MARKETING, SUCCESSFACTORS
Employers can now use the Web to grab not just information, but also software such as pefgormance and talent management applications that are essential to their business.
“Knowledge is power” goes the old saying—and never has it been more appropriate. The age of social technology and lightning-quick access to information has allowed everyone (human resource professionals included) access to a new, varied, and growing tidal wave of knowledge.
More and more employers are adding layers of sophistication to their performance
management strategies. They are leveraging evolving best practices in strategic HR and
enabling these best practices through automated management tools and human capital management application suites.
RIPPLE EFFECT
These forward-thinking employers are gaining insights into their workforce that will cause a ripple effect outward to other aspects of human capital management, like goal and
succession planning, employee learning and development programs, and recruiting.
Employee performance, after all, is the center of a company’s talent management strategy—the single most important factor when trying to evaluate an employee’s potential, where they fit in with the company’s future, and how they are going to get there.
It is also the easiest, most fair and balanced metric to build a compensation program around; an employee who performs up to or beyond expectations gets compensated as such.
Performance-based compensation decisions ensure that employers are spending their salary and incentive compensation budget where it counts—on employees who are performing to or above expectations—and also helps motivate and engage employees.
After all, people work to get paid, so fair compensation based on individual performance is a great foundation on which to build happy employees.
A GOOD LINE OF SIGHT
As simple as this sounds, employers also need to personalize and build nuance into their pay-for-performance programs in order to provide employees with clear direction on what their company expects from them, as well as a clear picture of what they need to do to be successful at their job.
The easiest and most effective way to do this is for companies to tie pay-for-performance compensation systems to a set of clearly defined and well-understood goals. Terry Fox, director of HRISi and data analysis at Direct Energy, which employs more than 5,000 people at locations across North America, said setting meaningful goals—those that align with company strategy—and then consistently measuring employees against them, is fundamental to tying an individual’s performance to the company’s performance.
“If you don’t have objectives, you have nothing to measure against,” Fox said. “It’s like playing golf or basketball, but not taking score. How do you know what the other team has, and how do you know how you’re doing against them? You have to keep score; you have to have a way to measure how an employee is making an impact on the company.”
Fox helped build Direct Energy’s compensation process, which is based both on an employee’s overall performance as well as his or her performance against a set of goals. The company uses SuccessFactors Performance and Talent Management Suite to measure, record, and manage that information company-wide.
While all employees’ goals ultimately tie into the overall performance of the company, Fox said the goals are more personally tailored for non-management employees to ensure
their goals are tangible and make sense in the context of their roles.
As employees move up the ranks, the definition and nature of goals evolve as they assume more responsibility. For example, field workers and supervisory staff have individual goals that help them develop skills and competencies to either get better at their current job or prepare them for advancement.
Moving up the organization, goals become less individually oriented and geared more toward success within a division or department, up to the senior executives, whose goals are almost entirely based on the company’s overall performance. The net result, Fox said, is employees who know exactly what they need to do to succeed and who feel they have a vested interest in the company’s success.
“It allows a good line of sight for employees,” Fox said. “A lot of employees want to see where they fit in within the organization and how what they do affects the company as a whole. If they have clear goals to hit and they’re getting rewarded for meeting them, they can see exactly what the company values and how their work is helping the company to succeed. It creates a personal investment in the work they’re doing every day.”
VALUING UNIQUENESS
Fox said there are also lots of tactical, pragmatic advantages to concentrating heavily on goals. Managers can use goals to drive personal initiatives with a single employee or micro-initiatives within a department.
But most importantly, using goals to drive performance and compensation is simple, yet
also easily customized and personalized. A company that explicitly states what it expects
out of its employees, and then rewards them when they meet those expectations, gets rid
of a lot of the guesswork that goes along with compensation and also helps create a sense of
accomplishment among its employees.
“You have to have balance between a simple compensation system and a system that’s complex enough to let them know that they are unique.”
David Karel is responsible for marketing SuccessFactors’ suite of performance and talent management applications. Karel has 15 years of experience in marketing and information technology. Prior to SuccessFactors, he was the founder and CEO of MBAVision, an online
recruiting and career development portal. David holds an MBA from the Wharton School of Business. Contact him at dkarel[at]successfactors.com or go to his company’s website at www.successfactors.com.
