How to Choose the Right Performance Management System Software for Your Needs

An effective performance management system involves regularly reviewing and assessing your team's performance progress.

You have to continually find opportunities to develop their skills, knowledge, and abilities. It's no easy task.

Luckily, the landscape of performance management is evolving. More dynamic and holistic systems are replacing traditional (manual) methods. 

Central to this transformation are software solutions. 

Performance management system software offers the structure, tracking capabilities, and analytics required to drive meaningful growth.

Working with an employee performance management system software simplifies the process and makes it more efficient.

This article will: 

• Discuss identifying your unique requirements (with 15 questions to ask yourself before deciding on a performance management system solution).
• Explain the top features to look for in a performance management system software. 
• Walk you through how to choose the perfect performance management system software for your needs. 
• Explore different software options. 

📈 What is performance management system software?

A performance management system software is a technology tool that helps organizations streamline the process of managing, evaluating, and improving individual and team performance. 

The performance management process involves five inter-connected stages that build a high-performance team and cultivates a growth culture:

• Planning: Setting SMART goals that align with the company's mission, vision, and objectives.
• Monitoring: Tracking goal progress.
• Reviewing: Evaluating employee performance.
• Rewarding: Recognizing top performers.
• Acting: Implementing an employee development plan.

Thus, performance management system software solutions typically include goal-setting and tracking features, employee appraisal and feedback mechanisms, self-assessment tools, and reporting capabilities to provide insights into performance trends. 

💡 The best performance management software tools also integrate with learning and development systems to recommend training based on performance gaps.

🧰 3 Performance management system software examples

Zavvy

Zavvy enables transparent, fair, and calibrated 360 and 180 degree feedback processes. You get goal management plus coaching conversation tools as well.

You can customize your employee performance reviews to fit your performance management strategy and drive employee engagement. And use your results to build meaningful career progression frameworks and growth plans within Zavvy.

Filters give you quick access to employee data.

You can build a continuous feedback system that works for your organization and set automatic reminders.

As an employee enablement platform, Zavvy integrates with learning and development systems to recommend training based on performance gaps.

Zavvy gives you insights into the strengths and opportunities in your workforce. Using these insights, you can build a data-driven cycle of continuous development and engaging training programs—all in one platform.

Betterworks

Betterworks provides tools that support meaningful conversations and check-ins, goal-setting and management, and real-time feedback.

Its 360 degree reviews and actionable insights help you develop a development-oriented action plan to boost performance.

PerformYard

PerformYard facilitates customized performance reviews. 

For example, you can set up weekly check-ins with employees, send reminders, manage goals, and set continuous feedback.

You also get comprehensive reports and visualizations on goal progress and other aspects of employees' performance.

🏆 9 Top features of the best performance management system tools

Access to past performance details

A great performance management system tool records past employee performance data. And makes it easily accessible.

It's important to help managers track employee progress and milestones in their people's development.

An effective feedback mechanism

A quality tool facilitates real-time 1:1 feedback and unbiased 360 and 180 feedback. Managers and employees can provide and request feedback in the flow of work.

The software also makes it possible to align feedback with personal development plans.

Helps you come up with a development plan

Good software comprehensively analyzes employees' performance results vs. specified performance standards and performance metrics.

It helps you execute personalized and well-defined employee development plans.

Provides quantitative and qualitative insights

The right software measures employee productivity metrics providing the full context of employee performance. This includes:

• Open questions to provide qualitative insights into the motivations behind an employee's behavior and performance. These can enhance self-evaluations and peer appraisals.
• A rating system to provide numeric data that quantifies an employee's performance, such as a five-point scale

It helps you take a developmental and evaluative approach to your performance management system.

Check out this in-depth article on developmental vs. evaluative feedback.

Goal setting, alignment, and management

The right performance management software lets you set clear and trackable goals.

Some will let you define the key result areas (KRA) of each goal and rate employees based on these KRAs.

It creates room to adjust these goals in response to changes in:

• employees' ambitions and competencies;
• resource availability and other constraints;
• company strategy.

➡️ Learn how to set effective employee performance goals (+33 skill-based examples).

Competency and skill assessment and management

A system software fully maps employees' current competencies and skills gaps. You're able to build an accurate skills matrix that helps you:

• Invest in the right skills development plan that brings in the best ROI.
• Match the right employees with the right jobs and projects to optimize your operational processes
• Create accurate 9-box models for succession planning.

