Frankli Vs Doing Nothing: Why you Need Digital Performance Management Tools

We’re sometimes asked, “does my business really need performance management software?”, which is always a welcome question, as it gives us a chance to quote some of our favourite research on the impact of digital performance management tools.

Take one of the most frequently-cited reports by Deloitte on high-performing teams - it shows that companies using performance management software are 1.4x more likely to meet financial targets, 1.7x more likely to delight customers, 2.2x more likely to improve efficiency, 2.4x more likely to innovate and 4.9x more likely to manage change (1).

Of course, numbers like these are based on averages, so you might be wondering if performance management software will work for your specific business. This brings up a really important point - the benefits of using digital performance management tools will vary, depending on what you’re already doing.

So let's start this conversation defining your current performance management process.

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Why is Performance Management Important?

Performance management is important because it impacts a company's profitability, as well as employee productivity, engagement and retention rates.

The Importance of Performance Management: A Network, Not a List

How you manage performance also has a huge influence on company culture, which in turn impacts employee satisfaction and wellbeing.

We’ve already used this list to answer the question,

“Why is performance management important?”;

1. 1

   Profitability

2. 2

   Productivity

3. 3

   Employee Engagement

4. 4

   Company Culture

5. 5

   Employee Retention

6. 6

   Employee Satisfaction

7. 7

   Employee Wellbeing

8. 8

   But, to be completely honest, this is an overly simplistic answer. To really understand the importance of performance management, we need to reframe these 7 elements as a network, not a list.

In our infographic, you’ll see that all 7 pillars of organisational success connect to each other directly. This is good news when things are going well. A boost in employee engagement will be felt across productivity, retention, employee satisfaction, and so on.

But it works the other way around, too. For example, if there’s a significant dip in employee retention rates, it affects the other 6 pillars. Productivity will take a nosedive as recruitment begins and as new hires get up to speed. The added pressure on existing employees will impact employee satisfaction, wellbeing and engagement rates. And all this will combine to lower the company’s goal success rate, translating to lower profitability.

By using software to manage performance, engagement and development, we can ensure the best possible outcomes across all 7 pillars of organisational success. And we can create a culture of continuous improvement, so our teams are always striving for progress.

Defining your Current Performance Management Process

Your first step in exploring the idea of performance management software is to take a look at your current processes. Be honest with yourself - it takes time to find a performance management rhythm that works, and even the most capable teams struggle to get it right.

Most companies have a system in place for managing employee performance and engagement, whether it’s manual, paper-based, or spreadsheet-based, whether it involves a HRIS add-on or dedicated performance management software.

→ Click here if you’re using a manual, paper-based or spreadsheet-based system

→ Click here if you’re using a HRIS add-on

→ Click here if you’re using dedicated performance and engagement software (and are open to change things up!)

In this article, we’ll discuss companies that don’t already have a system in place for managing performance and engagement. In other words, what can we expect when a company leaves employee performance to chance?

What Exactly Do We Mean by “The Cost of Doing Nothing?”

In reality, very few companies are doing absolutely nothing to manage performance and engagement. But some companies have processes in place that are so ineffective, they’re not impacting performance at all, or - even worse! - doing more harm than good.

Here’s how we’ve defined “doing nothing” for the purpose of this article;

• No system or process for performance management, e.g. no tracking of employee goals, no system for ensuring managers and employees have impactful conversations, no system for providing career development opportunities, etc.

• A patchy system for performance management, e.g. a solid goal-tracking system but no processes for feedback, 1:1 meetings, or employee development

• Inconsistent performance management practices, e.g. goals are tracked closely for 2 months and then forgotten about

• Frequent changing of performance management processes, e.g. OKRs one quarter, SMART goals the next, KPIs the next

• Disjointed performance management systems, e.g. some teams are tracking goals, and holding regular, but others aren’t

• Performance management processes that aren’t properly communicated across the organisation, e.g. leadership have decided to roll out OKRs, but managers and employees aren’t clear on what they’re supposed to do

You may spot your company on this list but still feel that your current processes are serving you well. So let’s talk about what you’re missing out on by not committing to consistent, intentional performance management processes.

