Performance Management

What is a Performance Management System?

What is a Performance Management System?

An Employee Performance Management System Helps You:

  • Recognize top performers
  • Bolster employee engagement and productivity
  • Streamline the annual review process
  • Set employee performance goals
  • Facilitate and document performance evaluations

Tracking employee performance is critical for maintaining the overall performance of your organization. How well your business does depends solely on the performance of your employees, but it can be difficult to track this metric using a paper-based system.

This is why companies are increasingly turning to innovative software solutions to improve their performance management processes.

Recognize top performers

A performance management system can supply you with insight into how your employees are performing and highlight the strengths of your top performers. By collecting and analyzing data, these products are able to help managers identify which team members are excelling in their role and which employees might need additional help.

Utilizing software to help identify which employees are working most efficiently, HR managers are able to easily recognize top performers and provide them with the recognition they deserve. Many solutions include features such as pay-for-performance and incentive management that allow you to award your top performers with incentives like bonuses.

This kind of data tracking allows managers to track not only the team members who are performing above or below average, but also helps managers to distinguish between employees who fall in the middle of the pack. This helps managers determine the best plan for developing skills at both an individual and team level. Some tools that can help with this include:

  • Self-Assessment Tool
  • Competency-Based Assessment
  • Performance-Based Review Tool
  • 360-Degree Feedback

Bolster employee engagement and productivity

According to a recent Gallup poll, only 15% of employees are actively engaged in their work worldwide. A lack of engagement can lead to lower productivity and poor performance, so it should come as no surprise that the most successful managers look for ways to foster engagement within their team. Fortunately, there’s plenty of methods for increasing this percentage, and a performance management system is an effective tool to help increase employee engagement.

One specific way in which performance management can assist managers to increase engagement is by helping to facilitate discussion between managers and employees. Managers can identify their top performers to discuss what keeps those employees engaged with their job, recognize which employees are not engaged, and discuss the reasons why. This allows managers to make adjustments to business practices by reassessing tasks or adding small breaks and events to the weekly schedule. Some other tools that can help foster engagement include:

  • Incentive Management
  • Employee Performance Related Report
  • Workforce Analytics
  • Comprehensive Dashboards

Streamline Annual Review Process

A performance management system offers a variety of tools that can make the review process simpler. By automating the self-review process, employees are able to complete their own assessment of their performance throughout the year and send it directly to their manager — giving managers plenty of time to prepare to discuss reviews. Managers also have access to a variety of evaluation, reporting and analytic tools to help inform the review process and provide their team members with detailed insights into their performance and progress.

Many solutions can also remind you when it’s time to conduct annual reviews. This means that your employees can always count on timely feedback on their performance. Some programs can even guide you through more regular reviews, such as quarterly or semi-annually — which can help track your employees progress towards their annual performance goals.

Set Employee Performance Goals

A major part of evaluating your employee’s performance throughout the year is setting annual goals and tracking progress towards meeting those benchmarks. Collaborating with your team to set goals for the year not only helps include them in the process, but also assists each member with understanding of what is expected from them. Many systems provide goal-setting tools that are straightforward to use and can track progress. This helps managers set goals for individual employees, which they can then use to set both short and long-term department goals.

Facilitate and Document Performance Evaluations

The core functionality of any of these solutions helps facilitate annual reviews. Many systems can help you by sending you reminders when it’s time to conduct reviews, reminding your employees to complete their self-evaluations and by generating review templates. All of this can be done directly through the system — allowing you to store this information and access it again in the future.

In addition to providing a variety of tools to help you complete performance evaluations, many solutions also provide audit tools. Audit tools are able to assess many of the features we’ve already discussed and determine if they are actually a benefit to users. These tools act as a built-in quality assurance resource, ensuring that the system you have is always meeting your needs.


How Do I Know If My Business Will Benefit From Performance Management?

While there are obvious benefits to implementing a software solution to streamline the review process, they may not be the best solution for your organization. If you’re stuck trying to determine if an appraisal system would benefit your business, start by asking yourself a few questions:

  • Does every manager provide the same level of evaluation and feedback?
  • How do you make changes based on performance appraisals?
  • Are you already using a talent management system?

Every manager has a different tactic for managing employees and providing feedback. Hopefully, all of your managers focus their energy on improving each member of the team by recognizing their strengths and taking notes on where there is room for improvement. They should be able to determine if employees have met certain objectives and detail how they have helped reach organizational goals.

Sadly, not every manager has this kind of attitude towards evaluating employee performance. Fortunately, good performance management can help fill the gaps. By standardizing the review process with a software application, you’ll be able to provide all of your employees with an equal opportunity to develop and improve their performance.

The most vital step of performance appraisals is implementing the changes that managers suggest. This may mean promotions or salary increases based on managerial suggestions, or it may require employees to receive additional training. Regardless of what changes you need to make, you’ll need to determine how to implement them and who will be responsible for the task. By using performance management, managers are able to track these changes and implement them with ease. The standard procedure issued by the system makes it easy to determine what the recommended actions are, who reviews them and ultimately, who acts upon them.

