Retaining employees is a challenge for all small ventures. But in Kerry Schulz's business -- running video rental and convenience stores -- it's a nightmare. "In our industry, employee turnover typically is measured at 100%, 200%, or 300% a year," he says, adding that it can wreak havoc on day-to-day operations.

Yet Schulz, vice-president of 70-employee Vidcon Enterprises in Battle Ground, Wash., manages to keep workers about a year and a half. Besides treating them well, he credits his success to an inexpensive technology -- employee evaluation software. Why? Because, he says, it has made it easier to give people consistent feedback. And that encourages them to stay on the job.

Of all the business uses of software, those that supplant human discernment are bound to be controversial. Some aspects of these programs are innocuous enough -- such as forms that allow companies to standardize numerical ratings and categories for evaluating workers. Most large companies have them, anyway. On the other end of the spectrum is boilerplate text that managers -- especially those uncomfortable with words -- can use to impart good and bad news to workers about their performance as well as suggestions for improvement.

The idea of using generic language for one of the most sensitive and personal tasks a boss faces could understandably make many employees -- and managers -- cringe. But Schulz insists that it has helped Vidcon avoid some of what participants hate most about evaluations: their tendency to be inconsistent and painfully subjective -- and time-consuming.

"The main problem the software addresses is consistency," says Schulz. "We have multiple locations. And each location has its own manager, some of whom have been evaluating employees longer than others. Our concern was to evaluate each employee consistently, so they knew exactly where they stood." The feedback has helped Vidcon employees feel their good deeds are noticed, and they have guidance for doing better, he contends.

To see how it might feel to evaluate by software, we looked at the program Schulz uses -- KnowledgePoint's Performance Now ($119) -- and a similar product, Austin-Hayne's Employee Appraiser ($129).

With both, you start by creating a record for each employee that includes basic information, such as job title, salary, and last and next review date. Next, you select a template for the general class of employee you're evaluating. Employee Appraiser has 17 templates, ranging from customer service to managerial and production workers. By contrast, Performance Now! has only four templates: clerical, production, management, and sales and service.

POINT, CLICK, AND EVALUATE. Overall, we found the programs to be equally thorough. In each job-category template, there are general criteria for evaluating people, such as "communication skills." The programs also have additional criteria appropriate to specific job categories. For instance, the managerial templates look at such skills as how well managers handle employees and develop their skills, plan for the long term, conduct meetings, and solve problems. Those criteria aren't part of the production workers' templates, which instead have ratings for work output and safety.

With both packages, you rate the employee and click a button to add editable boilerplate commentary. Here, we found Employee Appraiser more subtle. Click on a button, and the language automatically adjusts to become slightly positive or negative without changing the ranking. For instance, when evaluating a manager's problem-solving skills, a click on one button generates a neutral tone: "The group benefits from John's input in problem-solving and brainstorming sessions." Click another button to inject a note of enthusiasm: "I can count on John to offer good ideas and spark discussion when the group has a problem to solve."

By contrast, Performance Now tends to be slightly more standoffish: "John often displays creativity and original thinking beyond the expectations for his position."

We found Performance Now easier to use, however. A single dialog box contains options to guide you to each step of the evaluation process, such as goal-setting and writing a summary. Employee Appraiser's interface is more confusing and requires more work.

On the other hand, Employee Appraiser offers more sophisticated advice for helping employees improve. For instance, it suggests that a sales rep who hasn't provided good after-sale service periodically watch customers use the product and ask them for specifics on how he or she could give better service.

Schulz says the speed of the software evaluation process and the consistency of the boilerplate appeals to both managers and employees.

That's a matter of debate, says Bonnie McMullin-Lawton, human resources director at Persoft Inc., a Madison (Wis.) software developer. She has looked at evaluation software but never seriously considered using it at her company. "It can be useful for evaluating hundreds or thousands of employees -- or if you're in a high-turnover situation. I don't use it," says McMullin-Lawton. "In our business, we have a highly educated staff that is career-oriented. They drive us to evaluate them as individual people with specific career goals. They don't want a relationship with their boss that's based on a structured package."

But Schulz says he can't argue with success. "Before, managers were reluctant to do evaluations because they often weren't comfortable with the process," says Schulz. "They were on their own. And we didn't have a structure in place that gave them consistent language and all the elements that go into a review. And sometimes their emotions would get in the way of being consistent." Now, he says managers are more cooperative about performing reviews, which occur in the first 30, 60, and 90 days of employment and twice a year thereafter.

Schulz hasn't quantified the benefits of using software to evaluate employees, but he says that greater retention improves the bottom line. "Our training costs are less because we hang on to employees longer," he says. Few would argue against making the evaluation process more consistent and less capricious. But one thing's for sure: No amount of boilerplate text can supplant a thoughtful manager.

By David Haskin in Madison, Wis.

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