Chapter 4 - Do I want a point solution or a module?

Chap­ter 4 — Do I want a point solu­tion or a module?

Apolo­gies to those who are well-versed in this debate already. For those that aren’t, here’s a lit­tle background. 

Near­ly every organ­i­sa­tion we speak to has an exist­ing HR Infor­ma­tion Sys­tem (HRIS) in place. And near­ly every HRIS has an appraisal or per­for­mance man­age­ment mod­ule that can be bolt­ed on for an addi­tion­al fee. If you’re look­ing to trans­form your per­for­mance man­age­ment sys­tems, you may be look­ing at using a bolt-on mod­ule rather than buy­ing a ​“new” piece of soft­ware. As you’ll see, there are advan­tages to both options.

Suite Solu­tions vs Point Solutions

We’ve picked a side — we’re very much a point solu­tion — but, speak­ing per­son­al­ly, I’ve worked on the oth­er side of the fence for many years. It’s an ongo­ing debate and we’ll try to break it down as impar­tial­ly as possible. 

What is a Suite Solution? 

In short, it’s soft­ware that offers var­i­ous ele­ments or ​‘mod­ules’ which cov­er dif­fer­ent dis­ci­plines. These mod­ules often include: Core HR admin­is­tra­tion; Pay­roll; Learn­ing; Recruit­ment; Suc­ces­sion Plan­ning; and Per­for­mance Man­age­ment. Nat­u­ral­ly, we’re talk­ing about HR soft­ware here. There are suite and point solu­tions for almost any soft­ware category. 

Ben­e­fits

• You man­age a sin­gle contract.
• You have a sin­gle data source.
• You (often) pay a low­er price. The cost of sev­er­al mod­ules from a sin­gle provider may well be less than the com­bined cost of sev­er­al ​‘point solu­tions’ from dif­fer­ent vendors.

What is a Point Solu­tion?

A point solu­tion sim­ply refers to soft­ware that has been designed to do one thing. For the pur­pos­es of our con­ver­sa­tion, that means per­for­mance man­age­ment or, even more specif­i­cal­ly, con­tin­u­ous per­for­mance man­age­ment. Even in the con­tin­u­ous per­for­mance man­age­ment soft­ware cat­e­go­ry, there are spe­cif­ic areas of focus and competency. 

Ben­e­fits

• You get a solu­tion designed to sup­port a spe­cif­ic pur­pose, so you should expect it to be more effec­tive and eas­i­er to use. 
• You should expect the ven­dor to update and refine the prod­uct more regularly. 
• You get think­ing and design from spe­cial­ists rather than gen­er­al­ists, so you should expect a bet­ter pedi­gree of thought. 
• You get a prod­uct which may cost more, but which should show a bet­ter ROI thanks to increased uptake and usage.

The Back­ground

It’s use­ful to get an under­stand­ing of what the think­ing has been in the past and how the land­scape is changing.

The all-impor­tant ques­tion is: what you are look­ing to achieve from per­for­mance man­age­ment? We’re pleased to see increas­ing­ly clar­i­ty in this right across the HR, Tal­ent and lead­er­ship com­mu­ni­ties: per­for­mance man­age­ment should improve per­for­mance. If you want to mea­sure your peo­ple, fit them into nine-box grids and so on, that’s fine, but then you’re not real­ly devel­op­ing performance. 

The lega­cy prob­lem is adop­tion. Peo­ple don’t engage with the old way of think­ing. Soft­ware built to sup­port those old, bro­ken mod­els will car­ry over all those bad behav­iours we’ve talked about: a poor user expe­ri­ence, clunky inter­faces and labo­ri­ous workstreams.

The solu­tion

So how does this apply to the suite vs point debate? 

Our expe­ri­ence is that good inten­tions are not enough. Man­agers and employ­ees often desire more fre­quent and mean­ing­ful com­mu­ni­ca­tion, but it’s easy to derail that. Think of it like any dig­i­tal expe­ri­ence. Let’s say you nav­i­gate to a site some­one has rec­om­mend­ed and find that, before you can even start brows­ing through the good stuff, you need to reg­is­ter your name, email address, phone num­ber and inside leg mea­sure­ment. You might choose to jump through the flam­ing hoops to get there. More like­ly, you won’t.

Per­for­mance man­age­ment mod­ules for suite solu­tions are near­ly always root­ed in the old think­ing of annu­al appraisals and data col­lec­tion. On top of that, they’re often buried away with­in this larg­er sys­tem, which means the user has to click their way through those flam­ing hoops just to get there. There’s also a cog­ni­tive bar­ri­er: as the user, why am I facil­i­tat­ing per­for­mance con­ver­sa­tions through the same sys­tem I use to log my expens­es and book annu­al leave? Either of these fac­tors can send some­one back to their email (prob­a­bly mut­ter­ing dark­ly about HR and their ​“process­es”). Togeth­er, they can be a roadblock. 

We feel that the tool you give your peo­ple should a) require min­i­mal clicks and b) drop them straight into the envi­ron­ment they were expect­ing. The user jour­ney should be geared towards feed­back and dia­logue, not dat­a­cap­ture or rat­ings. A soft­ware tool’s sales­peo­ple may tell you it’s a per­for­mance man­age­ment solu­tion, but if it doesn’t tick those box­es then it’s not solv­ing the real problem. 