Because inaction isn’t just inaction in this case. Inaction is a step back. And it’s costing your business money.

The Hidden Cost of Doing Nothing

Whether your performance management processes are non-existent or just ineffective, they’re holding your teams back. Here’s what you can expect if you continue to choose inaction over action.

1. Lower profitability

When it comes to the bottom line, employee productivity, engagement and retention rates have a very real, measurable impact. As we highlighted in this article, even a 1% improvement in these metrics could save the company $100,000s per year.

Employee management software like Frankli was specifically designed to help teams drive these rates skyward. In Frankli’s case, this is done through dedicated tools for goal-setting, feedback, 1:1 meetings, surveys, reviews, and employee development.

Key statistics:

• Companies using performance management software are 1.4x more likely to meet financial targets (1)

• Highly engaged teams show 23% greater profitability (2)

• Managers who receive feedback on their strengths show 8.9% greater profitability (3)

• Organisations with a thriving company culture show 400% higher revenue (4)

• Organisations that score in the top 25% for employee experience report 2x the return on sales (6)

• Disengaged employees cost U.S. companies up to $550 billion a year (5)

• Employee turnover triggered by poor workplace culture cost U.S. employers $223 billion across 5 years (14)

2. Lower productivity

Without a clear system for tracking goals and providing feedback, employees may not be sure what’s expected of them, or what they need to do to improve.

Employee goal-setting software like Frankli helps employees identify exactly how they’re going to reach their goals, while the platform’s engagement tools help leaders and managers provide the necessary supports.

Key statistics:

• Teaming a framework like OKRs with regular accountability check-ins like 1:1 meetings increases the chance of individual goal success to 95% (7)

• Highly engaged teams are 14% more productive (2)

• Teams with managers who receive strengths feedback show 12.5% greater productivity (3)

• 85% of companies that offer work-life balance and flexible work options for their employees report an increase in productivity (9)

• Leaders at GE saw a 5x increase in productivity over 12 months when they introduced regular 1:1 meetings between managers and employees (8)

3. Lower employee engagement

Without defined processes for managing performance management and engagement, employees may not feel connected to the organisation, their managers, or their work, leading to decreased engagement, motivation, and job satisfaction.

Frankli’s 1:1 meeting, feedback and mentoring tools help build strong relationships that lead to higher engagement.

Key statistics:

• Managers and their performance management practices account for 70% of variance in employee engagement (11)

• Employees who have regular 1:1 meetings with their manager are 3x more likely to be engaged at work (10)

• 43% of highly engaged employees receive feedback at least once a week (12)

4. Higher turnover rates

Employees who feel disengaged and lack career development opportunities are more likely to leave their jobs, leading to high turnover rates and increased costs associated with recruitment, onboarding and loss in productivity.

As well as automating meaningful employee career development through career pathways and coaching and mentoring, Frankli’s tools tackle low engagement at employee, manager and leadership levels.

Key statistics:

• Lack of career development opportunities is the #1 reason why employees leave their jobs (13).

• Highly engaged teams show 43% lower turnover (2).

• Organisations with recognition programs have 31% lower voluntary turnover (15)

• Companies that implement regular employee feedback have 14.9% lower turnover rates (3)

5. Higher absenteeism

Absenteeism isn’t usually a metric we like to focus on, as it doesn’t distinguish between unavoidable absenteeism due to illness etc. and avoidable absenteeism related to low engagement.

But the research on this one is clear - disengaged employees are more likely to miss work, which can stall progress on important projects and cost the organisation money.

As we saw in #3, employee development software like Frankli uses performance management tools to drive high engagement.

Key statistic:

• Absenteeism is 81% lower on highly-engaged teams (2).

6. Uninspiring company culture

Researchers and CEOs all agree on this one - culture and performance are intrinsically linked.

Employee performance management software like Frankli helps leaders build thriving cultures through employee surveys, consistent feedback and themed, automated 1:1 meetings.

