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13 Best Performance Management Systems in 2021


Discover the best performance management software to implement a performance management system with performance reviews, real-time feedback, goal setting, and one-on-one tools.

Best Performance Management Systems

Giving managers and employees an in-depth view of an organization, performance management systems will help you continuously improve your team's performances through 1:1s, OKRs, and goal management.

Modern performance management systems and OKR tools will help you deploy performance reviews, as well as provide coaching necessary for the employees to acquire skills for accomplishing business objectives, assess their performances in real-time, and conduct succession planning.

Apart from the business objectives, modern performance management systems allow the managers and employees to understand each other's needs, strengthen their weaknesses as a team and individually, discover new approaches, and grow together.

In this article, we have conducted thorough research of the market to deliver you the best performance management tools in 2021, along with their use cases and strategies to avoid the common pitfalls in performance management.

As you continue reading, you will find the best performance management and OKR tool for your business objectives.

Workday

Best Overall Performance Management System

Try Workday

Betterworks

Best for Aligning People & Enterprise

Try Betterworks

Lattice Performance Management

Best for High Performing Teams

Try Lattice

BambooHR

Best for Growing Companies

Try BambooHR

15Five

Best for Creating Expert Managers

Try 15Five

Kissflow

Best for Improving Retention

Try Kissflow

Leapsome

Best for Continuous Performance Management

Try Leapsome

Engagedly

Best for Services Organizations

Try Engagedly

UKG Pro Performance Reviews

Best for Identifying Areas of Improvement

Try UKG Pro

Quantum Workplace

Best for Employee, Team, and Business Success

Try Quantum Workplace

eloomi

Best for Coaching Sessions

Try eloomi

Cornerstone OnDemand

Best for Supporting all Learning Across Organizations

Ty Cornerstone OnDemand

Paycor Talent Development (7Geese)

Best for Small and Medium Sized Businesses

Try Paycor

List of Best Performance Management Tools

1. Workday

One-Stop Solution for HR and Talent Management.

Workday is a One Stop Solution for HR and Talent Management

Workday HCM is a part of a single system that includes products such as financial, payroll, recruiting, learning, planning management, and much more.

The machine-learning, cloud-based system helps you understand and streamline your employees' skills while fostering talents around the skills you will need in the future.

Through Workday, you will be able to deliver curated recommendations, suggested learning, and personalized career guidance for every employee at scale.

As a complete administrative solution for workforce planning, analysis, and execution, Workday also offers a module for educational institutions, equipping them with recruiting and admissions, curriculum management, records, advising, financial aid tracking, and more.

Workday Dashboard
Source: Workday

The system allows the employees to easily revise entries and submit them to the supervisor, while the quicklinks feature enables the team to find specific data easier in an emergency.

The capability to send reminders to everyone for updated info enables the whole team to stay on track without confusion, just like the augmented analytics eliminate any ambiguity through insights from various data sets explaining what is happening and why.

The intelligent automation in the attract-to-pay process eliminates the tedious, manual tasks and empowers the employees to maintain the peak of their productivity.

Pros

  • Design your perfect future workforce and uncover talent gaps
  • Complete worker and skills profile management
  • Flexible organizational structures and modeling
  • Agile compensation management
  • Central administration of benefits
  • Payroll, time & labor, and absence
  • Case creation and status tracking
  • Confidential case management
  • Head-count, compensations, skills, talent planning
  • Quickly answer common HR questions through a self-service knowledge base

Workday is a superior HCM software for midsize and larger organizations with global employees that streamlines manual tasks, deploys machine learning and augmented analytics to help managers make better decisions, and provides a self-service functionality for the employees.

2. Betterworks

Performance Enablement Solution for aligning People, Strategy, and Performance across an Enterprise.

Betterworks is a Solution for aligning People, Strategy, and Performance across an Enterprise

Betterworks helps the employees and managers understand where you are trying to go with the company, streamlining OKRs, conversations, feedback, and recognition, and integrating many valuable features such as career development focus for quarters, testimonials from other users, ability to view the goals of other employees if tagged viewable, and more.

Apart from having access to view your goals, goals of your manager, goals of your direct reports, and goals of those who are not on your team, Betterworks allows you to request feedback from other employees to consider different perspectives when a manager makes a performance evaluation.

Through Betterworks, you can uncover actionable insights on business and employee performance and deploy the best-in-class customer success and training that will get you moving quickly and enable you to maximize your results from the software.

Betterworks Dashboard
Source: Tech.co

Pricing

Betterworks Team Edition plan will cost you $8 per user per month.

