Summary
Leading workwear company Carhartt, Inc. was struggling with a Word-based appraisal system and selected Halogen eAppraisal™ to automate the process and drive time savings for all involved. An in-depth feasibility study driven by Information Services (IS) formed the cornerstone of the company's selection process and enabled the company to successfully measure the ROI of their investment. With the new system, Carhartt has been able to:
- Improve employee engagement and visibility into the process;
- Put HR in control of the system creating forms and processes, with little involvement from IT; and
- Achieve a 120% ROI for the company and ensure major measurable time/cost savings particularly for managers.
Company Profile
Carhartt, Inc. combines heritage and innovation to create authentic workwear that guarantees to get the job done right. Since 1889, Carhartt has been the premium workwear brand of choice for hardworking men and women thanks to a history of continuous innovation and a commitment to high-quality and durable products and services for its consumers both on and off the job. Headquartered in Dearborn, Mich. with more than 4,500 employees worldwide, Carhartt (www.carhartt.com) is privately owned and managed by the descendants of the company's founder, Hamilton Carhartt.
Challenge
Carhartt was using a Word-based employee performance management system that had been developed by the company's IS team. The forms included macros that would populate and do calculations, however, the entire system was proving to be cumbersome for all involved.
"There was a lot of pain for all involved with the Word-based system," explained Katrina Agusti, Senior Analyst, Carhartt. "If you didn't save the form in the right way or have the right security settings, the form wouldn't work right, and users were losing their work. On top of that, there was no standard method of completing the form or workflow for the process. Everyone was frustrated and employees were totally disengaged from the process."
HR, IS and departmental managers all agreed there had to be a better way to execute the appraisal process and have more interaction with the company's employees. The in-house IS team, which services the HR department, began to research options for moving to a standardized process that would provide visibility and control.
Solution
The HR team researched available options and decided a web-based employee performance and talent management system would best suit the company's needs. The IS department then did its due diligence to assess vendors and available solutions, and had demonstrations with a number of vendors including Halogen Software and SuccessFactors.
A key part of assessing solutions was the development of a list of requirements from both HR and IS, as well as a feasibility study prepared by Agusti. Any solution that Carhartt selected needed to be able to deliver a high level of functionality and have a user friendly interface, all while putting the HR/IS teams in control and enabling them to quickly and easily create forms and change the workflow. The feasibility analysis examined a move to an automated solution on two levels, technical and economic, and clearly outlined the impact of this project on the IS team, as well as the expected ROI and cost savings of replacing the existing system.
"After examining all of the solutions and ensuring we were meeting our objectives from the feasibility study, we decided on Halogen eAppraisal," said Agusti. "We opted for Halogen's offering based on its user interface, as well as the fact that we would not have to go back to the vendor to create forms or alter the workflow. Plus, we have the resources, so we wanted to be able to host the solution internally as this would be the most cost effective option in the long term. Having the flexibility to deploy in-house was a real plus."
Carhartt was able to deploy the Halogen solution enterprise-wide in under 60 days. "I still can't really believe it was done so quickly, I kept asking Halogen if there was something I should do. I am naturally skeptical about implementations because it can quickly turn into a nightmare, but in this case everything went smoothly. My initial fears about having to provide a lot of support to HR haven't been realized, the solution is so intuitive they are able to make changes and need very little from IS."
Benefits
Carhartt completed its first performance appraisal process in late 2007, with great success. With a new web-based employee performance and talent management system, the company has been able to increase the level of employee engagement, gain insight into the process, and achieve measurable cost and time savings.
"We are headquartered in Dearborn, Michigan, but we have facilities across the U.S. , four facilities in Mexico, a distributed salesforce across the U.S. and Canada, and operations in the Netherlands, Poland and China," said Agusti. "Having people spread out across the world used to be a real issue with the paper-based system, but we've been able to overcome this challenge. Everyone involved knows exactly what is going on and where things are in the process. We have achieved 100 percent consistency between all HR teams, managers and regions, which is a huge improvement for us."
Carhartt employees have reacted very favorably to the new system, and are now involved in their evaluation and development on a day-to-day basis using performance journals. "Everyone has been saying thank you because they finally have a role to play in the process, and aren't just meeting with managers once a year. Many employees and managers have remarked on how user friendly it is with the automatic reminders and workflow steps," explained Agusti.
From an IS perspective, the new performance appraisal system has resulted in time savings, with very few helpdesk tickets being opened related to the maintenance or function of the system. "Our group supports dozens of systems and this is one of the lowest maintenance systems we have," stated Agusti.
Based on Agusti's feasibility study, Carhartt has been able to measure the ROI of its investment, along with calculating the cost savings for all involved. The ROI on the Halogen solution has been 120% for Carhartt, with a measurable annual cost savings across HR, IS and managers.
"Hands down, our biggest cost savings has been with managers," said Agusti. "We have estimated that by moving to the new system they have reduced time to produce appraisals by 35 percent, and we expect that to be as high as 50 percent by the third year of using the system."
The HR team at Carhartt is now planning more strategic ways of using the Halogen solution now that they are experienced with it. They are looking at including compensation management into the mix, and more closely aligning goals and development plans. A key priority is getting associates even more engaged in the process so they can track their performance and development on a daily basis.
Agusti sums up Carhartt's experience, with Halogen, "I would absolutely recommend Halogen to anyone looking for an employee performance and talent management solution. I can't think of anything we would do differently, things went so well."
Making the Case and Measuring Success
A key element of Carhartt's decision making process and subsequent measurement of the success of the new system was an upfront feasibility analysis conducted by Agusti from the company's IS team. The feasibility analysis included a look at the technical feasibility of moving to a web-based employee performance and talent management system, ranking the risk of factors such as familiarity with application, familiarity with technology and the project size. An in-depth analysis of the economic feasibility of the solution was prepared as part of the study, which looked at items including Carhartt's internal costs, the benefits of the system in terms of time and cost savings and a breakdown of intangible benefits.
The cost-benefit analysis performed in the feasibility study became the basis for Carhartt to measure the success of the project based on ROI and cost savings calculations. The analysis looked at the cost savings on year-by-year basis for three years following the implementation, and provides the company with a much needed tool to measure the program's ongoing success.
Calculating ROI Checklist
Internal Costs
- Hours and rates for all IT and HR staff on the project
- Costs of the new system
- Labor
- Project administration
- User acceptance testing
- Implementation related costs
- Operational Costs
- Licensing
- Professional services fees
- Maintenance over three years
- Hardware costs
Benefits of the System
- Analysis of projected time savings based on hourly rates and anticipated time savings
- Managers - Number of hours saved preparing and conducting performance appraisals
- HR - Number of hours saved on the administration of the performance management process
- IT - Number of hours saved on support, maintenance and associated tasks
