Chapter 6 — Where to Look & Pricing
When to Engage with Software Vendors
You may be in the very early stages of your project. You may not have stakeholder buy-in or a signed-off budget. But there is one clear benefit to getting in touch with vendors early on: seeing a solution in the flesh can move your thinking forward very quickly. Yes, you need to nail down a strategy and do the discovery work we talked about earlier. But don’t underestimate the way that a quick demo or conversation can give shape to your thoughts in the early stages.
There’s a lot to consider when moving from annual appraisals to continuous performance management. We often meet HR and Talent people who are incredibly stretched for time, and may feel a little daunted by the scope of the project. Down that path, sometimes, lies inertia: how do I kick this off? Where do I find the tools I need to deliver it?
We cover quite a lot of this in one of our webinars, but the general point here is: don’t let the perfect be the enemy of the good. Vendors are the front line: they see customers dealing with and moving past these problems every day. At Clear Review, we often conduct demos with customers who specifically tell us that they’re in the early stages of the process. Despite that, they often go away really energised and confident that there’s a way past the roadblocks. If you’re concerned about being hassled by salespeople or setting false expectations, just be transparent. Telling people “I’m happy to talk again but not for three or six months” is perfectly reasonable.
Where to Look?
Word of Mouth
The first place you should look for a potential performance management software partner is within your existing networks. People have made this change, and you may already know one. If not, try Linkedin groups: our experience is that when an HR leader has delivered a project like this, they’re always happy to explain how they did it and offer advice.
Google Organic Search
In order to achieve a high ranking on Google, a software provider will need to be creating regular, relevant and quality content. Although a page one-ranked website doesn’t necessarily mean they’ll be a great partner, at least it’s an indication that they consider themselves a key player in the space and have invested time and money in raising their profile.
The Google Ads at the top of the page are probably less important. Although it’s unlikely any business would invest money in advertising something they can’t do, it’s much easier to throw money at ads than it is to build a genuine organic ranking based on thought leadership and quality content.
If you Google “performance management software” some of the first listings are the likes of Capterra, SoftwareAdvice and G2. These are search and review sites for software solutions. The user reviews will give you a better sense of what each solution’s strengths and weaknesses are. However, it’s worth noting that they don’t have the same level of rigour as Google organic search, and there can be some smoke and mirrors involved. For example, it’s not always clear whether a high ranking has been earned or paid for. And although a number of reviews is a useful metric, if a company has been around for 15 years it might have plenty of reviews, but another company with fewer reviews might be a more modern and effective solution that simply hasn’t been around as long.
Follow the Quality Content
If you’re researching continuous performance management best practices, pay special attention to the software providers whose articles, eBooks and resources add genuine value to your research journey. If a vendor seems to be ‘speaking your language’ and providing insight into the challenges you are facing, it’s likely that their technology will at least be trying to address these same challenges. It might be worth booking a demo based on that reasoning alone.
It’s impossible to tell you exactly what you should be paying — everyone’s needs and resources are unique — but there are some considerations you can use to guide your thinking. Once you’ve seen a few demos and had the proposals through (assuming you can’t just get the pricing directly from the vendor’s site) you’ll quickly get an idea of the budget you’ll need.
Business Case — What is the cost of poor performance?
This is a complex topic but it is worth thinking about whether you can establish a guideline figure that rings true with senior stakeholders.
One way to do this might be through engagement. There is substantial research out there which shows that disengaged employees are both less productive and more likely to leave than their engaged counterparts. If you can create a cost for replacing a disengaged employee (on a sliding scale of salary percentage, based on seniority) and show that strong performance development boosts engagement, you’re on your way to a real-world number. And it’ll be far higher than the cost you’d be looking at for a piece of performance management software.
To look at this in more depth we have a Performance Management Software Business Case Template which we’re happy to share.
What are the different pricing elements?
There are usually three commercial elements to consider: the annual subscription cost; the cost of implementation; and the minimum contract commitment term.
A subscription cost is usually a straightforward equation: the number of users X annual cost per user. There may be options to pay for additional functionality or modules to be switched on or off.
Implementation cost can vary wildly from free to tens of thousands. Our view on implementation cost is that the era of costly customisations and in-depth user training projects should be coming to an end. Software should do what it says it can do without major configuration. When it comes to performance management, if people can’t simply log in and use it then it’s probably too complicated and no amount of training can fix that problem.
Minimum contract length often depends on the size of the spend. It is also linked to the implementation cost (or lack of). For a Software as a Service vendor a significant amount of the resource commitment is up front. It might make sense to offer free implementation on a two-year contract as the costs will be absorbed, but if it’s a one-year contract the vendor may need to charge for implementation up front.
What outcome are you paying for?
Keep your end goal in mind at all times. What are you really aiming for here? If you want to drive adoption and get your people having those meaningful performance conversations and sharing feedback, that should inform your assessment of the cost.
It can be tempting to go for a “bang for buck” approach: how much stuff and how many features am I getting? All we’d recommend is that you think back to our earlier points around clarity and usage. A product with fifteen areas of functionality developed over the years is also likely to be a cumbersome, confusing beast that your users just won’t use. In that case, it doesn’t matter how much you save or how much value you think you’re getting. If it won’t do the job you bought it to do, you’ve wasted your money.
This is a culmination, of sorts, for myself and the team at Clear Review. After a couple of years evangelising the continuous performance management phenomenon, it feels as though we’re well past the tipping point. No one needs to be told that annual appraisals are a misery any more. And almost every potential customer we meet is looking for a way to manage performance in a continuous and human way.
It’s great news for buyers too: it really is a buyer’s market. You can spend as much (and almost as little) as you want. There’s more free content online — in the form of white papers, research, webinars and whatnot — than you could read in a lifetime. So thanks for taking the time to read this one.
But the truth is that, despite all the great thinking that’s been done on the subject and great strides that have been made in software development, you still need to be wary. As we mentioned in Chapter 4, there are plenty of vendors of various sizes claiming to be able to deliver a continuous solution for you. And they’re still selling the same thing they built a decade ago, only now with added bolt-ons. I hope I’ve offered some clarity on how to approach the sales process and the obvious traps to avoid.
But what I hope most of all is that you come away from this with excitement and enthusiasm. Creating this sort of cultural change in your own organisation is a truly amazing thing (we have a customer whose staff erupted into spontaneous applause when they were told that the annual appraisal was being consigned to the dustbin of history). And when it’s up and running, and you see managers talking to employees on a regular basis and the feedback rolling in, perhaps you’ll feel entitled to spend just a moment patting yourself on the back.
You did that.