Performance management meeting

Performance Management Software Systems: Everything You Need To Know

Master the performance management cycle and build a workforce committed to excellence with performance management software systems

The performance management process can be broken down into four key stages. Each of these stages features a range of processes that interlink with one another as part of an ongoing process. Performance management software allows organizations to implement each of these stages.

The four key stages of performance management are: 

  1. Planning. During this stage, goals and objectives are established, along with the metrics to be used to define their success. 
  2. Monitoring. Progress towards the accomplishment of objectives is tracked and monitored. Managers adopt a forward-thinking mentality during this process to ensure obstacles are identified and overcome before they become overwhelming.
  3. Reviewing. Processes are reflected upon, and individual and team performance is evaluated. What went right – and wrong – is defined so that lessons learned can be applied in the future.
  4. Rewarding. Top performers are recognised for their good work, and rewarded accordingly. 

These stages aren’t clearly delineated. Rather, activities concerning monitoring, reviewing and rewarding are part of a continual process throughout the lifecycle of an employee or project. 

When conducted correctly, positive outcomes from the performance management cycle include:

  • Clarifying job responsibilities and expectations. 
  • Enhancing individual and group productivity. 
  • Developing employee capabilities to their fullest extent through effective feedback and coaching. 
  • Driving behavior to align with the organization’s core values, goals and strategy. 
  • Providing a basis for making operational human capital decisions (e.g., pay). 
  • Improving communication between employees and managers

Some commonly asked questions about performance management software systems are:

What is performance management system software?

Performance management software systems are used to drive productivity through a business. By linking the four key stages of the performance management cycle, goal setting, performance tracking, rewards and reviews are integrated into one software system.

How do you use a performance management system?

By understanding the core objectives of the organization, business leaders can channel efforts towards collective goals. Performance expectations can be clearly defined so that individuals and teams can better understand which skills they need to develop to deliver the desired outcomes.

What do you look for in a performance management system?

A performance management system delivers a comprehensive suite of tools. When choosing a performance management software system, look for:

  • Easy to track goals and objectives
  • 360-degree feedback
  • Self-evaluation tools
  • Ongoing feedback mechanisms
  • Support for monthly and quarterly reviews
  • Integrated HR administration tools
  • Multi-channel communications

This list is by no means exhaustive, and the best performance management software systems will include a range of other features. 

Using performance management software systems for performance planning 

The reason most people never reach their goals is that they don’t define them, or ever seriously consider them as believable or achievable. Winners can tell you where they are going, what they plan to do along the way, and who will be sharing the adventure with them.

Denis Waitley, writer and motivational speaker

Performance planning is the first crucial step in the performance management cycle. During this phase, a range of questions are addressed to help ensure that on-the-job performance is correctly oriented with company objectives.

During the planning stages, managers, team leaders and HR professionals should:

  • Discuss with employees their performance expectations. This means clarifying their role definition and their tasks and duties, and tying these closely to specific and measurable targets.
  • Clarify behavioural expectations, for instance how they should support their colleagues, their role within their team and department, and other expectations regarding communication and their role as mentors and coaches.
  • Understanding how their role and responsibilities are associated with the broader aims of the company. This process of alignment drives employees to engage in positive behaviours which drive organizational success.
  • Outlining the measurable results expected of the employee. These are the tangible measurements relating to sales, customer satisfaction, productivity and other factors which are intimately associated with the company’s success.

It’s important to note that the plans established in this initial phase (for instance when a new hire arrives in the company, or a new project is undertaken) are not fixed in stone. Throughout the performance management cycle, factors addressed here are constantly subject to changes as new challenges arise. 

Indeed, it is the ongoing nature of effective performance management which imbues this initial planning stage with the necessary flexibility to adapt to unforeseen changes. As such, the planning stage can be viewed as a guide rather than a set of immutable laws. HR leaders and managers can refer back to this plan at any given point and use it to better determine whether or not employees are on the right track.

Goal setting and monitoring through performance management software systems

Motivation is interwoven with the goals you make and the habits you form in order to achieve them.

Matthew Lewis Browne, entrepreneur

On a basic level, the ability to monitor progress towards goals via performance management tools saves managers and team leaders valuable time. By viewing employee and team priorities through a performance management dashboard, they can see clearly where their immediate attention should be placed.

Such goals, tracked as either Key Performance Indicators (KPIs) or Objectives and Key Results (KPIs), can include a wide range of factors, including:

  • Increasing revenue
  • Cutting costs
  • Improving the customer experience
  • Developing a new product
  • Rolling out a new service
  • Improving organizational culture
  • Implementing automated processes

But performance management software also integrates processes that make obtaining individual and team goals more realistic. Such goals are not only linked to personal and professional development objectives, they are also associated with individual skills and abilities. 

Finally, performance management software allows these factors to be closely aligned to the company’s core objectives. By getting individuals to pair their own strengths and ambitions with that of the business, efforts and resources are channelled in the same direction.

Driving ongoing feedback and employee reviews with schedules and templates

Continuous performance management requires adopting a continuous process of feedback and review. The efficacy of annual appraisals has come under increasing fire in recent years, with management expert Elaine Pulakos referring to them in an interview with the BBC as “extremely costly and have no impact on productivity.”