Betterworks Pricing Plan

Pros

  • Streamline OKRs, conversations, feedback, and recognition
  • Career development focus on quarters
  • View the goals of your manager, your direct reports, and the people not on the team
  • Identify where the employees need support
  • Scheduled and on-demand coaching conversations
  • Align individual improvements to overall business performance
  • Receive employee feedback
  • Identify talent development opportunities
  • Adopt best-practice templates to configurable feedback formats

Through Betterworks, you will be able to coach for better business results, enable frequent performance feedback, track & promote the progress of your global workforce while integrating with tools such as Slack, and more.

3. Lattice Performance Management

People Management Platform for developing Engaged, High-Performing Teams.

Lattice is a People Management Platform for developing Engaged, High Performing Teams

Lattice's people analytics structure enables the managers and HR to get a holistic view of their organization and make more profitable decisions.

You can launch 360 reviews, inject goals and OKRs, share feedback and public praise, learn best practices from people operations experts, facilitate impactful 1:1s with collaborative agendas and action items, prioritize the most important work and clear obstacles with updates.

You can easily set up goals across your company, delegate employee engagement surveys, facilitate employee development and growth through frameworks, and produce actionable insights through powerful analytics.

Keeping everything in one place for regular review cycles, Lattice helps you keep everything organized and accessible at arm's length, centralizing everything from separate Google Documents, while the Google Calendar integration simplifies linking the scheduled 1:1s to Lattice.

Lattice Features
Source: Connecteam

Pricing

The Performance plan will cost you $9 per person per month.

Lattice Pricing Plan

Pros

  • A holistic view of the organization
  • Launch 360 reviews
  • Inject goals and OKRs
  • Share feedback and public praise
  • Learn best practices from people operations experts
  • Set impactful 1:1s
  • Prioritize the most important work and obstacles with updates
  • Employee engagement surveys
  • Pulse check with direct reports and manager

Along with powerful Slack and Google Calendar integrations that help you stay organized, Lattice will provide you with the platform to implement actionable and ambitious goals, foster continuous employee development, and learn from insightful analytics.

4. BambooHR

Affordable HR Software for Growing Companies tracking Valuable Employee Information.

BambooHR is an Affordable HR Software for Growing Companies tracking Valuable Employee Information

With BambooHR, HR managers will have more time to focus on meaningful work, executives will get accurate reports on time, and the employees will be able to service their time off through a mobile app.

The holistic software makes it easy for you to get the open APIs up and running, with a lot of potential for integration with HR tech vendors.

Being one of the most complete HR software on the market, BambooHR covers applicant tracking, benefits administration, employee onboarding, HR reporting, time-off tracking, and performance management.

The main dashboard is organized, displaying the company directory, job opening, and reporting options, along with an employee view of the platform that displays the hire date, fair labor standards act (FLSA) code, employment status, ethnicity, equal employment opportunity, and job category.

BambooHR Dashboard
Source: Jobvite

Through the dashboard, the managers can see which employees are out and who have upcoming anniversaries or birthdays, various beneficial workforce statistics and links, tiles for adding employees or creating reports, and more.

The employees can request time off and access the company directory through the self-service access feature.

Pros

  • Check who has upcoming anniversaries and birthdays
  • Get a quick list of job offerings
  • Distribute job listings via social media and post them automatically on the company's career page or websites like GlassDoor
  • Onboard new employees with ease
  • Request time off and view the vacation hours left through the mobile app
  • Select the benefits like health insurance, health savings account, disability, and 401(k)
  • Plot out employee performances compared to their colleagues

More affordable than a sizable part of their competition, BambooHR is a personalized Human Resources Information System with a lot of built-in templates, visually appealing lists, directories, and reports, as well as a powerful performance review process and an optional AT system for job posting.

5. 15Five

Human-Centered Performance Management Platform for creating Expert Managers, Highly-Engaged Employees, and Lucrative Organizations.

15Five is a Human Centered Performance Management Platform for creating Expert Managers

The 15Five Continuous Performance Management software will provide you with everything from engagement surveys and 1:1 tools to performance reviews and OKRs.

When you request real-time feedback, you can expect to receive an accurate critique that you can act on, generated through in-app, science-based tips that empower the employees to take charge of their growth.

Celebrating wins and contributions makes everyone feel valued, and the high fives feature is among the most relevant functionalities for employee recognition and fostering a satisfying atmosphere.

Regular check-ins will allow the managers to stay connected with their teams, aligning everyone with top priorities, removing roadblocks, and empowering managers.

Through a guided structure, you are allowed to make your meetings more impactful with increased productivity, as the 1:1 feature is designed to maximize the results of your meetings.

Pricing

The Basic plan will cost you $7 per person per month.

