Appraisal Software: More Businesses Are Using Online Tools to Provide Timely, Accurate Employee Performance Appraisals

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Like most people, Donna Van Gundy, PHR, would spend time during the holidays opening boxes in her living room and going through the contents. But she wasn't expecting any surprise presents. She was going through employee evaluation forms to make sure they were complete; the absence of data could derail her company's annual employee appraisal process.

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"As we had a paper process, the HR department spent a lot of energy chasing down forms and looking at them to see what they were missing," says Van Gundy, director of human resources for Belkin International Inc., a Los Angeles-based supplier of electronic cables and accessories. "We had to work on moving paper around, rather than focusing on the review process."

It wasn't a highly skilled task. In fact, sometimes she recruited fifth-graders to help her in exchange for treats. Ultimately, Van Gundy figured that "if a fifth-grader can do it, maybe we needed an automated system."

So two years ago, Belkin automated its performance appraisals with software from SuccessFactors of San Mateo, Calif. The system enabled Van Gundy and her staff to stop shuffling papers and concentrate on higher-level activities. In fact, by going with an online process, Belkin added a midyear update to its annual review process.

But efficiency is not the only reason to move performance appraisals online. "These systems have a more strategic role than just automating performance appraisals and helping decide who gets a raise," says Josh Bersin, chief executive officer and president of Bersin & Associates, a talent management consulting firm in Atascadero, Calif.

In fact, the benefits the software can provide, and the experiences of companies that have ditched their paper review processes for online appraisals, attest to the technology's value.

Red-Hot Market

The performance appraisal market is "explosive," Bersin says, "the fastest-growing area of HR software." In 2008, the performance management software market is expected to reach about $490 million worldwide, and "it is growing at approximately 22 percent to 24 percent per year," he says.

The business of automating performance appraisals grew out of forms automation--putting paper forms into an electronic format. Then, the designers of these simple systems began adding features to manage the workflow, as well as providing analytics.

"It has only been in the …