Seagate managers and executives establish their functional goals and metrics, as well as conduct self-appraisals. Also through the Maximising Alignment for Performance (MAP) system, an employee performance management system (EPM) by Workscape Inc, a US-based vendor of web-based HR solutions, its managers can evaluate and assess the performance of staff anytime, anywhere. Three years since the system's implementation, Seagate's human resources director, Singapore International Headquarters, Lim Khia Tat, is convinced that automating EPM was a wise business move.
As a human resources veteran of 18 years, Lim says he has seen EPM shift from paper-based to electronic systems. "EPM has gone through many waves such as Management By Objectives, Competency Assessment and Development, or a combination of everything. Appraisals are usually tied to annual salary increment and performance bonus payment.
"Previously, the appraiser and appraisee were required to sign a formal printed performance management document for audit purposes but in recent times, many e-enabled or web-based EPM systems are helping to reduce the cycle time in the approval process," he says.
Slow adoption of automated EPM systems
EPM is often regarded as a holistic approach to managing employee motivation, behaviour, performance and development to meet corporate goals. In Singapore, HR consultants observe that EPM automation, led, which is led by multinational companies, has been slow.
One of them is Creative Software's managing director, Brooks Magruder. He says that businesses in Singapore are less open to automating EPM except for the "very big companies - of global 1000 scale".
"In general, people hate systems and prefer doing things manually because the risk is not worth the reward. This isn't just HR or administration people, but who wants to risk his or her job with a product that may be expensive and not work?" he says.
Irene Tay, lecturer of a master degree course in HR at a local university believes culture is a barrier to adopting EPM technology. "As Asians, we still like to have face-to-face discussions. In contrast, the Americans even do online interviews. I don't think EPM automation will be prevalent in Asia for at least the next five to 10 years," she predicts.
Unfriendly software and lack of updates on new technology are further barriers. Lim Fang Chien, head, service quality & learning, consumer financial services of a local bank recalls his experience while working at a European bank. His team was looking at deploying an electronic 360-degree feedback system for employee development between 1999 and 2000.
"Unfortunately, most software available at that time required loading the software on several thousand desktops, plus data would have to be generated at the vendors' site in the US to run reports. What makes it more difficult was that the software could not be integrated into our existing HR electronic platforms," says Lim.
"I must add however that in the last two to three years, these are no longer issues but the publicity of newer and more sophisticated software is lacking. Hence, most companies have yet to hear of them," he adds.
What then have been drawing large companies such as Seagate to automate EPM? The benefits are many.
Easy access to information
Processes are no longer manual and historical records can easily be retrieved. Through EPM systems, supervisors can track performance and view staff information online anytime.
For example, planning and development of staff at SingTel has become more systematic with the web-based Performance Management Career Development (PMCD) system. PMCD has been used as a tool for business planning since 2001, says SingTel's vice-president, corporate human resources, Wong Sau Lin.
Used by 7,000 staff worldwide, PMCD provides supervisors with records of key performance indicators (KPIs) and performance of staff. During the annual business planning, each business unit will set the action plans and targets for the year.
The plans and targets are then cascaded and transformed into KPIs for each manager and executive. The KPIs are input into the system. Employees can key in their own achievements, enabling supervisors to track their performance every quarter or six months.
During the yearly performance appraisal, supervisors will enter the performance ratings of all staff into PMCD. Some of the ratings might be moderated across business groups. The final ratings are then flowed into a sub-system where the supervisors can key in recommended variable bonuses and increments, which are then fed into the payroll system. In addition, supervisors can recommend staff training programmes through PMCD.
Increased efficiency
EPM systems take over tedious tasks traditionally done by HR departments. For instance, reminders to supervisors and staff to submit their appraisals are activated by EPM systems. In addition, HR practitioners no longer need to fish out personnel files for theirs and their supervisors' reference, freeing HR staff for more strategic performance consultancy.
SingTel's PMCD prompts and reminds managers to complete the annual staff appraisals. "This saves the HR department time," says Wong. "We just key in the parameters and deadlines. The system also instills discipline as it can track who has yet to file an appraisal".