15Five Pricing Plan

Pros

  • Company, department, and individual goals in one place
  • Monitor the team's health through the pulse check feature
  • Update weekly goals and align with quarterly goal settings 
  • Document and modify the tactics and achievements around your performances
  • Request real-time feedback
  • Celebrate wins and contributions
  • Regular check-ins
  • Maximize the benefits of your 1:1 meetings

The versatile 15Five structure helps you magnify your employee engagement, communicate the progress productively and simplistically with empowering feedback and guiding reporting features, helping you align your weekly goals with quarterly and yearly OKRs.

6. Kissflow

#1 Performance Management System for improving Retention.

Kissflow is a Performance Management System for improving Retention

The omnichannel, user-friendly HR software allows you to assess the monthly, quarterly, half-yearly, or annual employee performance, gather feedback from peers, reportees, vendors, set performance improvement plans for identified underperformers, reward your top performers, and create attainable goals.

Kissflow's versatile suite consists of dozens of installed applications for regulating different operations and workflows by preventing the problems instead of fixing them.

You will find various purchase orders, employee onboarding, vendor payment, mileage reimbursement, and other features which you can edit to make them more specific for your cause or create original, preference-induced ones.

For future reference, you can store the employee evaluations and quantitative manager feedback on the Kissflow HR Cloud while also having access to system sequences and reports on human tasks, notifications, and forms for capturing data.

Pricing

The Basic edition of Kissflow starts at $16 per month per user with a minimum of 10 users.

Kissflow Pricing Plan

Pros

  • Hands-off workflows
  • 5-step app creation wizard
  • Direct document attachments from Google box and Dropbox
  • Multi-language support
  • Progress tracking
  • App templates editing
  • Performance improvement plans
  • Edit and create business-specific features
  • Create preference-induced workflow features

Kissflow HR Cloud will allow you to streamline your performance management processes while improving retention, strengthening your team members' weaknesses, preventing issues with regular progress tracking, and aligning with measurable goals.

7. Leapsome

Best Performance Management Platform for measuring Employee Performance across All Key Skills and Competencies.

Leapsome is the Best Performance Management Platform for measuring Employee Performance

In Leapsome, you can generate continuous performance management and personalized learning cycle, with the platform combining tools for goals and OKRs management, 360s and performance reviews, employee learning & onboarding, employee engagement surveys, feedback and praise, development framework, 1:1s and team meetings, remote team management, and integrations.

The simple performance reviews, agile project reviews, 360 reviews, and anonymous leadership reviews enable you to collect data that is actionable and linked to learning and development.

You can set up your review process from Leapsome's best-practice templates and frameworks, or you can customize the questions, timelines, and anonymity settings, and you can automatically trigger the probation period reviews or decentralized annual review cycles.

In Leapsome, you can visualize the development requirements on the skill matrix and accentuate what's needed for each skill at each level while setting up recurring goal cycles with fixed timelines.

Pricing

Leapsome's pricing starts at $6 per user per month.

Leapsome Pricing Plan

Pros

  • Run impactful performance and 360 reviews
  • Define company-wide and team-specific skills and accentuate what's needed for each skill at each level
  • Cut down on quarterly admin and set up recurring goal cycles with fixed timelines
  • Employee engagement surveys
  • Deliver personalized learning content to employees
  • Build your employee onboarding playbook 
  • Conduct effective 1:1s and team meetings
  • Give instant feedback and share praise

Leapsome allows you to integrate with your existing HRIS and communication tools easily while letting you run impactful performance and 360 reviews, define and embellish individual and team skills, set up recurring goal cycles, and much more.

8. Engagedly

Best Performance Management Platform for Services Organizations.

Engagedly is the Best Performance Management Platform for Services Organizations

The holistic performance management software ensures goal alignment and continuous check-ins, allowing you to execute your strategy with goals and OKRs, 360 reviews and performance appraisals, people development with 1:1 feedback, mentoring & coaching, LMS, recognitions & rewards, employee surveying, and much more.

Aligning people practices with organizational strategy, Engagedly allows you to deploy competency assessments, ongoing check-ins, comprehensive 360s with real-time feedback, and even survey the employees for ideas.

To fully incentivize your employees, Engagedly lets you provide recognition, award points, badges & rewards, as well as social praise, while the Learning Management System (LMS) allows you to drive development, along with talent mobility and mentoring program management.

Engagedly Dashboard
Source: Capterra

Pricing

According to online sources, Engagedly's lowest prices start at $2 per user per month.

Engagedly Pricing Plan
Source : Betterbuys

Pros

  • Engaging performance reviews and competency assessments
  • Empower your employees with gamification and rewards
  • Survey employees for ideas and feedback
  • Drive frequent conversations with ongoing check-ins
  • Comprehensive 360/multi-rater
  • Advanced talent insights
  • Proactive succession planning and 9 box
  • Push notifications to Native iOS and Android Apps

Engagedly is a holistic goal alignment and employee performance improvement platform that equips you with the review, feedback, surveying, incentivizing, and other key OKR optimization tools proven to improve engagement.

