For years business performance management (BPM) apps have been a staple on the financial side of the house, now these same apps are making waves in HR as well.
While nothing new to the accountants or CFO at your company, don’t be surprised if one day soon the head of HR comes into your office asking you set up metrics for BPM system that measures how well the company’s employees are performing against stated business objectives.
Increasingly, companies are looking to scrap lump-sum, once-yearly pay increases in favor of a scheme that doesn’t do away with yearly reviews per se, but adds ongoing merit pay as an incentive to keep top performers performing. The general idea is to better reward those who deserve it by tracking rank-and-file employee performance against corporate goals.
But by implementing merit pay systems companies are also looking to better allocate resources, a.k.a. money, since yearly, four-percent pay raises don’t really do much to boost employee moral, loyalty or desire to work harder and upwards of 70 percent of the cost of doing business is payroll.
Because of the increased interest in the BPM apps and methodologies for use in HR, staple vendors such as PeopleSoft, SAP, Oracle and have all either adapted modules from their ERP suites to suit this need or have stand-alone solutions available. Niche vendors, such as Synygy, CCH/KnowledgePoint, SuccessFactors and others, are also coming out of the woodwork with solutions, said Bob Buttacavoli, global leader of Client Technology Services for Mercer Human Resources Consulting.
“This is well beyond executives,” he said. “Variable compensation is becoming a reality for a greater number of people. The market has been around for 10- to 15-years. The problem is that most of the solutions that were out there were mostly departmental solutions (like sales) verses solutions that could really scale to a large organization.”
While the bad news is you may have yet another company-wide application/project to roll out in the next couple of years (if the idea takes off, of course) the good news is, because of existing scorecarding applications, you already have much of the data you need in your databases. It’s just a matter of sending existing metrics to a new application or adding some new fields to your existing data collection efforts, said Doug Barton, vice president of Enterprise Planning Product Marketing for Ottawa, Canada-based business intelligence (BI) vendor Cognos.
The metrics that don’t exist are those that have to do with individual employee performance but the solutions being sold today fill in these gaps, said Ian Alexander, president of Petaluma, Calif.-based CCH/KnowledgePoint a employee performance management vendor.
“It’s a tool for line managers, at the end-of-the-day, to use to keep track of employee performance, to keep track of goals, set goals and then measure those at the end of the year, or quarter,” he said.
While the market for these products is still in its infancy, according to Ron Hanscome, a senior program director at Boston-based IT-analyst METAgroup, the software is getting noticed. KnowledgePoint’s sales are up 25 percent this year and PeopleSoft has already sold hundreds of instances of its module, said Mercer’s Buttacavoli.
“The newer parts (of BPM) are how do you close the loop on the back-end with your reporting so that you can begin to start using analysis to properly measure cause-and-effect of what actually happens?,” said Hanscome. “How does the compensation and linking with objectives lead to increased performance or to what extent does it impact it?”