuring performance inculcates a sense of gamification where employees will try to excel at their tasks to be recognized and awarded. It also has the additional benefit of improving organizational productivity.
6. Better Engagement
Employees will be motivated to work harder when they are recognized and rewarded for their work. They will also remain engaged with their workplace when they realize that their employer ensures fair practices for performance evaluations. It leads to improved loyalty and trust, which in turn leads to a sense of accomplishment and satisfaction for the employees.
Challenges in Traditional Performance Management Practices
When performance evaluations are undertaken using legacy methods, both employees and employers may face different kinds of issues. These issues range from additional administrative workload to unfair appraisals, leading to employee disengagement and attrition.
Here are some of the major challenges with legacy performance management practices:
➔ Unconscious Biases
Since manual performance tracking is not transparent to the employees, there are chances for errors and inconsistencies. Additionally, managers or supervisors can be biased towards some employees, leading to favouritism; even in the case of fair managers, unconscious human bias may still be an issue with manual performance management.
➔ Difficult Progress Tracking
Additionally, with manual progress tracking, there are no mechanisms to understand whether the employee’s daily work is aligned with the fulfillment of organizational goals. There are multiple reasons for the lack of accuracy in employee work tracking, such as dispersed data, inconsistent reporting, delays in review, incomplete employee work details, etc.
➔ Increased Administrative Overhead
The additional administrative burden also results in inconsistent performance evaluations. Since performance management is a relatively complex process, every aspect of the process, such as evaluations, scheduling of appraisal meetings, follow-ups, and others, results in additional administrative overhead.
➔ Time-consuming
Due to the additional administrative overheads, manual performance management becomes a time-consuming endeavour. Since performance evaluation requires in-depth knowledge of their work structure, work evaluations are a combined effort between the managers and the HR teams. Hence, HRs are required to coordinate between them to ensure streamlined performance management.
➔ Lack of Real-time Visibility
Another major challenge is the lack of real-time visibility, which makes it harder to track employee work. When performance is measured manually, HRs and managers are required to assess performance as well as align it with the organizational goals, which can be both time-consuming and tiring. Similarly, scheduling feedback with each employee can also be a stressful process, especially in companies with a huge number of employees.
Steps for Managing Employee Performance with HRMS
Now that we have a good idea of the challenges with manual performance management, let us understand how an HRMS transforms it into a seamless experience for both employees and their organizations. To understand it, we need to look at the various steps involved in the process.
These steps include:
1. Establish Performance Goals
One cannot begin to measure something without setting well-defined goals. Hence, with the help of an HRMS, the HR teams define the goals to be achieved by employees within a specific time frame. Companies usually set SMART goals and objectives, as these goals enable easier tracking and management.
2. Monitor Employee Performance
Once the goals are set, the next step is to monitor employee performance to ensure the desired results. With the help of a robust HRMS, managers can share continuous feedback as well as capture 360-degree feedback for their staff members. It also automates the review cycles, with the help of real-time performance tracking. As a result, HRMS provides managers with automated options for employee reviews and tracking.
3. Review and Reward Employees
A robust HRMS also provides different options, such as custom appraisal forms, review forms, etc., for ensuring that organizations can understand performance tracking according to their policies. It also notifies them of their actions for moving forward with the appraisal process, making it easier for the managers to undertake their appraisals on time.
4. Evaluate Appraisal Effectiveness
HRMS also provides handy custom reports, which provide the HR teams with in-depth insights into their performance and appraisal management processes. It helps them identify any gaps in their existing system and make necessary changes to ensure a more streamlined experience for the future. Hence, HRMS also empowers HR teams to evaluate the effectiveness of their performance management process.
The Role of HRMS in Performance Management and Appraisals
The role of HRMS in performance management and appraisals can be understood with reference to how it automates various aspects of the process:
➔ Automated Tasks
By deploying a dedicated HRMS, you can automate almost all aspects of performance management. From setting goals to managing self-appraisals to notifying managers to approve employee requests, a robust HRMS can ensure timely appraisals by providing automated options. It also streamlines performance reporting, enabling HRs and other decision-makers to provide fair rewards.
➔ Targeted Training
Similarly, the system can also ensure targeted training, as managers can understand where each team member is lacking and provide training accordingly. Modern HRMS even helps managers to get in-depth data on their employee performance through AI-enabled insights, suggesting training programs to ensure better productivity. Hence, if you combine it with a training management system, you can shift your performance management process into auto-gear.
➔ Real-time Analytics
Another major factor that helps with performance management is real-time analytics. With a dedicated HRMS, managers can measure their team’s productivity in real-time and ensure that it is adequate for the organization. Having access to real-time performance data also lets them change their tactics in real time to ensure that their team performs according to the company’s expectations.
➔ Increased Engagement
HRMS also provides various options to engage employees, which play a major role in improving their performance. For example, it provides them with easier access to their HR-related tasks, such as leave applications, payslip downloads, etc., resulting in better engagement. Hence, while HRMS doesn’t directly affect performance, it helps engage employees, which leads to improved performance.
➔ Simplified Notifications
Another major benefit of HRMS in performance management is that it provides timely notifications to the stakeholders. Such alerts remind them of their performance management-related duties like filling out the appraisal forms, sharing feedback with their teammate, etc., resulting in streamlined appraisals.
➔ Continuous Feedback
Additionally, HRMS also enables continuous feedback as it provides managers with easier access to performance data. As a result, they can recognize and reward their staff members when their performance is excellent, while suggesting corrective measures if it is underwhelming.
➔ Fair Appraisals
HRMS also results in fair appraisals as the performance metrics can be viewed and analyzed by different stakeholders, which helps avoid fraud. HRMS provides added transparency to the performance management and appraisal process, ensuring that all appraisals remain based on pure merit. It also results in improved loyalty from the employees as they would be motivated to work harder for the rewards and recognition.
Conclusion
Since HRMS is a vast system comprising multiple features and modules, it easily streamlines the process of performance management and appraisals. The role of a robust HRMS in performance management is significant as it enables continuous feedback, timely notifications, real-time analytics, etc., automating almost all aspects of performance management.