9. UKG Pro Performance Reviews

Best Performance Management Software for identifying Areas for Improvement and retaining Top Talent.

UKG Pro is the Best Performance Management Software for identifying Areas for Improvement and retaining Top Talent

The configurable UKG Pro Performance Reviews (formerly UltiPro Performance Management) is an HCM system developed to help companies recruit and hire new employees, monitor time and work, calculate and track payrolls, conduct workplace surveys, assess the employees' feelings towards work and colleagues, manage salaries, and more.

With UKG Pro Performance Reviews, your organization's future is secure, as the software enables you to identify and groom potential successors for different roles and evaluate talent factors like leadership ability, performance, and involvement.

UKG's career development module ensures that your employees acquire the expertise, knowledge, and credentials necessary to contribute to the success of the organization, while the global HCM ensures you document the valuable information of all workers regardless of their location.

UKG Pro Dashboard
Source: Getapp

Pros

  • Assign or recommend goals to employees and see how they align with wider objectives
  • Discover, monitor, and contrast individuals to identify potential successors
  • Nourish the employees' strengths through personal growth plans
  • Empower your employees to set individual career aspirations, implement advancement steps, and self-ass the progress
  • Make rational compensation decisions based on experience quality and analytical resources
  • Automate the wage allocation process and remove manual labor
  • Single global HCM solution for all employees regardless of their location

UKG Pro Performance Reviews allows you to recognize and rate employee achievements, identify areas for improvement, and proactively find ways to elevate your employees' skills, which raises the quality of performance within your organization and creates future successors.

10. Quantum Workplace

All-in-One Employee Engagement and Performance Management Solution for Employee, Team, and Business Success.

Quantum Workplace is an All in One Employee Engagement and Performance Management Solution

With Quantum Workplace vouching for higher quality results with their system of the employees receiving feedback from the colleagues and outsiders instead of HR mandating feedback, you can rely on the software like this to equip you with a complete suite of employee engagement and performance solutions that will help you set and move towards goals faster.

You will get all the intuitive and robust employee surveying, goal tracking, peer-to-peer recognition, real-time feedback, one-on-one conversations, smart talent reviews, people and business impact analytics, and other tools to help you achieve year-round performance development.

The employees can read data about their performance, respond to feedback, and schedule 1:1s with a manager or mentor.

This sort of flexibility is seen within the software in other areas like the options for the different templates to be used for 1:1s and feedback, as well as the different options to utilize cycles for feedback and 1:1s.

Pros

  • Employees can receive feedback from colleagues and outsiders
  • Employees can read data about their performance, respond to feedback, and schedule 1:1s with a manager or mentor
  • Different templates for 1:1s and feedback
  • One-on-ones and smart talent reviews
  • People and business impact analytics
  • Connect turnover and engagement data
  • Quickly analyze survey comments
  • Create healthy habits with in-tool nudges and alerts

Allowing a year-round performance development and creating opportunities for continuous improvement, Quantum Workplace will help you target your efforts so that you drive engagement, progress, and success.

11. eloomi

Best Performance Management Software for Coaching Sessions.

eloomi is the Best Performance Management Software for Coaching Sessions

eloomi allows you to give your employees the resources and recognition they deserve, conduct ongoing feedback sessions, move towards specific goals, and nurture skill development.

The software's LMS will connect your organization's e-learning and on-site training, allowing you to import existing content or create new, assign content and automatically notify the employees, blend different content, creating online training content in minutes.

You can view performance statistics on a personal, departmental, and organizational level, grasp the bigger picture through visual reporting, ensure training completion with end-of-module testing, get predefined reports on compliance, test results, and more.

Pros

  • Plan modules for training and follow up on face-to-face meetings
  • Daily development plans with insights into real-time progress
  • Reward training completion with points, badges, certificates
  • Import your existing content or create training content with the built-in-course builder
  • Ignite your subject matter experts in the co-creation of content
  • Easy feedback and employee-management conversations
  • Effective employee motivational strategies
  • Create custom reports filtered by demographics, roles, learning, skills, or compliance

Combining learning, development, and appraisals into a single solution, eloomi ensures that the development needs of your employees are satisfied at each stage of organization expansion.

12. Cornerstone OnDemand

Best-in-Class Performance Management Software for Recruitment, Development, Management, and Engagement of your People.

Cornerstone OnDemand is the Best in Class Performance Management Software

Supporting all learning across organizations, Cornerstone OnDemand allows assigning training based on the staff's needs, optional training and registration into larger organization sessions while solving compliance training assignments and tracking, along with administrational and professional development opportunities.

