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Midwest Manufacturer Realizes 85% Savings by Improving the Quality and Efficiency of their Performance Appraisal Process with Halogen eAppraisal

Customer Profile

Van Meter Industrial began operations in 1928, after a merger between Iowa's two largest long-term industrial distributorships. In 1993, the company established an employee stock ownership plan (ESOP) and today, Van Meter is 100 percent employee-owned and operated. Its more than 400 employees run successful manufacturing and processing facilities in 15 locations across the state, building products for several industries including automation, computer, datacom and electrical.

Van Meter employees are the best in the business, offering world-class service and leading-edge technology, living up to the company's motto—Employee Owned, Customer Driven.

The company's success can also be attributed to its adoption of technology to better serve its customers. For example, Van Meter became an early adopter of XML technology to transmit customer orders electronically over the Internet. The employees' vision to become their customers' competitive advantage through the adoption of leading-edge technology helps drive their continued success.

Challenge

Continually striving to improve client service, Van Meter decided to look inwards. Managers realized one way to enhance employee commitment was through their annual employee performance reviews. Their existing employee performance management (EPM) system had not been re-evaluated for a number of years and Van Meter recognized it was time to overhaul the system and process.

After reviewing their existing EPM system, the managers were surprised by the inefficiencies they uncovered. First, their EPM process, which was paper-based, required supervisors to keep paper notes on their staff, and employees to keep notes on their own personal goals and progress. Second, it required a lot of travel time. Although they used email to send documents back and forth, supervisors had to drive for several hours to meet with employees who lived elsewhere in the state. And, finally, hard copies of the evaluations were produced, signed and sent through the interoffice mail system.

Not only was the system inefficient in terms of time and money spent, it left personal and private information wide-open to curious eyes. Furthermore, the inefficient system was counter to the importance they attributed to timely and fair employee reviews. Van Meter attaches a monetary value to every review that is completed on time and without error. After reviewing the situation, Van Meter decided that a new EPM system needed to be made a strategic priority.

Although HR made the initial request to the executive team, the IT department needed to be involved from the outset.

They had learned a hard lesson in a past situation where an HR system was sourced and purchased without IT participation. While the system performed the functions necessary for HR, support for the product required expensive and continual consulting work and a large chunk of IT staff time. Not surprisingly, because IT had not been informed about or involved in the purchase, they were not prepared to support the application.

• HR and IT need to work together. HR knows what features they need to fulfill legal requirements and to achieve business goals. IT understands technological requirements and what the company's systems can support.
• Typically, IT has more experience in purchasing and supporting large programs and applications. HR departments stand to benefit by leveraging this knowledge.
• When dealing with consultants, the IT department can offer technical knowledge and questions to complement those of HR.

When the request came from HR for a new system to be sourced, IT was guarded. HR had initially requested that IT develop an in-house solution. But from an IT standpoint, they lacked the resources to program, manage and maintain an in-house program. "We also didn't want to expose our IT staff to any more sensitive information than we absolutely had to," recalls Den Henrickson, Senior System Administrator at Van Meter. "This was to protect HR, employees, and the IT staff."

So with the advantage of 20/20 hindsight, the HR and IT departments worked together to source a suitable application. Together they calculated the overarching goal—to reduce the organization's review process costs by 15 per cent. This objective was calculated by adding the costs of reduced travel by employees and supervisors, reduced manual work by the HR department, and time saved not having to sift through a years' worth of employees' handwritten notes.

Solution

Together HR and IT set out the requirements for a new EPM system. Final selection criteria was as follows:

1. Ease of use
2. Ease of administration
3. Minimal additional support required by IT
4. Ability to automate processes and follow-up notifications (i.e. HR didn't want the hassle of having to continually remind supervisors to complete tasks)
5. A stand alone application (i.e. Van Meter didn't want to purchase a full blown Human Resource Information System (HRIS) with components they would likely never use)

After assessing several solutions, Van Meter chose Halogen eAppraisal.™ The main reason for their choice was that Halogen eAppraisal was not part of a complete HRIS package. Other vendors offered modules that were part of a larger package, and as a result, were more expensive. Van Meter had no interest in moving to a single system since they already had most of the other components in place. The second reason was Halogen eAppraisal's ease-of-use and simplicity.

"eAppraisal was by far the simplest program for the end-users. We didn't want to have an overly complicated package," said Henrickson. "We believed that if we overloaded our people with a complicated system they wouldn't buy into the process and would put up resistance."

Once the decision was made to purchase Halogen eAppraisal, Van Meter looked inward to decide how their existing processes would fit most effectively with Halogen eAppraisal. They critiqued their existing process step-by-step. This exercise exposed more ugliness than they originally thought existed. "We had to ask ourselves 'Why on earth are we doing it like this?' Many times the answer was 'because we've always done it that way.'"

