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Giving the boot to traditional performance reviews

John Carlan, managing mirector with Javelin Technologies, with employee Barbara Jarosz demonstrating the Rypple software.

Fred Lum/Fred Lum/The Globe and Mail

At Javelin Technologies Inc., managing director John Carlan and his colleagues used to measure employee performance the old-fashioned way. Javelin, based in Oakville, Ont., sells design software, 3-D printers and other cutting-edge technology to manufacturing and engineering firms. But until a few months ago, staff and managers at the company did performance evaluations by filling out forms.

This manual system, which consisted of an annual review at the start of the year and spring and fall check-ins to make sure employees were staying on track, worked adequately. But between reviews, the documents were locked away in a cabinet, Mr. Carlan says. "They resided in file folders and weren't used on a continual basis."

Then last summer, Javelin discovered Rypple, a social performance-management platform created by the Toronto software developer of the same name. Rypple's cloud-based service – clients include Palo Alto, Calif.-based Facebook Inc. – lets users set and manage goals, provide real-time coaching and feedback and instantly praise accomplishments.

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So-called "human capital management" software is undergoing a transformation, partly thanks to the rise of social media and cloud computing. Affordable new online tools that borrow from consumer technologies could help make organizations of all sizes more productive.

Peer-oriented Rypple offers several advantages for Javelin, whose 50-odd employees across the country started using it in January. For one thing, the 40 per cent of them who work from home have easy access to it.

Employees can set up feedback loops that allow others to give them ongoing suggestions on improving job performance. Likewise, they can commend a fellow worker by posting a recognition badge for everyone to see.

When it's time to conduct a review with a staff member, all of the information that Mr. Carlan needs is there on his screen. "I know that I'm having much more effective review discussions with the people who are working for me."

Rypple (whose full suite goes for $9 a month per user) also saves Javelin money. Previously, the company had brought in human resources consultants to perform 360-degree staff reviews, an exercise that cost thousands of dollars.

Mr. Carlan thinks Rypple will deliver long-term results. "I think it's really going to bring our company together, to be on top of all the things that we've got to do," he says.

Lately, human capital software has been playing catch-up.

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"For years, it was kind of the stepchild in enterprise resource software," says Nigel Wallis, Toronto-based research director of the application solutions research group at market intelligence firm IDC Canada. "For whatever reason, despite people's comments about how their employees are the key resource of the company, they never really put the dollars behind it to prove that."

Having invested in software such as Oracle Corp.'s PeopleSoft suite, many North American corporations let things lie, Mr. Wallis explains. "Over time, what happened was the gaps between what the first generation of HR software could do versus the requirements of what companies wanted it to do became unsustainable," he says. "And so you started seeing all these cool startups create solutions at reasonably cost-effective levels that helped fill those gaps."

At Rypple, co-founder and co-CEO Daniel Debow's pitch is to kill the useless bureaucracy of the traditional annual performance review.

"If you've got a company where your talented people are distracted spending a week writing essays about each other," Mr. Debow says, "filling out long, complex forms that to compound it, most people don't think are valuable and are just an exercise in [covering your backside] that is not a good use of time."

Besides providing constant feedback that helps employees get better at their jobs, Rypple lets everyone participate in setting goals. "As a management organization, you're having less bureaucracy about how you distribute and describe goals and goal setting," Mr. Debow says. "As an individual, you have more clarity about how what you're doing is meaningful and important."

Highly productive organizations start from the position that people are good, Mr. Debow contends. "I think the problem with most traditional business software ... is that it assumes the opposite. It assumes that people are bad and that our job in management is to catch them or trap them or trick them into doing things."

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He has a warning for businesses that lag in adopting social tools to support and motivate their employees.

"You're going to see a lot of the ethos of the Web and social technology coming into how work gets done," he predicts. "And you're going to see these companies start going even faster, and the companies that don't are going to go out of business."

New HR products

Seeing a chance to conquer new markets and reinvigorate their offerings, makers of enterprise software are snapping up human capital management services. Nigel Wallis of IDC Canada flags three startups that recently cashed in:

Rypple (Toronto): Launched in 2008, this self-described social performance-management platform got such good reviews that San Francisco-based software shop announced its acquisition last December. "It's going to be the basis of how starts cracking the human capital management market," Mr. Wallis says of Rypple.

SuccessFactors (San Mateo, Calif.): German enterprise software developer SAP just shelled out $3.4-billion (U.S.) for this provider of business execution services. Mr. Wallis says SAP paid so handsomely because it wants to modernize its approach to human capital management.

Taleo Corp. (Dublin, Calif.): Last month, Santa Clara, Calif.-based hardware and software giant Oracle Corp. agreed to buy Taleo's talent management service for $1.9-billion (U.S.). "They were the big dog in human capital management for years," Mr. Wallis says of Oracle, "but were finding that their solutions weren't agile and flexible enough to reach out."

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