Cornerstone OnDemand allows for frictionless recruiting so you can find great people quickly and match them with a perfect role, leverage machine learning to deploy relevant content to your people, make meaningful changes with the assistance of experts sharing best practices, engagement resources, and insights.

Keep your team motivated and provided with the resources to keep learning skills through automated assignments, comprehensive completion records, version control and auditing, multiple languages, and so on.

Cornerstone OnDemand Features
Source: Zdnet

Pros

  • Automated assignments, comprehensive completion records, version control and auditing, multiple languages
  • Stressless interview scheduling, one-click candidate assessments, unbiased feedback systems
  • Enable learning through audio, video, digital docs, instructor-led, virtual reality formats
  • Cornerstone iOS and Android apps
  • Hyper-personalized external and internal content for current and future roles
  • Recommend relevant content to your people through LMS
  • Exclusive microlearning content from Cornerstone Studios
  • Make meaningful changes with a team of experts sharing best practices
  • Evaluate skills and find the perfect fits for different roles

Cornerstone's cloud-based talent-management solution is completely configurable and designed so you can meet your talent strategy, compliance, business, and workflow needs, so you can acquire the best people, develop their skills, and maintain them in your team for a long time.

13. Paycor Talent Development (7Geese)

Best Performance Management Software for Small and Medium-Sized Businesses.

Paycor is the Best Performance Management Software for Small and Medium Sized Businesses

The cloud-based, unified HCM system Paycor helps small and medium businesses effectively manage their HR tasks, with employees having the privileges to change their personal information, check their paystubs and leave balance, clock in and out, leave their performance reviews, and more.

Paycor HR will automate your team's workflows, store employee information in a central location, elevate company information with push notifications and chat while empowering the employees to sign documents, complete tasks, update profiles, and more.

You will be able to eliminate tedious admin work with alerts and reminders while delivering enrollment data to all major insurance carriers, deploy video and scheduling integrations for recruitment, interviewing, and hiring virtually.

The onboarding module enables the new hires to fill out the required paperwork and receive the company information before the first day, after which the talent development solution can help align the employees with top priorities.

Paycor Dashboard
Source: Paycor

Pros

  • Automated workflows, tasks, prompts, and notifications
  • Empower employees to sign documents, complete tasks, edit profiles
  • Drive efficiencies with robust carrier connections and deliver enrollment data to insurance carriers
  • Frequent employee discussions to enhance engagement
  • Video and scheduling integrations for virtual recruitment, interviewing, and hiring
  • Streamlined paperwork and company information before the hiring process
  • Employees can view their pay stubs, pay history, and end-of-year tax forms
  • Track time worked on specific projects, tasks, grants, customers

Perfect for smaller and medium-sized companies, Paycor is a gem of a self-service HCM software that enables employees to change their personal information, check their paystubs, leave balance, complete their performance reviews from any device through a web browser or a mobile app.

What is a Performance Management System?

A performance management system is a mechanism through which the HR department involves its employees in improving organizational effectiveness while allowing the managers and executives to track the performance of employees and apply best practices to improve them.

With performance management software, you can enable the HR managers to set clear performance expectations so that employees and departments understand what is expected of them, reinforcing individual accountability with the employees to meet their goals and evaluate their performance.

You will find vital HR functions like continuous progress review, real-time feedback, frequent communication, individualized growth planning, employee training, incentivizing, rewarding improved performance, intuitive goal setting streamlined in a performance management system.

When you apply a performance management system to your organization, you can set challenging goals and motivate employees to improve their performances, fostering a culture of proactive communication about goals, training, and achievements in a supportive work environment.

This kind of people-driven structure allows you to engage in 360 feedback where managers evaluate the employees and vice versa, recognize and publicly praise everyone's achievements, provide thoughtful feedback and suggestions on where and how the employees can improve, and promote active learning and development.

Use Cases for Performance Management Software

1. Employee complaints about your current system and lack of opportunities for growth

Most reasons for implementing performance management software have to do with communication and clearer expectations.

If the employees complain about your current performance system and process, it could be a good indication that your team would benefit from performance management software.

Let's say you have a talented employee that has worked for your organization for over a year and showed clear potential for a specific role, for example, which caused the managers to react in the performance reviews and discuss the possibility for advancement with the employee expressing interest in becoming a leader.

Without an efficient follow-up, all this effort can be for nothing, which is why you will see promising employees stagnate due to a lack of a structured process enabling the leader to proactively evaluate appraisals and create actionable goals that will allow the employee to keep progressing.

Instead of proactive assignments preparing employees for future leadership roles, employee's achievements get stored in files and forgotten, which is what performance management software is there to prevent.

2. HR department is wasting time navigating paperwork

If your HR team spends excessive time organizing performance paperwork and tracking completed reviews, it is a good indicator that you need performance management software.