However, if you’re already using a talent management system, then it’s likely you don’t need a separate performance management system to access these functionalities. Many talent management systems give users a solid foundation for performance evaluations. These systems can help managers by outlining the review process, collect managers’ recommended actions and collect employee performance metrics in real time. All that’s left for managers is to schedule the individual reviews.

What Features Should I Look For?

We’ve already discussed the multitude of capabilities that performance management provides. However, just like your business needs, each vendor offers a unique combination of features. You’ll want to determine what your specific pain points are and use those to guide your search for the best solution to meet your needs. Some of the things you’ll want to be on the lookout for include:

  • Deployment: Whether you’re searching for a cloud-based solution or a system that is housed on site, you’ll want to be aware of which type of deployment is the best fit for your business and be sure that your top vendors can meet that need.
  • Goal Management: Be sure the system you choose assists with goal setting and tracking, as this is a vital way to measure employee performance when the time comes for annual performance reviews.
  • Performance Evaluation System: The best systems enable 360-degree feedback, allowing employees to receive feedback from not only managers, but from coworkers and customers as well.
  • Employee Lifecycle Management: Effective software provides features that can help throughout every stage of an employees career with your business. From creating job descriptions to exit management, an employee lifecycle management function ensures that your solution goes the extra mile.
  • Reporting and Analytics: By utilizing reporting features, managers can track progress towards goals at all levels ensuring that employees are constantly improving their performance.

How Do I Select an Employee Performance Management System?

There are countless features to sift through and a seemingly endless number of vendors to choose from. So, how do you decide which solution is best for your business? Start by compiling a list of must-have features. We’ve broken down a few of our top functions in this article, but if you’re still looking for guidance consider taking a look at our requirements guide, which breaks down everything you’ll need to know in detail. Once you’ve narrowed down your list of potential vendors, you’ll want to consider test driving a free trial or asking for a demo.

Performance Management Resources for System Selection

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Performance management articles are written and edited by:

Madeline Reinbolt

Market Research Analyst

Madeline Reinbolt is a Market Research Analyst at SelectHub. She writes content for Enterprise Resource Planning (ERP), Employee Performance Management and Recruiting.

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Mariah Hansen

Mariah Hansen

Lead Editor

As the lead editor at SelectHub, Mariah edits and manages content for more than 40 different software categories, as well as writing for a couple of them herself.

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The way we work is changing. Millennials now occupy the majority of the workforce, innovations in technology have changed the way we do business, and after all, it’s the year 2020 — the future has arrived. Perhaps this conjures up images of flying cars and robots, but we’re just referring to performance management trends. The new decade has brought a host of changes for performance management, and we asked industry leaders for their insight into the future of the market and associated performance management software.

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What Is Cloud Performance Management?

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Performance management software is used to evaluate employees’ performance to improve productivity at your organization. It can help you determine which employees are top performers, and which employees may need some extra help. This information can help HR managers learn the best plan of action for running an efficient and productive team. Cloud performance management will allow you to access these tools anywhere you have an internet connection.

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When it comes time to conduct annual performance evaluations, most managers find themselves filled with dread. The task of reflecting on an employee’s performance throughout the past 12 months and trying to remember goals set a year ago is challenging — especially if you don’t see your employees every day. That’s one reason why many businesses now use performance management software. But that’s not the only reason businesses are turning to software solutions. Performance management software can do a lot to help your company succeed. If you’re looking for software, then it’s time for you to conduct a performance management software comparison.

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What is a Performance Appraisal System?


The practice of performance appraisal has been around for many years — in fact, it’s rumored to have been invented as early as World War I, but it wasn’t widely used until the 1950s. Since its debut, performance appraisals have come a long way… today, there is even performance management software available to streamline the process for you.

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Employee Performance Management System Requirements and Features

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If you’ve ever seen an advertisement for a pizza shop, then you’ll likely have heard them say something about how they use the best ingredients. That’s because we all know that using high-quality ingredients is how you make the best pizza. When it comes to enterprise operations, your individual employees are the ingredients you’re cooking with, and the performance of your business is the pizza. High performing employees will result in better overall business performance — but how can you ensure that your employee performance is the best it could be?

The overall performance of your organization depends solely on the performance of your employees — but it can be very difficult to track employee performance using paper-based systems. That’s why many businesses turn to employee performance management software. However, selecting the right product for your company can be difficult. You’ll need to determine your own performance management system requirements to help guide your search.

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7 Ways Talent Management Software Helps Get the Best Out of Employee Hiring and Performance

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Maximizing performance within teams and departments is a primary goal of every organization. Talent management software offers an effective way to get the most out of your top talent and staff as well as available recruits. Here are seven ways to help get the most out of automated processes like talent management software.

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