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.
To define performance management 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.
What is Performance Management Software?
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 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:
6 Best Performance Management Software Tools for Establishing Performance Standards
1. ClearCompany Performance, Engagement, & Goals
ClearCompany Performance, Engagement, & Goals is an employee-first platform that empowers your strategy with easy-to-use performance reviews, peer-to-peer recognition, employee surveys, interactive goal planning, and collaborative feedback tools. Our software was created with expert advice and best practices in mind, and it integrates seamlessly with our full-platform talent management system.
With ClearCompany Performance Management software, you can:
- Start review cycles right away with our library of expert-informed performance review templates and best practices guides
- Create your own reviews from scratch with a variety of formats and rating scales to choose from
- Automate review reminders and notifications to keep cycles on track and reduce the burden on HR
- Set and track weighted employee goals that are aligned with business objectives
- Schedule one-on-one meetings to encourage collaboration, increase coaching opportunities, and boost engagement
- Build comprehensive records of performance with private and shared notes, meeting action items, and goal updates
- Gauge employee sentiment and foster engagement with employee surveys, Shout Outs, and Celebrations
- Measure and analyze employee performance and engagement data to spot trends, find areas for improvement, and identify top performers
- Gain insight into what drives high engagement and great performance at your organization
TalentLMS is employee learning software specifically designed for remote teams. Users can create their own courses for onboarding, compliance, sales, and more to help their employees grow. TalentLMS boasts fast implementation timelines and a mobile- and user-friendly interface.
Officevibe is employee experience software with tools for managing performance and measuring engagement. Its performance management modules features include goal and OKR tracking, performance reviews, and one-on-one meetings.
4. ADP Workforce Now
ADP Workforce Now is a human resources management (HCM) system that companies can use to manage payroll, benefits, time tracking, and more. Users can also access talent management functions including performance management. Its features include performance reviews, employee career plans, and multi-rater feedback.
Oracle’s PeopleSoft is comprised of a suite of solutions for executing operations at enterprise organizations and includes a human resource management system (HRMS). Its performance management component offers features including goal-setting, appraisals, competency assessments, and development planning.
6. UKG Ready
UKG Ready provides tools for small businesses to manage payroll, talent management, benefits administration, and other HR functions. The performance component of the software provides tools to support performance tracking, feedback exchanges, and performance improvement initiatives.
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, their appraisal is put into a folder after completing performance reviews, and no set plan is created. Though convinced they’ll be a fantastic asset in management, their leader has to navigate countless in-person conversations and verbal instruction. Creating actionable goals and assessing the progress of tasks around them takes a significant amount of time. 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. A performance management solution 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 excellent 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.
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.
How Much Does Performance Management Software Cost?
Performance management software costs vary depending on the features, integrations offered, and number of users. The price of performance management software also varies depending on implementation, account management, and more and is typically calculated per user per month.
What are Performance Management Best Practices?
There are lots of different ways to execute a successful performance management strategy, including these proven best practices:
- Set aligned SMART goals. Managers and employees should collaborate to set clear SMART goals that are aligned with their team’s goals and business objectives. SMART goals are specific, measurable, achievable, relevant, and timely.
- Check in about performance regularly. Managers should hold frequent one-on-one check-ins with employees to increase trust and transparency and help employees stay on track. One-on-ones also help employees feel supported in their roles and can increase engagement.
- Conduct formal performance reviews. One-on-ones are excellent for monitoring performance and coaching, but formal reviews are still necessary for more thorough evaluation and feedback. Reviews that take place more than once a year are most effective.
- Incorporate 360 reviews. Adding peer feedback to your review cycles with 360 reviews helps ensure employees receive fair and balanced feedback.
- Recognize employees’ work and contributions. Employee recognition is a key factor in engagement, motivation, and retention and can be as simple as giving them a shout-out in a meeting.
- Use performance management software. Performance management software automates the tedious parts of the process for your HR team so they can focus on conducting effective reviews and analyzing performance data to gain workforce insight.
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.