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Continuous performance management firm, BetterWorks, reboots

BetterWorks Systems has a new CEO and has put a sexual harassment lawsuit in its rearview mirror. The startup has $60 million in funding from some top Silicon Valley VC firms.

BetterWorks Systems has a new CEO and has won some new business. These are steps forward for this continuous performance management software vendor. Last summer, the firm's CEO resigned following a sexual harassment lawsuit.

Continuous performance management software emphasizes ongoing goal setting and feedback. It includes peer input. A Bersin by Deloitte Consulting report said it improves goal setting and employee engagement.

BetterWorks, founded in 2013, was part of a new breed of performance management firms. Indeed, it received the trademark for "continuous performance management." But in July 2017, a former employee filed a lawsuit alleging sexual harassment. It was against the firm and its CEO and founder, Kris Duggan, who later stepped down from the post.

New CEO steps in

The firm was without a CEO for about seven months until March when it appointed Doug Dennerline. He has been the BetterWorks executive chairman since November and continues in that role. He was previously CEO of Alfresco Software, an enterprise content management firm. His resume includes a tenure as president of SuccessFactors.

Doug Dennerline, CEO of BetterWorks SystemsDoug Dennerline

The lawsuit has since been dismissed, according to BetterWorks and court records. The plaintiff's attorney, Ron Arena, said in an email that "the matter has been resolved." A third-party independent investigator sponsored by the firm's board of directors found "no harassment" or violation of company policies, Duggan said in a blog post. Duggan is now at work on a new venture, not yet announced, but it is not in the HR space, he said in an email.

The lawsuit and loss of its CEO "certainly had an impact on the momentum in the organization," Dennerline said in an interview. "Reputationally, we certainly took a hit in the marketplace."

Dennerline said the issue is now in the firm's past. "I think, candidly, we're through it," he said.

Company moves ahead with VC funding

BetterWorks has 80 employees and $60 million in funding from some of Silicon Valley's leading VC firms, Emergence Capital and Kleiner Perkins. John Doerr, chairman of Kleiner Perkins, is also a board member of BetterWorks.

Reputationally, we certainly took a hit in the marketplace.
Doug DennerlineCEO, BetterWorks Systems

The firm recently signed a major deal with "one of the top four banks" for its systems, Dennerline said. He would not name the bank.

BetterWorks was founded on the idea that the performance review process is outdated. The annual review process gets minimal management time, and "doesn't reflect the actual performance of the person over the course of time," Dennerline said.

With continuous performance management, "you actually can reflect back on a yearlong conversation you've had with your employee" and "make your performance review reflect more greatly the work that the person has done," Dennerline said.

New capabilities coming to BetterWorks software

BetterWorks is adding new capabilities to its systems, including improved analytics.

In the next six months it will deliver sentiment analysis capabilities, Dennerline said. This intelligence will "look at the language that managers are using in these conversations," he said. The idea, for instance, is to detect a manager who uses a lot of negative language and also sees a higher turnover and lower engagement.

The ROI on these systems comes from, in part, improved employee engagement, such as how an employee's work connects to organizational goals. "They feel better connected," Dennerline said.

Holger Mueller, a principal analyst and vice president at Constellation Research, believes performance management systems, generally, need improvement. The breakdown of goals is not really productive, he said. "There is no common best practice," and as a result "all startups have a shot to redefine it," he said.

What's needed in performance management "must be in the direction of more regularly shared, more micro-level feedback," Mueller said. Machine learning and AI can help process more sources and help in the understanding where employees may really stand, he said.

The market is competitive and in need of new best practices, Mueller said. "Enterprises are experimenting -- in-house and with vendors."

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