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Getting a Performance Management Budget

Getting budget approval for a performance management (PM) project seems to be an ongoing theme amongst HR professionals. The problem seems to be that human resources departments don't often contemplate projects costing tens or hundreds of thousands of dollars. This makes sense to me given that most HR acticity - by amount of time spent - revolves around recruitment, payroll and training. And the dollar amounts for any inititiatives are in the order of a few thousand dollars.

It seems as though most human resources professionals struggle with the concept of the expense required for performance or appraisal management systems - with obvious cause.

The crux of the matter though is not really one of expense but one of value. What does real value mean when applied to performance management systems ? How can a software supplier tell the HR department that they have to pay some money every year per staff member ? Where is the value for the money spent on performance management ? Human resources staff instinctively understand the value in training and developing staff and find it easy to justify large training budgets and recruitment budgets.

The trick is to understand performance management systems in the sense of employee development systems. This is because PM systems usually include a competency framework, personal development goals and organisation objectives which can only be achieved if the employee is further trained and developed. This is what HR is good at. The dollar value comes from getting more people working smarter. When you do the sums, the benefits swampt the costs.


Getting budget approval for a performance management (PM) project seems to be an ongoing theme amongst HR professionals. The problem seems to be that human resources departments don't often contemplate projects costing tens or hundreds of thousands of dollars. This makes sense to me given that most HR acticity - by amount of time spent - revolves around recruitment, payroll and training. And the dollar amounts for any inititiatives are in the order of a few thousand dollars. It seems as though most human resources professionals struggle with the concept of the expense required for performance or appraisal management systems - with obvious cause.

The crux of the matter though is not really one of expense but one of value. What does real value mean when applied to performance management systems ? How can a software supplier tell the HR department that they have to pay some money every year per staff member ? Where is the value for the money spent on performance management ? Human resources staff instinctively understand the value in training and developing staff and find it easy to justify large training budgets and recruitment budgets.

The trick is to understand performance management systems in the sense of employee development systems. This is because PM systems usually include a competency framework, personal development goals and organisation objectives which can only be achieved if the employee is further trained and developed. This is what HR is good at. The dollar value comes from getting more people working smarter. When you do the sums, the benefits swampt the costs.


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