Performance paperwork is almost invaluable if it can't be quickly and easily accessible, and spending tons of hours on tracking completed reviews not only tires out your HR team but it trains your employees to stay passive and not develop the accountability to assess their performance.

A performance management software encourages your employees to take responsibility for their growth and learn to receive and give feedback for the good of the entire team.

3. Outdated methods of performance tracking

Printed documents and Excel spreadsheets have been outdated for quite a while now, and effective performance management software will eliminate the need for tedious manual work so that you can maintain on-time completion and let HR focus on process improvement.

4. Low employee engagement and high turnover rates

If you are experiencing low employee engagement or high turnover rates, the problem could lie in the way that you handle progress assessment and performance management.

Through performance management software, an organization adopts an overall focus on employee performance and development, which enables them to align with the company's goals quickly and master the skills required to achieve them faster.

With consistent feedback and coaching, employees are much more engaged because they are constantly equipped with the knowledge and resources that help them reach goals for which they are rewarded.

When the employees feel as though they are viewed as positive investments, the retention rates will increase drastically.

5. Employees are inconsistent meeting KPIs

When too many of your employees can't achieve goals and meet the deadlines, you should consider installing a performance management system that will help you identify and work through the roadblocks of your short-term goals.

The automated performance management system will let you devise dynamic, custom feedback forms relevant to each role, with the frequent performance reviews allowing you to assess the development needs in each phase, which is what leads to employees checking off milestones in order.

6. Increased chances of uncalculated risk

Finally, if you doubt that your current performance management strategy increases the chances of uncalculated risk when deciding on promotions, compensations, and terminations, performance management software is a mechanism that can help you prevent potential damage.

Types of Performance Management Systems

1. The Balanced Scorecard

The balanced scorecard combines four different business perspectives (financial, customers, internal processes, and people) and helps companies understand the roadblocks and ways to achieve their organizational objectives.

The BSC consists of high-level goals broken down into strategic increments, measures and KPIs to help you understand what you are achieving and initiatives to help you achieve the objectives.

Requiring a structured reporting process and based on reviewing your strategy regularly, the BSC facilitates alignment across divisions and departments and allows you to link the departmental with the organizational objectives.

2. Management by Objectives (MBO)

The MBO centers on creating a set of organizational objectives which are used as guideposts for creating individual employee objectives.

In MBO, the objectives aren't always linked to one another, defined as a collaborative effort between the leaders and employees, with less emphasis placed on how the objectives will be achieved.

Usually, you will recognize the MBO approach by the list of activities and actions that the organization is grouping together to improve various goals and objectives.

3. Budget-Driven Business Plans

It is a less commonly used performance management system where the work plans are linked to the overall budget of the organization with spendings going to the projects that deliver results.

With budget-driven business plans, you can find the income sources and expenses grouped into categories so the leaders can identify the downsizing and investing opportunities.

The system is driven by finance, unlike the other approaches organized by a strategy department, and the development starts with the finance team providing last year's spending to a department, after which the department needs to list the activities they have in plan for the coming year without changing the budget.

Benefits of Implementing a Performance Management System

1. Consistency and role alignment

With a performance management system storing all performance metrics and earned appraisals for each employee, it is much easier for managers and leaders to access these records and take the right action at the right time.

No promotion should be unjustified, and no transferring should be without a valid reason, which is why performance management software is so beneficial as it not only documents the milestones achieved by each employee, but it generates evaluations of employees' potential for different roles based on skill assessment.

A performance management system will allow you to match the right person with the right job consistently.

2. High morale and motivation

With an organization proactively assessing and developing employees' skills and investing the resources in them continuously acquiring new knowledge, the employees realize that the organization views them as a stable contributor to the company's plans and long-term future.

Objective performance appraisals will reassure the employees, supervisors, and managers that their work is valuable and the rewards will incentivize them to continue improving their performances.

The 360 review structure found in many performance management software creates an atmosphere of equality, allowing the lower-level employees and the managers to be critiqued by one another.

3. Pleasant workplace and cost savings

Part of the effectiveness of the performance management software is its holistic structure, as the increasingly motivated employees are more likely to be loyal which keeps a high retention rate of highly valuable employees.

Not only does this foster a positive outside reputation, but it makes the workplace more pleasant, increases the output per hour, and cuts labor costs.

More high-quality employees stay with an organization for a long time, increasing their work rate and getting promoted, which secures all positions are occupied by the best in class, leaving the organization with minimal turnovers and recycled onboarding costs.

4. Mature and accountable workforce

When the individual employees' efforts are objectively judged and rewarded, it causes them to mature as a worker and willingly accept responsibility for their work.