Key statistics:

• 94% of executives believe strong company culture is key to business success (16)

• Organisations with great culture are 53% more likely to have highly engaged employees, 29% more likely to see employee innovation and 27% more likely to have increased revenue in the previous year (18)

7. Lower employee satisfaction and wellbeing

When employees feel undervalued or unsupported, employee satisfaction and wellbeing suffer, leading to a negative work environment and decreased employee engagement.

Frankli helps teams support employee satisfaction and wellbeing through regular surveys, built-in conversation templates and meaningful employee development opportunities.

Key statistics:

• Employees who don't have regular 1:1s with their managers are more prone to burnout (17)

• Researchers estimate a return on investment of $1.50 for every $1 employers spend on an employee wellness program (21)

8. Lack of innovation

Without a focus on employee development and career growth, employees are less likely to bring new ideas or solutions to the table.

Employee development software like Frankli shows employees how they can build a bright future at the company through demonstrating competencies like innovation.

Key statistic:

• Employees who receive strong recognition are 33% more likely to be proactively innovating (19)

9. Lower customer satisfaction and retention rates

Disengaged employees are less likely to provide quality customer service, leading to decreased customer satisfaction and potentially decreased revenue.

When your teams complete meaningful performance management rituals like goal-tracking, 1:1s and surveys through Frankli, they free up valuable time to devote to customer success.

Key statistic:

• Organisations with high employee engagement retain more than 80% of their customers (20)

As the data clearly shows, the items on this list are directly connected. If we neglect one area, it can have a negative impact on the others. This is why employee performance management software so powerful - it takes the guesswork out of building highly-engaged, high-performing teams with research-based workplace rituals and actionable employee insights.

Creating a review cycle in Frankli

9 Key Benefits of Performance Management Software

Digital performance management tools like Frankli help your teams build everyday rituals that fuel company success. We’ve provided an in-depth explanation of the benefits of performance management software in this article, so here, we'll just summarise the key points.

1. 1

   It saves time and effort by reducing the need for manual data entry and analysis.

2. 2

   It uses automation to save time and promote impactful rituals by sending automated reminders and notifications.

3. 3

   It offers greater visibility and accessibility of goals and priorities by automating sharing and granting access to relevant stakeholders.

4. 4

   It offers people analytics by autogenerating reports highlighting key action points from large amounts of data.

5. 5

   It integrates with existing tools to empower employees to complete performance management tasks in tools they already use.

6. 6

   It offers flexibility through customisable workflows.

7. 7

   It offers guidance and support to employees who struggle with performance management practices.

8. 8

   It delivers data security and helps keep track of valuable employee data.

9. 9

   It stores all performance management activities in one place, eliminating the need for context-switching.

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Frankli Vs Doing Nothing Comparison Chart

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Sources:

1. Deloitte, Top Findings from High-Impact Performance Management Research. 2. Gallup, Employee Engagement vs. Employee Satisfaction and Organizational Culture. 3. Gallup, The Secret of Higher Performance. 4. Forbes, Does corporate culture drive financial performance? 5. Gallup, How to Tackle U.S. Employees' Stagnating Engagement. 6. IBM Smarter Workforce Institute, The Financial Impact of a Positive Employee Experience. 7. The ASTD Handbook of Measuring and Evaluating Training. 8. Harvard Business Review, GE’s Real-Time Performance Development. 9. IWG Global Workplace Survey. 10. Gallup, Should Managers Focus on Performance or Engagement? 11. Gallup, Managers Account for 70% of Variance in Employee Engagement. 12. Forbes, Feedback: You Need to Lead It. 13. McKinsey, The Great Attrition is making hiring harder. Are you searching the right talent pools? 14. SHRM, Toxic Workplace Cultures Are Costing Employers Billions. 15. Bersin and Associates, The State of Employee Recognition. 16. Deloitte, Core Beliefs and Culture. 17. Gallup, 2022 State of the Global Workplace. 18. O.C. Tanner, The Business Case for Recognition. 19. O.C. Tanner, The ROI of Effective Recognition. 20. Demand Metric, Employee Engagement Survey. 21. SHRM, The Real ROI for Employee Wellness Programs.