Automated continuous feedback

A great performance management system automates employee feedback.

Managers can provide feedback at any time. Plus, they can access previous feedback and ensure the employee implements it before giving new feedback.

It turns feedback into a cyclic system and a casual part of a workday, not just another box to check. 

With time, the fear and anxiety often associated with 'performance reviews' fade and take on a positive meaning.

⚙️ Check out how Taktile manages new hire feedback on autopilot.

Comprehensive reporting and analytics

Access to a wide range of performance reports and in-depth analytics paint a comprehensive picture of an employee's performance.

You can use this intel to identify employee performance trends and make more informed decisions.

Accurate talent profiles

An agile employee performance management software system compiles real-time performance and competency details in an accessible dashboard with:

• consolidated insights from feedback;
• data from performance evaluations and productivity analysis;
• details of employees' prior experience and training.

It helps you create detailed employee talent profiles based on accurate and up-to-date data.

⚙️ 7 Reasons why you need a performance management system tool (& Supporting features)

The importance of performance management system software lies in its ability to automate and standardize processes related to performance management, which can significantly enhance efficiency, transparency, and fairness.

1. It makes you more objective and fairer

A performance management system software enhances your objectivity and fairness in managing performance in that:

• You're able to collect complete data on employees' performance.
• You can set metrics to evaluate employees at similar levels and create consistency.

It takes guesstimation out of your performance reviews.  

Features to look for:

• easy access to real-time employee data;
• comprehensive reporting and insights;

2. Helps with identifying high-performers more effectively

With a performance management software tool, employees undergo the same review process.

You can make data-driven decisions about the distribution of incentives and rewards. And a clear link exists between performance and compensation.

It helps you structure a more dependable employee promotion and advancement system.

Features to look for:

• precise measures of success based on set goals;
• visualization of goal progress;
• KPI tracking;
• measurable OKRs.

3. It saves time and boosts efficiency

Performance reviews involve loads of administrative work and paperwork.

Software for performance management systems takes this burden off your hands. It digitizes the processes while also improving efficiency.

Features to look for:

• consolidation of multiple actions into streamlined milestones;
• auto-alerts and email reminders.

4. Facilitates effective performance reviews

The software creates a repeatable model that managers can use to quantify employees' performance relative to precise goals.

And by integrating it with your existing business systems, managers can provide meaningful feedback that aligns employees' performance with the organization's larger vision.

Features to look for:

• reports on target-reaching, competency gaps, etc.
• linking goals to performance reviews.

5. Helps you collect feedback from all relevant sources

The performance management software makes it easier to gather multi-rater feedback. You get an all-rounded perspective of an employee's performance.

Additionally, managers can use the system to unobtrusively give continuous and real-time feedback without interrupting employees' work with countless meetings.

Features to look for:

• 360 degree feedback;
• a transparent, fair, and anonymous feedback system;
• feedback reminders.

6. Makes it easy to identify training needs

The right software stores and analyzes data from employee-manager interactions, feedback, and past performance.

It draws attention to training needs based on individual goals, job expectations, and skills gaps.

You can create L&D programs that align with the organizational goals and employees' career aspirations.

Features to look for:

• an open forum where employees and managers can collaborate on performance conversations;
• templates to drive productive performance conversations;
• easy access to past performance data;
• learning and development modules.

7. Boost employee morale and motivation

Recognition is key to boosting employee morale and encouraging more positive actions. But keeping track of who deserves what is not always easy.

The software makes it easy to keep track of top performers. And you can provide immediate recognition.

Features to look for:

• public recognition, including peer-to-peer recognition;
• effective goal tracking.

❓15 Questions to ask yourself before deciding on a performance management system solution

🧑🏻‍🤝‍🧑🏻 People strategy questions

1. What is our current performance management system? What is working well? What is not working well?

If you're currently using a performance management system, check its weaknesses. Find out what employees and managers say about the software's mechanics, efficiency, and intuitiveness.

Find a performance management system that closes these gaps and improves your processes.  

2. Why is it important for us to have a solution?

Make the business goals you want to achieve using the software clear.

3. What concrete challenges do we need help solving?

Get specific on the challenges you want to address in your workforce management. 

Identify the key features that will streamline your processes and tackle these challenges.

4. How will this solution integrate with our current and future talent management strategy?

The software must be flexible and stable enough to accommodate your current and future performance management expectations without losing efficiency.