When it came time to set up their first process, there was some internal indecision about how to proceed. Henrickson admits that if they'd had a rollout plan they could have focused 100% of their efforts on the rollout and the entire process could have taken only 2-3 weeks.

A training package was purchased to get things 'right from the start'. Cautious as a result of their experiences in implementing corporate-wide systems, they knew that training would be an important element for a successful rollout, especially for the IT staff, who would field staff questions about the product. A Halogen Software training consultant visited the Van Meter offices to train the HR and IT help desk staff. The IT and HR personnel were then dispatched to perform the staff training—one hour for employees and two hours for managers—minimal training by Van Meter standards.

"With our other HR application we didn't perform any training on the application," says Henrickson. "But from that experience we learned that a well-trained employee generates fewer help desk calls and feels less frustration than an employee who doesn't have a clue where to start. A program that's simple to train on and simple to use makes everyone's life easier."

Van Meter was eager to begin the process. Less than 30 days after receiving training on the product, Van Meter launched its first appraisal process - an impressive feat by anyone's standards. The turnaround was even more impressive because Henrickson's team had originally budgeted six months to rollout the new system.

Van Meter eAppraisal system rollout steps:

April 23	Signed Contract
June 22–25	Trained the trainers and designed initial forms and processes
June 28–July 2	HR and IT wrote user documentation
July 5–15	Started training the employees and managers
July 5	Evaluation process kick-off
July 15	First evaluations completed

Originally, Van Meter intended to host the system on-premise. But after a cost analysis that included the estimated number of IT person hours for system updates and maintenance, the cost of the server and the backup required, they opted for Halogen's hosted solution. Having Halogen minding the back end added to the simplicity of the product implementation and use. Van Meter would not have to allocate time for upgrades.

"Halogen has performed very well in this aspect. They keep the system maintained and backed up, and perform technical troubleshooting. They also assist our HR personnel when they're stumped. Since the program is fundamentally simple to use there are fewer calls in general, the problems are usually simple and because Halogen provides excellent support it's easy to get things fixed that are beyond our skills," says Henrickson. "This is the only program we're currently having hosted for us and I'm very happy with how it's working out."

The product is currently being used enterprise-wide, with all employees using the system. This translates to more than 400 users in 15 offices.

Benefits

Once Halogen eAppraisal was implemented, managers and employees were able to update and maintain notes electronically in a single location—which proved very useful when it came time to perform the actual appraisal. Electronic signatures enabled them to abandon the need for paper. As a result, the need for travel between locations has decreased. For those still required to travel, a big benefit of the system is their ability to complete evaluations while on the road. Many users praise the 'anytime, anywhere access' as a major benefit of the system.

In comparison to previous years' appraisals—pre Halogen eAppraisal use—the immediate results were much more uniform in terms of the format and the types of comments that users were able to include when completing employee performance appraisal forms. Because the system is able to provide users with guidelines, users stay within acceptable corporate standards, resulting in more consistent reviews. More importantly, the majority of reviews are completed in a timely manner. In the past, large numbers were completed very late—30 days or more beyond the window of time allocated.

In Henrickson's experience, new product rollouts typically result in a significant increase in help desk call volume. This time, things were different. User response to the technology has been overwhelmingly positive.

They expected the help desk to have additional call volume, but after the initial rollout there were very few calls related to the product, about 2–4 calls per week. And the typical user issues were web-browser related, not product-related.

For Van Meter, the product's best feature is the simplicity of the end-user interface for both day-to-day journal entries and for the annual evaluations. "We didn't want to scare our employees and managers with a bulky complicated system," says Henrickson. "This system is not scary to use!"

"Believe it or not, the feedback has been universally positive. This has never happened to me before. Not even the people who are completely phobic over computers have complained. This is the only product I've rolled out in eight years that I haven't received any negative feedback on from users!" says Henrickson.

Van Meter significantly exceeded the cost savings they were aiming for, surpassing their original goal of an overall cost savings of 15% per review, to reach on overall cost savings of 85%.

Following the rollout, employee and manager surveys were conducted to gather qualitative and quantitative feedback on the new system. They calculated time saved for completing, reviewing and following-up on appraisal completion, as well as the reduction in time allotted for travel. Their evaluation also factored in errors made in the system, hosting costs and additional time for IT staff to support the new product.

"For example," explains Henrickson, "with 85% cost savings, if we used to spend $100 per review, we now spend $15!"

 

Henrickson would highly recommend Halogen eAppraisal to other organizations, based on general ease of use, the automated reminders and overall cost savings. When asked if the investment in an employee performance management solution was worth it, he responds, "Yes! It was worth it simply for the employee and manager feedback. They are all on board and loving the system. Once you plug in the cost savings per review the solution is a no-brainer!"

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