The empowerment of the employees to take accountability for their development causes them to create a habit of proactive skill assessment, self-initiated progress tracking, and developing strategies for tackling any arising issues, which strengthens the present workforce and creates future leaders.

The evaluation system allows you to spot the employees that are too insufficient or cause the halting of business processes more easily, as the objective evaluation system can point to inadequacies with more accuracy and consideration.

Common Pitfalls with Performance Management Software

1. Not keeping the administrative and developmental discussions separate

The divergent goals assessed in performance management software can be grouped under administrative (salary, bonuses, promotions, layoffs, demotions, transfers) and developmental goals (methods used to improve employee motivation and ability).

As the performance problems must be investigated for causes and solutions, the management must take into consideration the administrative decisions like salary increases that result from these situations, which can cause disclosure of either positive or negative information, leaving a distorted view of circumstances for the intended action plan.

To resolve this, some organizations will keep the developmental and administrative discussions separate, with the manager focusing on the employee's performance strengths and potential improvement areas in the first meeting and the boss discussing pay increases and bonuses tied to the performance several weeks later.

Other organizations will maintain two separate systems, with one focusing on the employee's accomplishments, results, and compensation and the other addressing how each employee performs, providing feedback and developmental initiatives.

The first approach does little to resolve the problem of employees being cautious to expose any weaknesses, while the second approach can dilute the payoff of a performance.

The key to avoiding this pitfall lies in conducting regular, ongoing performance reviews, alleviating the conflict of divergent purposes of performance management.

2. Unprepared or unskilled managers

As there is little to no formal training provided for most managers on how to conduct effective performance reviews, which can lead to subpar and inaccurate skill assessments.

Without managers being educated on how to plan reviews, write reviews, and deliver discussions, it can cause employee motivation to deteriorate and the appraisal effect to diminish.

The lack of effort from managers constructing performance reviews can cause the executives to delay feedback until the formal review period and then blame the employees for misdirection in the process that they caused.

Additionally, the managers can forget to tie the employee with the company goals, fail to set stretch goals, or set goals that aren't measurable.

Another great mistake that can't be fixed by expensive software or a trick is when the managers fail to document the process, as this not only justifies appraisal but allows anyone to go back to and understand each phase of development through a clearly constructed message.

3. Biased and inaccurate evaluations

Managers can make certain conscious and unconscious rating errors when evaluating employees' performances.

The contrast effect can fool the manager when comparing the performances of a high level with a lower-level performer without taking different circumstances into account.

There are many types of biases a manager can fall for, like the central tendency bias, which causes them not to rank anyone too high or too low to avoid conflict, as well as the personal, strictness, leniency biases which are all well-known.

Biased evaluations can lead to perceptions of unfairness, subjectivity, favoritism, and even deliberate disruption, which can cause distrust in the performance management process and the manager.

On the other side, if the manager's performance assessments are too vague instead of addressing the specifics of what the employee did well and what they need to improve, the employees can't rely on any useful feedback to improve their performance or understand why they didn't get the pay increase they aimed for.

4. Not emphasizing the problem employees and the star employees

When a manager ignores the problem employees, it can cause the dedicated part of the workforce to feel as though their work environment is left uncared for.

When someone's obvious mistakes and wrongdoings aren't addressed, it can create resentment in other employees as they can't get away with the same actions as the problem employees.

What's worse is that the negligent behavior of certain individuals can halter the whole process and decrease everyone's productivity.

When managers keep the problems unaddressed, it sends signals to certain individuals that the poor performance is acceptable.

Another potential danger of keeping the problems unaddressed in the recorded performance reviews is that it can create legal troubles for the company claiming the poor performance as a valid reason for termination.

In the same manner, an employee not recognized for their above-average performance can cause them to lose faith in their efforts, which can keep many employees from performing to their fullest potential.

What Features to Look for in Performance Management Systems

1. Easy-to-digest success metrics

To quickly determine how much progress an employee has made, a performance management system must provide you with clear metrics of success that will help your team stay on track.

Clear benchmarks based on SMART goals, along with strong visuals, will help make the employees' progress clear and remove any ambiguity.

Smart Goals Explained
Source: Dougthorpe

Four major categories of success metrics include work quality, work quantity, work efficiency, and organizational performance metrics.

2. Automation, e-signatures, questionnaires

A high-quality performance management system will provide you with automatic prompts and reminders so you never forget a task you need to complete.

Instead of going through the hassle of printing, signing, and scanning documents, you can utilize the e-signature feature, while having the flexibility to customize key features like questionnaires so you get the information you are looking for.

Collecting feedback from your customers, employees, and peers can be the fastest way to learn what you need to improve, which is why you can search for different questionnaire tools to help you gather the information that you can streamline.