Enter performance management software systems. Performance management tools offer HR leaders and managers a two-pronged approach to feedback and reviews. Annual appraisals are replaced with monthly and quarterly reviews, performing a similar function while avoiding many of the biases inherent in making this a once-a-year assessment. 

At the same time, regular feedback through more informal ongoing conversations helps keep employees focused on the here and now. These conversations establish and develop relationships between managers and employees, meaning issues relating to health and well-being are also discussed. 

With remote and hybrid working creating a disconnect between companies and off-site employees, such mechanisms are essential to understanding the employee experience. Peer feedback and 360-feedback give managers insight into the challenges employees might be facing which otherwise would be overlooked. 

Other feedback-related tools and mechanisms which can be found in performance management software systems include:

  • Scheduling tools. By setting up schedules and using performance management software to push reminder notifications, regular feedback sessions run smoothly.
  • Feedback templates. Managers and team leaders can use templates to save valuable time, for example when dealing with familiar reviews or scenarios previously encountered.
  • Employee feedback mechanisms. Anonymous feedback from employees offers valuable insights into how the company is operating. By using systems such as employee net promoter scores (eNPS), employees can offer critical feedback without fearing ramifications.

Creating a culture of recognition and rewards at all levels of the organization

Recognition and rewards programs in businesses have traditionally been reserved for annual appraisals. But recent trends in such programs have moved towards ongoing recognition which comes from all levels of a company. Moreover, public recognition is now understood to be an effective method for encouraging better performance throughout the workforce.

The article from Harvard Business Review, Research: A Little Recognition Can Provide a Big Morale Boost, outlines why public recognition should be included as part of a recognition and rewards program:

“Private feedback is appropriate in some situations, but public recognition — such as awarding certificates during a team meeting — can often be a cost-effective way to motivate the entire team. Public recognition can feel more impactful to the recipient, and it can also boost motivation among all employees, including those who aren’t recognized themselves.”

Performance management tools can also be used to deliver praise and recognition to teams and departments. By framing positive feedback as a collective effort, it encourages greater cohesion among colleagues. It also further drives collaborative behaviours in future projects, delivering more creative thinking and solutions.

This collective ownership of recognition and rewards is embedded in performance management software systems. Sometimes referred to as a Rewards Management System, these awards can be delivered either from manager-to-peer or peer-to-peer. Categories of rewards can be easily defined by business leaders, reflecting everything from productivity and output to contributions towards a positive workplace culture.

Maximizing the workforce’s talent pool – continuous coaching and training via performance management software

Coaching and training shouldn’t be confined to specific occasions. To be truly successful, learning should be embedded and encouraged on a daily basis. This begins with the onboarding process when managers seek to discover the core skills and competencies of a new hire. From here, coaching and training should be integrated into their goals, as well as the expectations for their role.

The relationships which develop as an employee gains experience in a company should be based on trust. Trust is crucial for a healthy coaching relationship. As Deloitte’s performance management playbook, Coaching Employees to Reach Optimal Performance explains: 

“Trust is foundational to any coaching relationship; when employees are supported by continuous coaching from someone they trust to have their back, they develop the psychological safety required to reflect honestly on what drives—and inhibits—their performance. Trust also makes it easier for employees to take their performance to the next level by seeking out opportunities for development, taking risks, and trying new things.”

This trust is established at the leadership level, then reflected throughout the organization. HR leaders can use their knowledge of the organization’s overall structure and distribution of skills to connect talent with those who need training. Performance management software that features HR admin tools gives business leaders the means to build these organizational charts. Consequently, when an employee or their manager understands the necessity for training in a given field, peers with the relevant skills can be set up to provide mentorship and training.

Finally, forums, intranets can help keep healthy conversations about coaching and development to the fore, driven organically by a range of employees. This makes the concept of skill stacking one which is embedded into an employee’s daily experiences.

The core benefits of performance management software systems: a summary

Performance management software systems deliver multiple benefits for organizations across each step in the performance management cycle. By digitizing core processes and bringing them under one coherent system, performance management can become more than the sum of its parts.

Here are some of the broad advantages companies who adopt performance management software systems can benefit from.

  • Process consistency. By using a unified system, business leaders and managers can apply the same set of standards regardless of the teams and departments in question. This is particularly useful for larger organizations where effective communication between various departments might be difficult.
  • Clearly defining employee roles. When staff have a clear understanding of roles and expectations, their performance is directed towards the tasks which matter the most. Establishing roles and tracking their evolution through performance management software aids clarification and improves accountability.
  • Boosting morale. With many employees working remotely or via a hybrid model, keeping staff connected with one another can be difficult. Performance management tools can drive collaboration and provide digital spaces where employees can connect on a personal level. Shared interests and hobbies can be explored and friendships encouraged both virtually and through real-world activities.

Assistance with promotions. Deciding which employees to promote either vertically or laterally is much easier with performance management tools. HR leaders and managers can assess employee performance across a range of variables, including how effectively they lead and inspire others.