What is Performance Management Software?

Performance management software allows companies to effectively track, analyze and evaluate their employee performance and productivity. The software should distribute forms for feedback, collect data, manage administrative tasks like sign-offs, analyze information about performance and store feedback securely.

Other important features include automated workflows, continuous feedback, access control, upward, downward and peer reviews, customizable review forms, goal tracking, single sign-on, built-in reporting, anonymous feedback, email reminders, e-sign, flexible review timing, and intuitive navigation.

When performance data is collected and stored properly it can be used to guide company goals, hiring decisions, career trajectories, compensation, succession planning and all other human capital decisions. Additionally, consistent and formal record keeping of employee performance is an important protection against liability. Dedicated software can prevent issues like forgotten 90 day reviews, missing signatures, annual reviews that happen four months late, and managers going dangerously off-script.

Finally, great performance management software can dramatically streamline an existing performance management strategy. This can result in substantial time savings for managers, employees and HR. It also can be an opportunity for companies to increase the amount of feedback data they collect on employees. The best software will allow your team to increase the frequency of feedback and solicit feedback from more people while still reducing the administrative cost of performance management.

What is a Performance Management System and How Does Software Help?

A performance management system is made up of performance reviews, check-ins, goals, review forms, and data reporting. A good system tracks every employee's contribution to the company, highlighting both employee's that deserve recognition and employee's that need extra support or training. HR admins generally build a performance management system to time out review cycles, ensure meetings between managers and direct-reports, and generate data that captures employee performance trends.

Software helps make the system more efficient, but it's also a huge time-saver for HR folks who are trying to build a custom performance management system. Building a system on dedicated software is the best way to ensure consistency across all departments. A centralized platform not only makes it easy for employee's to log on and fill out review forms, but having the software also shows employees that the company is committed to performance management.

Performance management software is used by every employee at the company, but HR people get the most benefit out of the software. This is especially true for any HR people who have previously been using manual processes like paper forms or spreadsheets. Using performance management software is like finally finding the right tool for the job.

Choosing the Right Performance Management Technology

1-15 Employees

When a company is small there is less of a need for dedicated performance management software. At this size one or a few managers can keep a close eye on performance and manage a pen-and-paper or word-and-excel process at relatively low cost. Regular feedback and record keeping is just as important as it is for larger companies, however the management benefits of software will be harder to notice.

16-30 Employees

When a company grows over 15 employees the formal review process starts to become a hassle for the individual managing it. Often at this point the company will either move to a module offered by their payroll provider or begin to dig in their heels on the homegrown system.

The simple performance management software that is often offered in a suite with payroll and other HR tools can be great for companies that are willing to run their performance management process the way the software company says they should. The problem comes when anyone on the team makes a suggestion for a change. Simple HR suite software tends to be very easy to use one way, but very difficult to use any other way.

The other alternative at this size is to continue adding complexity to the homegrown system. This can work for a while and has the benefit of allowing a company to continue to use a performance management process that is custom to them. The danger is that when a company grows beyond 30 employees, the small annoyances and wastes of time inherent in most homegrown systems get multiplied by every new employee. The number one request from companies coming off a system of excel spreadsheets is “Please streamline our process.”

30-1000 Employees

This is the sweet spot for dedicated performance management software. Organizations need something that will be both flexible to their needs, but also simple to operate for their growing ranks of managers. At over 30 employees home-grown systems begin to break down, and fighting with limiting software offered in suites becomes more trouble than it is worth.

At the larger end of this bucket companies often start to have ERP systems and there can be a push from leadership to run every aspect of the organization through one vendor. More and more this is seen as an outdated mindset and companies are opting for the best solution to each problem as long as it integrates well with their other solutions. For this reason even the largest companies often continue to choose dedicated performance management software.

Do You Need Technology?

If you are finding yourself in some of the situations below it is probably time to invest in dedicated performance management software.

1. Managers complain about how complicated and time consuming their reviews are.
2. Review cycles are often delayed or don’t happen at all.
3. Great performance management ideas are turned down because, “our system can’t do that.”
4. Human resources is spending lots of time on administrative work, like managing paper and data-entry.
5. Large review cycles keep happening every year, but it’s unclear what the data is used for or if the feedback is stored appropriately.

Does any of that sound familiar? If so, moving your performance management process onto dedicated software can often pay for itself just in time savings and still give you all the benefits of more effective performance management.