Collecting Feedback from Customers
Source: Helpx.adobe

The streamlined information will help you create clear job requirements, apply the proper recruitment and selection procedure, negotiate performance standards, outcomes, and measures based on accomplishments, provide appropriate direction and training, conduct discussions for result improvement, and provide career advancement opportunities.

3. 360-degree feedback

What a 360-degree feedback functionality accomplishes is the balance and objectivity in the performance assessment process.

This feedback structure ensures you and your employees receive a clear understanding of each individual's distinct contributions and challenges while minimizing bias.

Apart from allowing you to easily discover your employees' areas for improvement and set challenges that will strengthen their weaknesses, the 360-degree feedback functionality creates an atmosphere of equality as it removes the manager ths frome pedestal and allows the employees to objectively judge their performance.

This way, the employees and the leaders are equally urged to develop and learn from their mistakes.

4. Self-evaluation tools

A strong performance management system should allow your employees to assess their own progress, as the self-evaluation practices urge the employees to think critically about their performance and come up with improvement strategies.

Also, self-evaluation will encourage the employees to take more ownership of their growth and accountability for their work, which will help the managers understand how they have been working and what exactly they need to adjust.

The self-evaluation capability will give the managers insights into how the employees are responding to their mistakes and if there are any changes in their approach that could result in more productive sessions.

Self Evaluation Tools
Source: Help.csod

5. Goal-setting functionality

Just as frequent reminders are necessary for the employees not to lose track of their objectives, there needs to be a configurable goal-setting functionality that will keep the employees on the right track in the first place.

A quality performance management system will let you set dynamic goals that you can modify over time as the employees' goals and competencies change.

The system needs to provide you with a configurable framework for setting short-term and long-term goals, as well as OKRs.

6. Instant feedback

Addressing the problem as soon as it arises is what ‘s going to make all the difference in completing goals efficiently, and real-time feedback enables exactly that.

The employees can ask for constructive feedback between themselves, just like the managers can give specific feedback about the ways an employee is excelling so that they understand how to keep improving.

Providing up-to-the-minute feedback will help you eliminate unnecessary meetings and the employees will be guided in a concise, unobtrusive way towards better results.

Instant Feedback Options
Source: Crowdreviews

7. Documentation and manager log

Consistent note-taking is crucial for accurate progress tracking and it must include all significant occurrences, as the documentation is a valuable asset that needs to support performance decisions.

The performance log is a record that a manager keeps of each employee, where significant performance events are documented.

The manager can record successes or performances that require improvements, and this documented information can be used to support performance decisions or ratings.

The performance log can serve as both a reminder for exceptional performances and deficiencies with specific employees, as well as a coaching reminder with a record of upcoming tasks.

Organization Summary Review
Source: Workday

Performance Management System FAQ

What is performance management?

Performance management is a continuous process of communication between a supervisor and their employees that occurs throughout a year, for the purpose of accomplishing strategic objectives of the organization.

The communication process clarification of expectations, objective setting, goal identification, feedback providing, and results reviewing.

Apart from the objective side, performance management is usually employee-focused as well, which means that the manager invests the time and efforts to help the employees develop the skills necessary to accomplish the organization's objectives.

What is the goal of performance management?

The goal of performance management is to create an encouraging working environment where the employees can perform to the best of their abilities, and learn and develop new skills throughout the process along with the managers.

Another primary goal of performance management is to ensure that an organization and all its departments work together in an integrated fashion for accomplishing optimal, common results.

What is the purpose of performance appraisals?

A performance appraisal has three main objectives.

Firstly, a performance appraisal needs to provide adequate and insightful feedback to each person about their performance, that is clearly understood by a third party.

Secondly, a performance appraisal needs to serve as the blueprint for modifying behavior so that it produces more lucrative working habits.

Lastly, a performance appraisal needs to provide accurate performance data that the managers can use to judge future job assignments and compensation.

Which Performance Management or OKR Tool Should I Choose?

If you want to relieve your HR managers of tedious tasks and allow them to focus on improving the workforce environment, ensure that the executives get accurate reports on time, give the freedom to your employees to service their time off through a mobile app, it's hard to find a software better than BambooHR.

Additionally, BambooHR offers a ton of templates, visually appealing lists, directories, reports, but what if you prioritize improving your retention rates over strong visuals or anything else?

Kissflow HR Cloud is the user-friendly software that allows you to assess your employees' performance throughout the whole year while gathering feedback from all sides and making guaranteed improvement plans for underperformers and over-achievers.

Continuously working on strengthening your employees' weaknesses and preventing issues before they arise makes Kissflow HR Cloud the perfect engine to power high retention rates throughout a year.

If you are looking for an HR solution to help your smaller or medium-sized team align with your top priorities while giving the employees the freedom to change their personal information, check their paystubs, clock in and out, and edit their performance reviews, