Performance management systems are tools that measure employee performance in terms of meaningful standards and goals, in a manner that aligns individual behaviors and efforts with organizational success. The advantages of employee performance management (EPM) systems are widely recognized today. EPM systems have been implemented by thousands of companies in order to obtain greater strategic value from their human resources (HR) and their HR divisions. As a result, EPM is viewed as a top priority by most HR managers and, according to a report issued by Lawson Software in 2006, is observed as being more important than other HRIS applications including payroll, time and attendance, benefits administration, online recruiting, and regulatory compliance (Business Wire, 2006c). According to a report issued by Forrester, corporate use of electronic performance and talent management systems is growing at a robust rate of 20% (Business Wire, 2006b).
Epm Systems: Background And History
Employee performance management (EPM) is a phrase that encompasses many things. Originally, EPM was as basic as handwritten performance appraisals. It has grown to encompass aspects of talent management, performance management systems, 360 degree feedback, and upward evaluations. Broader definitions would also include goal setting, performance planning, performance coaching, aspects of training and development, and employee feedback. With this evolving definition in mind, the following paragraphs will examine the history, characteristics, benefits and drivers, and issues and challenges associated with electronic employee management systems. This article concludes with a glimpse of the future of electronic EPM systems.
Computer-based employee performance management systems have been around for more than a decade. The first information technology-based (IT-based) EPM systems were essentially automated performance appraisal forms (Helmick, 2004). While these had advantages over paper forms, most resulted in only minimal improvements in employee performance appraisal processes in organizations. Many of the systems in use today are grounded in attempts to automate 360-degree evaluation processes, which, like other performance management approaches, began as a manual paper-and-pencil based performance appraisal process (Robb, 2004). Today’s systems can also be traced back to management-by-objective (MBO) and other systematic goal-setting approaches focused on directing employee performance toward organizational goals (Locke & Latham, 1990).
Research on goal-setting indicates that clear and specific goals provide employees with a reference measure of their individual level of skill in performing a given job. Longitudinal studies have demonstrated that workers experience increases in self-confidence (self-competence) after successfully attaining challenging goals (Steel & Van Scotter, 2003). Self-competence may be described as the degree to which an individual perceives that he/she possesses job-relevant skills and abilities. According to Steel and Van Scotter (2003), increases in self-competence have positive effects on subsequent job performance. Hence, goal- and competency-oriented EPM systems, the norm today, are grounded in solid research and can have lasting benefits to organizations.
Some of the first EPM software systems appeared in the mid-1990s, including client-based systems loaded on desktops that required data to be shipped to vendors for analysis. Web-based EPM products became available to corporate customers in the late 1990s and now are commonly available and popular due to their ability to integrate with a wide range of other HR information systems software (Robb, 2004).