We see the attrac­tion, though. Bolt-on mod­ules are cheap­er. All we’d say is that ROI is every bit as impor­tant — if not more so — as cost. Your per­for­mance man­age­ment evo­lu­tion may come at that low­er price point, but if you find that 30% of users are engag­ing with it after six months, you’re get­ting nei­ther the evo­lu­tion you want­ed nor the data you need. 

The Three Tiers of Per­for­mance Man­age­ment Software

There’s anoth­er way to split up the mar­ket of soft­ware solu­tions out there: size. What works for 500 may not work for 50,000, and vice ver­sa. Let’s take a look at the options:

1. Enter­prise Soft­ware: These providers cater most­ly to large and multi­na­tion­al organ­i­sa­tions. They’re near­ly always suite ven­dors, with per­for­mance man­age­ment being just a part of their wider HR tech offer­ing. The key play­ers are Work­day, Ora­cle, SAP Suc­cess­Fac­tors, Ultipro and Cor­ner­stone. The pros are that they are able to han­dle com­plex glob­al set-ups, are usu­al­ly high­ly con­fig­urable, offer a wider port­fo­lio and are robust providers who should be around for some time. Cons are that they are by far the most expen­sive (con­tract val­ue can run from the hun­dreds of thou­sands well into the mil­lions), tend to lack agili­ty and respon­sive­ness, and tend to have a clunki­er user expe­ri­ence. Sales cycles often run to 1 – 3 years. 
2. Mid-Mar­ket Soft­ware: Mid-mar­ket is a dis­put­ed term, but broad­ly speak­ing the aver­age is 500 employ­ees with a range of rough­ly 100−5,000 employ­ees. There has been a sig­nif­i­cant increase in mid-mar­ket HR tech­nol­o­gy solu­tions as the dig­i­tal rev­o­lu­tion has trick­led down from the enter­prise lev­el. Their busi­ness and com­mer­cial mod­els are appro­pri­ate­ly scaled and in sales, cycles are short­er: often between 6 months and a year. Sim­i­lar to the enter­prise mod­el, most of these providers offer a suite of mod­ules with per­for­mance man­age­ment being an option­al ele­ment. There are, how­ev­er, more and more per­for­mance man­age­ment point solu­tions enter­ing the mar­ket, most­ly from the US. These providers usu­al­ly have a spe­cif­ic take on the per­for­mance man­age­ment world and their web­sites and con­tent should help you under­stand their focus. 
3. Apps for Small Busi­ness­es: For small busi­ness­es (less than 100 peo­ple) there is an increas­ing num­ber of rea­son­ably easy to deploy apps. Often, the sales process is geared toward an auto­mat­ed approach — for exam­ple, video demos and auto­mat­i­cal­ly set-up free tri­als — as opposed to a more con­sul­ta­tive sales approach. The chal­lenges fac­ing small busi­ness­es often dif­fer in key ways: for exam­ple, adop­tion can be less of an issue as busi­ness lead­ers can push and mon­i­tor usage in a more hands-on way. Also, small­er busi­ness­es are often look­ing for hybrid sys­tems that might incor­po­rate some kind of task man­age­ment or KPI track­ing ele­ment (some­thing we would strong­ly advise against, as it comes back to that old mea­sure­ment over per­for­mance debate). Exam­ples of ven­dors in this space might be Small Improve­ments or PeopleGoal.

Bear in mind that there’s plen­ty of crossover here, with enter­prise-lev­el ven­dors offer­ing scaled solu­tions to the mid-mar­ket and small­er sup­pli­ers mak­ing a play for larg­er customers.

What Does ​‘Con­tin­u­ous Per­for­mance Soft­ware’ real­ly mean? 

Con­tin­u­ous per­for­mance man­age­ment is here to stay, and we’ve seen a strong con­sen­sus on this over the past cou­ple of years. While major cor­po­ra­tions like GE, Adobe and Microsoft get the head­lines for their pio­neer­ing deci­sions to ditch annu­al appraisals, most HR and Tal­ent lead­ers now realise that this is sim­ply the sen­si­ble way to approach performance. 

But as the approach has gained trac­tion, plen­ty of ven­dors have been quick to adapt their con­tent and mes­sag­ing to hit the right notes around this. And yet they’re still sell­ing the same prod­uct. So the ques­tion then becomes: what should a mod­ern con­tin­u­ous per­for­mance man­age­ment sys­tem look like? 

Our view is that it should be built around sup­port­ing high-qual­i­ty per­for­mance con­ver­sa­tions. The cur­rent per­for­mance man­age­ment rev­o­lu­tion we are expe­ri­enc­ing can be boiled down to this fact: con­ver­sa­tion and time­ly per­for­mance feed­back are the only things that make a gen­uine impact. 

Bear that in mind as you assess soft­ware solu­tions. Ask your­self (and the ven­dor): is this sys­tem all about unlock­ing dia­logue and feed­back? Is it easy to set a con­ver­sa­tion up, cap­ture the salient points and move on? Is the sys­tem ask­ing me to fill things out rather than actu­al­ly speak to anoth­er human? 

Yes, you need to be able to under­stand your tal­ent pop­u­la­tion. You need to be able to see poten­tial tal­ent and iden­ti­fy poor per­form­ers, for exam­ple. But it should not be the core focus. The user jour­ney towards bet­ter per­for­mance is the game chang­er. Get it right and you’ll be on your way to an improved per­for­mance cul­ture. The alter­na­tive is a return to the sta­tus quo: dis­en­gaged users and poor data.