💽 Software and feature-specific questions

5. What features are a must-have for us?

Think of the extra features that will boost management's efficiency in fulfilling their managerial responsibilities. Consider:

• advanced anonymity;
• advanced reporting;
• automatic prompts and reminders;
• a manager's log.

6. What aspects of performance management does this solution cover? What is left out?

Check if the features necessary for performance evaluation are present, such as:

• rewards and recognition;
• performance reviews;
• self-evaluation tools;
• 360 degree feedback mechanism;
• instant and continuous feedback;
• transparent goal-setting and tracking system;
• learning and development modules.

7. Can we customize this solution to our specific needs?

Great software will provide some structure but remain flexible.

You can customize the development process and cycles to match the changing demands of your organization.

8. Does this solution integrate with other tools we are currently using?

The software shouldn't interfere with the operations of other systems you use.

It should also integrate seamlessly with existing human capital management tools without losing valuable employee data.

9. How can we measure impact?

Check if the solution provides real-time reports. Better still, can you apply filters in the performance reports, such as reporting by team or individual level?

🖥️ User experience-specific questions

10. How long would it take to set up this tool?

Choose software that'll take the shortest time to set up. As a result, it'll minimize disruptions and delays that can cause productivity losses. 

11. How easy would the process be?

It should be smooth. Challenging and overwhelming software implementation can make employees and managers skeptical about switching from the old system.  

12. How much support will the admins need to learn how to use the tool effectively?

The answer here is 'minimal.' The best performance management tools are user-friendly with an intuitive user interface. It leads to faster adoption. 

13. How much support can I expect from the software provider?

Exceptional customer support is non-negotiable. A representative should be available to walk you through any issues you encounter.

14. Does it provide templates?

The tool aims to make performance management easier and less overwhelming for managers. So, ready-to-use templates for things like feedback should be available.

15. Does it provide an engaging experience?

The software should provide personalization features that let you create engaging surveys, learning and development modules, and performance reviews.

💡 Tip: Involve your company's managers in the decision-making process. It'll increase their commitment to solidifying a high-performance culture in your organization. 

💰 The ROI of employee performance management software system

Research shows a positive and significant relationship between an effective performance management system and high employee performance.

And there's no doubt about the impressive ROI of a good employee performance management system software.

It creates room for continuous feedback.

According to Gallup, employees are 3.6 times more likely to strongly agree that daily feedback motivates them to give their best performance compared to annual feedback.

Performance management also promotes ongoing communication between employees and managers.

It fosters positive manager-employee relationships. Employees can voice their concerns and discuss their challenges. And this creates a positive employee experience.

A positive employee experience makes your workforce inspired and engaged.

As Michael Mankins and Eric Garton, experts in organizational designs and initiatives, state in their book Time, Talent, Energy: 

"An employee who is satisfied with his or her work is 40 percent more productive than an unsatisfied one. But an engaged employee is 44 percent more productive than a satisfied worker, and an employee who feels inspired at work is nearly 125 percent more productive than a satisfied one. In short, an organization would need about two-and-a-quarter satisfied employees to produce as much as a single inspired worker. The higher the percentage of engaged and inspired employees in your organization's workforce, the higher its productive power."

True to this, a Harvard Business Review Analytic Services study showed that 66% of companies prioritizing providing a positive employee experience increased profitability. And 67% experience accelerated growth.

That's not all.

A great performance management system encourages a growth mindset where managers provide constructive criticism, and employees take it positively. And where employees find inspiration in the success of their peers.

Why is this a big deal?

Research published in Frontiers in Psychology shows a positive correlation between a growth mindset and innovative behavior.

Innovative behavior helps employees realize their objectives more efficiently, which drives company goals.

➡️ Enable high performance with Zavvy

With the help of software tools for managing your performance management system, you'll cultivate a growth mindset in your workforce.

Zavvy's performance review software does this and more.

Zavvy enables objective and meaningful performance management through features such as:

• easy customization (anonymity, performance review forms, visibility, performance ratings) 
• unparalleled insights into your employees' performance (skills matrices, spider web;
• powerful performance review templates inspired by top companies;
• a vast training catalog with hundreds of resources;
• competency models linked to performance and growth; 
• development frameworks;

Don't just take our word for it. Instead, book a demo today and experience how our performance management system tool can elevate your team's performance.