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Article : Performance Management - Catching The Wave

The performance management market space has gained considerable traction over the last 12 to 18 months and is commonly being heralded as a latent market ready to explode. Predictions on the market size and growth, value the space to represent a $20 billion enterprise-wide opportunity by 2005 .

A key-driving factor behind the market growth is the heightened focus within organizations on increasing productivity and reducing costs as they fight to maintain profitability in the face of declining revenue growth. This, coupled with the hard measurable results and significant return on investment being touted by early adopters of performance management solutions, makes this market one that executes well in a business decade that calls for rational decisions, measured spending and tangible return on investment.

In addition performance management, which has been traditionally viewed solely as a human resources application, has moved into the enterprise arena and become the concern of every manager within the organization. AMR Research, a strategic advisory firm, has issued several research reports on this topic and their findings conclude:

"A concern for every manager in the company, not just the HR department, performance management is critical to helping managers keep their employees focused on the right activities, and to steer their organization towards it corporate goals" - Monica Barron, senior research analyst, AMR Research.

"Successful enterprise-wide performance depends on alignment between individual goals and overall corporate strategy. Newer employee performance management applications are focused on visibility, alignment and flexibility, allowing users to quickly adapt to changing business conditions."

Performance management is also gaining traction in the market as executives and enterprises realize the direct correlation between improved employee performance and business profitability. Several leading firms have researched the link between people, performance and profit. Findings include statistical correlations between engaged employees and business performance indicators, such as:

  • Enterprises are 50% more likely to have lower staff turnover

  • Enterprises are 56% more likely to have higher than average customer loyalty

  • Enterprises are 38% more likely to have above average productivity

  • Enterprises are 27% more likely to report higher profitability

Facts such are these are driving businesses to focus on their employees' performance as a key business strategy to enable them to achieve success.

 

Market Size and Growth
Several of the leading market research organizations and analyst firms have conducted analysis into the size and growth of the performance management market space. This has been done, both at an enterprise level and at a contact center level.

 

Enterprise Market Size
Based on the market analysis of AMR Research, the enterprise performance management market space will have a value of $5 billion in 2003 and has a predicted growth of 13% per year for the next five years:

In addition, their analysis found that 42% of enterprises they spoke with placed performance management as a high priority for their business in 2003.

 

Contact Center Market Size
The contact center industry, due to its highly employee reliant nature, is widely viewed as one of the industries that can most significantly benefit from employee performance management and certainly is one of the most aggressive adopters of this breed of technology.

Findings from Gartner Research conclude that the deployment of performance management software solutions are a key factor separating the great contact centers from the average contact centers in today's marketplace, and that adoption rates are growing across the industry.

In addition, they predict that 70% of aggressive adopters of technology will be using performance management software as standard within their contact centers by the year 2007.

Datamonitor, a business information company specializing in industry analysis, on market size and growth predict the market place for employee performance management software solutions within the contact center to be worth $1.5 billion by 2007:

The key factor driving the growth is the pressure to get greater value from existing employee resources within the contact center industry, given that over two thirds of operational costs can be attributed solely to employee costs.

"As a broad range of industries feel the effects of a tight economy, call center managers are under increasing pressure to get greater value out of their agents. Given that two thirds of call center costs are directly related to the agent, simply put, companies want to get more bang for their buck out of each agent" – David Spindel, Datamonitor.

 

Performance Management Software Solutions – Core Components
The concept of performance management is based upon managing, motivating, rewarding and developing employees to improve performance and positively impact business results. What performance management software solutions bring to the market is the ability to take the underlying concepts behind performance management, and marry them with statistical data to create an operational solution that allows organizations to execute the concepts in an easy and automated manner.

The use of data and statistical information is imperative to robust performance management solutions, and the ability to automate data collection from disparate sources is a fundamental starting point and a core piece of functionality. However, where performance management software solutions differentiate themselves from other data driven solutions, such as reporting or analytics, is in how they use that data and statistical information.

The use of the data to manage, motivate, reward and develop employees is the mantra of performance management solutions. It is this approach that enables them to deliver significantly more value to organizations than traditional performance reporting or analytic solutions. The effect of this approach is to drive activity and action across the entire employee base rather than just at a managerial level. Using information in a manner that empowers employees to drive their own productivity and performance and that sustains performance improvements across the organization, has measurably more impact on profitability and business results.

Based on the findings of Gartner Research , performance management software solutions take their use of information much further than reporting and analytics to impact the productivity and performance of employees by:

  • Setting clear performance expectations for agents and managers, which are aligned with the goals of the organization

  • Delivering timely feedback on performance at both an individual and a unit level, empowering agents to modify behaviors to better meet daily productivity and performance expectations

  • Encompassing reward and recognition schemes and performance related pay to motivate agents to continually improve

  • Targeting learning and development based on factually identified needs to ensure that the performance curve of the business continues to shift forward

  • Aiding in identifying the characteristics (knowledge, skills and behaviors – competencies) of high performers

A robust performance management solution must exhibit functionality that addresses each of the five points outlined above, along with matching the functionality of traditional performance reporting solutions.

 

Performance Management Software Solution – Realized Benefits
As previously discussed, the realization of the tangible link between employee performance and business results is bringing performance management to the forefront of most executives' minds as a critical factor for business success. In addition, the hard measurable results and significant returns on investment being touted by early adopters are proving hard for any executive to ignore.

Based on a survey of organizations that have implemented and deployed performance management software solutions in their contact centers, it was found that all of them achieved very positive results. While the actual results varied from organization to organization in terms of the metrics that were improved and impacted, each organization reported improvements in employee productivity and reductions in operational costs. What follows, are the measurable results delivered to one early adopter of a performance management software solution. Due to the confidential nature of the research conducted, it is not possible to refer to this organization by name. It is important to note that this company achieved these improvements within 4 months of deployment:

  • Call transfers reduced from 20% to 8%

  • Quality scores increased by 5%

  • First time call resolution increased by 7%

  • Average handling time decreased by 4%

  • Supervisor workloads reduced by 8 hours per week resulting in an increase in supervisor to agent ratio of 1:11 to 1:13

  • Automation of the appraisal process resulted in a 3 hour time savings per agent, per review

In addition to this survey, Gartner Research has conducted several case studies on organizations deploying performance management solutions within their contact centers and they conclude:

 

Summary
The performance management software solutions market space is rapidly gaining market momentum. The organizations leading the way with early adoption have reaped the benefits of software solutions that are built on common sense and old-fashioned business values of cost control, return on investment and product reliability.

Predicted to be the key-driving factor in the growth and success of the contact center industry this decade performance management software solutions should be evaluated and considered by any executive serious about success.


About the Author
Rosemary Turley is VP of Global Marketing for Performix Technologies. Rosemary Turley has responsibility for all global marketing initiatives and product management. Rosemary has been working in strategic marketing for 17 years with experience in the contact center, telecommunications, FMCG and pharmaceutical industries. Rosemary has worked with blue chip companies in the US, Australia and Europe.

About the Company
Performix Technologies is a provider of performance management solutions that increase the profitability of contact centers by improving the business performance of employees within the enterprise. Performix' latest software, Emvolve Performance Manager, is the only enterprise software solution designed to drive bottom-line improvement by increasing the value of the customer relationship through improved employee performance.

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Published: Thursday, June 19, 2003

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