Employee and corporate goals align
Seagate's MAP was designed to align employees' performance to the organisation's strategy, Lim explains. To achieve this, Seagate has been promoting periodic reviews, removal of redundant or conflicting goals, feedback, coaching, evaluation and rewards.
According to Lim, of the more than 15,000 users worldwide, 75 percent of the goals in MAP were aligned to corporate objectives in the last financial year. Ninety-five percent of global employees entered their goals into MAP while 90 percent input their development plans.
Sean Loiselle, senior director, human capital management solutions, Oracle Asia-Pacific, observes that when employee performance is qualitatively measured over a long period of time, a higher quality and better motivated workforce will result.
For Seagate, the fruits are already abundant - improved business results, rewarding and retention of people based on performance, shift of an entitlement culture to a performance-based one, as well as early detection of performance problems and improvement.
Lim adds, "The 24-hour accessibility is key for some Asian employees as they may be reporting to supervisors based in another time zone."
EPM systems have become better investments in recent years. Kathy McRae, Watson Wyatt Australia's head of practice, technology solutions, says online EPM systems have rapidly grown in performance and features since the late ‘90s.
"The first EPM systems/modules on the market were merely online versions of the paper systems and did not leverage on the benefits of technology at all. Systems have now improved across the board with improved integration," she adds.
McRae also says outsourcing the technology to a service provider removes the need for internal IT resources in the client organisation and avoids the upgrade headaches.
PeopleSoft, JD Edwards, Oracle, SAP and other industry players are major global suppliers of EPM solutions. As in other industries, these players witnessed market changes and consolidation.
Merging of software giants
The software industry is going through some exciting times that spell implications for HR technology. In 2003, PeopleSoft bought JD Edwards, while Oracle acquired PeopleSoft for US$10.3 billion last year. The changes, thankfully, do not signify the end of continued technical support.
Declaring in January that the merger was complete, Oracle CEO Larry Ellison assured customers that their investments in PeopleSoft and JD Edwards products would be preserved.
"Our intent is not only to support the current PeopleSoft, JD Edwards and Oracle products into the next decade, but we also plan to continue to enhance those products for years to come," Ellison said in a CNET.com report.
Apart from developing and supporting current solutions, enhancements under Project Fusion will combine the features of Oracle's applications with PeopleSoft and JD Edwards products.
CNET.com also reported that Oracle would keep the licence and support costs of PeopleSoft and JD Edwards at or below the current levels that clients are paying. A published price list will also be available.
As for competition, Creative's Magruder thinks that "powerhouses" SAP and Oracle could get more aggressive and offer better value to SMEs. "HR people around the world fear that there will be further consolidation and so are turning to big players such as Microsoft and SAP, which are Tier one players catering to global companies.
"Tier two players such as Netvision, Lawson and Great Plains are offering lower prices to attract HR practitioners. Tier one players are trying to enter the Tier two market to cater to SMEs," he reveals.
Roadblocks
Despite the plethora of options available and the benefits aplenty, deploying EPM systems is not always smooth sailing.
One is getting buy-in from top management. Says Rachel Swee, managing director, Ready Software, "Without top management commitment, the implementation won't be successful. The HR manager who initiates the implementation will need to convince top management. At least financial commitment will be given then."
For SingTel, top management has been supportive of enterprise technology from the start so getting buy-in has never been an issue.
The second challenge is integration with current HR systems. Creative's Magruder recommends that companies buy from one vendor or ask the vendor to undertake the integration, adding that the former is easier.
"We have almost 400 integrations with large ERP(enterprise resource planning) / HRIS (human resources information systems), but it's not the system that's the hard part but how this ERP/HRIS system has been customised or configured. ...You can spend months reverse engineering," he said.
In addition, companies tend to pay two to five times more for customisation, he continues. "(Vendors) want you to customise because then you have to come back to them when you update related or possibly unrelated parts of the system. ...When you buy customised software, what do you do when the software manufacturer changes the platform? If you use software as it is, you get automatic updates from the software manufacturer."
Bucking the odds is SingTel, which worked with Renaissance Worldwide Singapore to customise PMCD. SingTel roped in its own information systems (IS) department during the development phase to help with minor modifications stemming from users' feedback.
