This article discussing the best features of performance management software was originally published in September 2017. It was updated in June 2021 to reflect current information and statistics.
What is Performance Management Software?
To define performance management system software, we first need to define performance management. Performance management is defined as a continuous communication process between managers and employees. That communication includes setting expectations and goals, evaluating performance, and giving feedback.
Performance management software is a technology that helps companies better understand their employees’ performance and productivity. It allows leadership to easily track, analyze, and evaluate their employees, ensuring goals are met and issues are addressed promptly. The resulting performance management data can inform compensation, career trajectory, company goals, hiring decisions, performance reviews, and just about anything related to human capital management.
Performance management system software isn’t a new development in HR tech and has always adapted to the industry’s needs. As more advancements are made in technology, this essential tool adjusts to trends and the changing demands of employees and employers.@ClearCompany says that the best #PerformanceManagement software needs to support continuous #development and goal tracking. See how you can choose the right tool for your company:
Do You Need Performance Management Software?
You should consider investing in performance management software if:
- Employees complain about your current performance system or process
- Your HR team spends a lot of time organizing performance paperwork and knocking on doors to track down completed reviews
- You have a manual process that involves printed documents and Excel spreadsheets
- You’re experiencing low employee engagement or high turnover rates
- Too many employees miss goals and deadlines or cannot consistently meet KPIs
- You’re concerned that your current process leaves room for risk when deciding on promotions, compensation plans, or terminations
Why Implement Performance Management Software?
There are many reasons to implement performance management software tools, and most lead back to more communication and clearer expectations. Imagine a highly talented employee. They have worked for their organization for over a year and demonstrate an obvious talent for the role. Their manager has discussed the possibility of advancement in performance reviews, and the employee has expressed interest in becoming a leader.
Unfortunately, after completing performance reviews, their appraisal is put into a folder, and no set plan is created. Though convinced they’ll be an amazing asset in management, their leader has to navigate countless in-person conversations and verbal instruction. It takes a significant amount of time to create actionable goals and assess the progress of tasks around them. Because there’s no structured process, many of those goals are spur-of-the-moment assignments with little connection to future impact. Not to mention, the manager has ten other employees to lead (and submit paperwork for).
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Meanwhile, the employee feels confined to their role, unable to see how their work contributes to their future as a leader in the organization. After months of exceeding goals with little reward, they pursue another employer. However, from the manager’s vantage point, the employee is meeting goals, but it’s unclear which goals signal their readiness for promotion. Even worse, a few weeks after the last performance review, the employee’s supervisor moved to another team, and now the employee has to begin building rapport all over again with a new leader.
If this employer had adopted the best performance management software, the employee would have known which new goals they needed to meet to qualify for a promotion. The supervisor would have had a process for creating solid plans where both leadership and employees could see goals, career planning, and future trajectory. The employee may not have considered new employment if expectations were clearer. In addition, the new manager would have a more accurate idea of individual and departmental progress, improving their time-to-proficiency and helping employees meet their career growth goals even if leadership changes.
The Benefits of Performance Management Software
People are your company’s most valuable resource. You want to help them do their best work, grow their skills, and stay productive. With an effective performance management strategy, it’s possible to evaluate and discuss employee performance in a constructive way. Performance management system software helps your organization execute that strategy successfully.
Using performance management software is especially powerful because it benefits short-term strategy as well as long-term business outcomes. These are a few of the advantages of performance management software:
- Stay on schedule with performance review cycles and automatic reminders
- Set goals and keep track of goal progress and completion
- Maintain performance records for every employee
- Identify high-performing and high-potential employees
- Analyze real performance data and spot trends in individuals, departments, roles, and company-wide
- Use performance data to predict performance, compare internal vs. external hires, and make better hiring decisions
What are the Key Components of Performance Management System Software?
These impactful features are key when you’re looking for the best performance management software for your business:
- User-Friendly Dashboard — The top benefit of great talent management software is its ability to bring all critical data and performance metrics into one organized location. A central dashboard makes it easy to navigate employee performance data and helps leaders make better decisions for their workforce. Meanwhile, employees can receive real-time feedback from their own dashboard.
- Performance Review Cycles — Regardless of your company’s review cycle, performance management software can help coordinate, organize, schedule, and store all performance-related information. The software can send reminders to leaders, manage permissions as leadership changes, and provide structure to the entire review process, including templates based on company values and the employee’s role.
- 360 Degree and Peer Reviews — Peer feedback and 360-degree reviews can be rewarding if performed correctly. Performance management software can help ensure the process goes smoothly by providing structured, anonymous assessments. In some cases, more than a few people are involved in the performance review of one employee, so the software can track feedback progress to ensure each participant gives their input promptly.
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Customizable Review and Assessment Templates — The most effective way to evaluate performance is to structure reviews around your organization’s unique values and goals. That means the annual review script should be different for a manager than it is for an executive, and nothing like the script of another organization. One size doesn’t fit all, so the ideal software solution includes customizable scripts, scales, and sections so that your performance management process fits the needs of your workforce.
Goal and Performance Tracking — Continuous performance and goal tracking allow leadership to follow the progress of projects while noticing which employees are hitting the mark and which need more guidance. And because it’s available to the employee, everyone is on the same page with goals and project progress, even between departments, in real-time.
Development and Succession Planning — Employees need continuous support to become effective contributors to the organization, especially in the long run. With performance management tools, you can track development progress, assign long-term goals, and increase your understanding of how employee performance relates to business progress. Performance management software with 9-box reporting capabilities strengthens that understanding and enables executives to align their grid to the overarching succession goals of the organization.
Use Performance Data to Inform Hiring and Predict Performance
Data collected from employee performance informs better career trajectory decisions for internal hires and increases the quality of external hires. Predictive performance features guide hiring decisions with data for any role, executive or entry-level.
If there’s one thing talent acquisition and HR teams understand, it’s that hiring a new employee means making a long-term investment. No matter how experienced or educated the hire happens to be, guidance, training, and support are crucial from day one. Performance management is a critical step in an employee’s career and is a mutually beneficial practice that can increase engagement, productivity levels, and satisfaction.
ClearCompany’s Performance Management Software is built with these best practices in mind, creating an award-winning solution for your workplace needs. Our easy-to-use tool can be customized to align with your unique company needs for fast adoption and increased levels of productivity and engagement across your company.
Want to see how the best performance management software will work for you? Reach out to one of our experts and schedule a free one-on-one demo!