America's Largest Non-Profit Investment Manager Follows Strategic Steps Towards Complete Employee Performance Management Solution
Customer Profile
The senior executives at America's largest non-profit investment management firm* saw significant value in upgrading their employee performance management (EPM) system and assigned their Director of Business Systems to find a vendor who would meet all their needs. The investment firm manages approximately $37 billion for almost 1,700 non-profit institutional clients across the U.S. They enhance the financial resources of non-profit institutions and help them improve investment management practices. This responsibility is placed ahead of profit, unrestricted growth and asset gathering - which allows them to offer thoughtfully constructed, high-quality programs and services at competitive costs. Aiming to manage their employees as productively as the funds they manage for their clients, the organization has always given careful thought to effective employee appraisals and compensation.
Challenge
Implement a new EPM System with the least possible disruption to the organization
Existing Compensation System
The organization currently uses a two-part compensation system made up of merit-based salary increases, which are determined using employee appraisals, and a separate incentive bonus process. The merit-based salary adjustments and bonus calculations are performed at different times during the year using a spreadsheet created by the CFO.
While this works well, there are concerns regarding the security of the information contained in these massive spreadsheets.
"The biggest drawback to our original system is that data is not stored securely and it is not accessible via a user interface," explains the investment firm's Director of Business Systems. "It is all Excel-based and if something were to happen to our CFO, our system may breakdown."
Incentive bonuses are dependent on a number of metrics that are specific to the employee's department and role within the organization, and based on a 1, 3 and 5 year plan to achieve certain targets. Many of these targets are corporately driven values such as total revenue, or cost reductions etc. To increase employee retention, these bonuses are also tied to the number of years an employee has been with the organization.
Annual salary increases, which rely on information gathered from annual employee appraisals, are relatively modest compared to payouts awarded through the incentive bonus process.
The organization wanted a new system that would support their unique compensation processes as well as address their security concerns.
The Implementation Strategy and Solution
The organization's implementation strategy was to automate its EPM system one step at a time, carefully evaluating each step in order to minimize risk.
"We wanted to start our automation project with a process that had the least impact on an employee's total compensation." said the Director. "Our appraisal process focuses on documentation and education. Although the appraisals are used to determine annual salary increases - they are not being used to determine incentive bonuses, which have the potential to be much more substantial."
After spending months evaluating several vendors, they chose Halogen Software's Talent Management Suite (eAppraisal™, eCompensation™ and e360™). Since each module in Halogen Software's performance management software can be implemented as a standalone solution it allowed the organization to implement what it needed at a comfortable pace.
The Director adds, "Halogen provided us with exactly what we needed; it met all of our criteria and it was clean and simple to use compared to other solutions. Plus we could configure it the way we wanted."
Step 1: Halogen eAppraisal
Since employee performance reviews had the least impact on an employee's total compensation - automating the appraisal process first was part of a strategic plan from the very start. Halogen eAppraisal not only reduces this investment firm's administrative headaches - it helps them prepare more meaningful appraisals that are completed on time along with employee development plans. More importantly, it fosters better interaction between managers and employees, which is key to their appraisal process. Finally, the web-based system provides accurate data that can be used by Halogen eCompensation for determining merit-based salary increases.
Step 2: Halogen eCompensation
The organization will introduce Halogen eCompensation as the next step in the automation of its EPM system. This solution will be used to calculate the amounts for both annual salary increases and the incentive bonus. "We decided to find a vendor with a proven application and then customize that solution to meet our business needs," said the Director. "We needed a solution that would strictly control access to sensitive compensation information and Halogen provided us with that."
When the organization began investigating web-based compensation management solutions they wanted a solution that would work easily with their CFO's spreadsheet, and simplify and automate the entire compensation adjustment process. They wanted the solution to provide all levels of management with secure, simple to use tools to allocate merit-based compensation. After screening three other vendors, Halogen eCompensation was chosen primarily because it worked well with their original spreadsheet system and integrated seamlessly with Halogen eAppraisal.
Benefits
Eliminates Administrative Tasks and Helps HR Stay on Top of Activities
The organization's overall appraisal process will be much easier to manage. "The solution will not produce a flood of paper for HR to drown in," said the Director. "The progress of those involved in the appraisal process can be easily tracked at anytime and automated e-mails will be sent out to those who are falling behind schedule. Our HR administrators will be able to easily stay on top of who has completed their appraisals and the progress of those that remain incomplete."
Everyone Gets What They Want. Easily!
The organization used a common employee evaluation form to begin their first appraisals; however, several senior managers expressed interest in having forms designed specifically for their departments. It became an extremely important feature that multiple forms were supported, could be designed easily and would allow for virtually unlimited content and layout choice. This desire for departmentally configured forms is satisfied with point-and-click simplicity.
Scoring and Weighting Options are Almost Infinite with eAppraisal.
This enables the organization to design a process that avoids the use of numerical scoring on the front end yet still provides objective reports to senior executive on the back end. Forms can include comments boxes, evaluative statements and other elements rather than numerical ratings.
Helps Retain and Recruit Talented Employees
The organization's existing compensation system is good, but employing eCompensation will make it even better. The solution has built in checks and balances to reduce errors and help ensure more accurate and fair compensation adjustments. Establishing confidence in companywide pay rates and bonus payouts helps to both retain current employees and to recruit the best employees available.
Fosters a Performance-Oriented Culture
"The best employees want to know that their focus and productivity will be appropriately compensated," said the Director. "I believe in the system and I believe this system works. Our compensation system will attract the best people in the business to all our departments. We will have a solution in place that ensures employees and potential employees are compensated for their achievements."
*NOTE: The investment management organization referenced in this story has requested that its name not be used in marketing publications, but is happy to act as a customer reference on behalf of Halogen Software. Please contact Halogen for further reference information.
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