"Even today, we're still enhancing the system as user expectations change. Our approach is to iron out the kinks before rolling out the system on a full scale," Wong says. "Integration was not a big problem because the IS department ensured that the system worked with the other internal systems."
SingTel uses PeopleSoft for payroll purposes and HR records that include information such as an individual's joining date, grade and leave taken, Wong adds.
Nevertheless, Wong advises that accurate data routing is crucial. "Since the process involves people's performance, information going to the right parties is very important. You have to begin with the end in mind. Ensure that steps are taken to prevent the wrong routings and data inaccuracies. You have to refresh the system with the current organisation structure and data before each exercise,"
She reveals that SingTel will roll out the capability of skills and competencies gap analysis organisation-wide by the end of 2006. This capability is now used only in the corporate business group.
As for Seagate, Lim says management should conduct regular reviews of how the EPM system is being used if it is to resolve roadblocks for greater employee participation.
Few companies know their needs before implementation, says McRae. "We see far too many organisations purchase an EPM system based on features that are very attractive but do not meet the underlying needs of organisations. Their needs become apparent as the project progresses and often they find that their needs are not met by the system that they are trying to implement."
These companies, she adds, then find themselves in a quandary-should they throw everything out and start again, or continue with the project? This leads to projects exceeding deadlines and budgets. The result - some projects might be abandoned, partially implemented or not meet the organisations' needs at all.
The third challenge relates to lack of understanding amongst users about how the EPM system can help them. McRae says change management programmes are vital. "If employees can see the value in the change and have been prepared for the behavioural changes they need to undertake, then they will be far more amenable to the project."
Training, says Oracle's Loiselle, involves educating managers and executives on how to interpret the results and the potential actions that could be taken based on them. "Often companies focus only on training users on how to use the technology rather than what to do with what it produces. Introducing a consultant in human capital management for at least part of this training is a common path to success", he adds.
Having a vision of the stages and the end in mind will alleviate much of the headaches. More importantly, companies can avoid creating a white elephant.
Says McRae, "The secret to the successful implementation of an automated EPM system is a clear plan and strategy and using the technology as a means to an end. The most common mistake is to automate an existing paper process and not realise any of the benefits that can come from automation. Not only is this an opportunistic loss, it is likely that automation undertaken in this fashion will actually detract from an organisation's performance management systems."
For Wong, slow and steady wins the race. PMCD was first rolled out in the corporate business unit for a year before it was implemented throughout SingTel. "Start small and iron out the kinks before rolling out the system. If you start big on day one, the users might lose faith if there are problems," she says.
(sidebar)
HR practitioners and software vendors share five key factors to look into when buying an EPM system.
•1. Choose an integrated EPM system
Look for an integrated solution that supports organisations in the end-to-end employee process-from hire to fire. In doing so, companies enjoy having a single source of employee data which HR practitioners, managers and executives can use with confidence.
Assess how data is being accessed, and then draw up a clear map for users between how they use it and where they will find it in the EPM system.
•2. Pick a system that is easy to use, robust and scalable
Consider using a system that has goal management capabilities, integrated development planning, succession planning, learning libraries and self-evaluators.
Ensure that the information which users require is easy to find, data is easy to enter and the navigation is simple. In short, an intuitive interface is important.
•3. Go for flexible technical support
Technical support at the planning phase is necessary to size up what can or cannot be done. When using outsourced support, there is a need to ensure in-house involvement all the way. Otherwise there could be continuity issues, although a good outsourced party would ensure proper handing over to their clients.
Local employment policies, cultures and practices change and so need to be taken into account. A vendor with experience in implementing software across different countries, and technical talent to support usability issues and customisation are important.
•4. Work with a committed vendor or developer
Consider whether the vendor has a viable short- and long-term business plan to avoid being trapped by software developers who are not interested in upgrading to cater to changes in employment regulations and users' needs.
•5. Look beyond price
Value for money is more important than price alone. If the financial returns in the form of increased productivity and motivated employees far exceed the cost, this is often a good investment.
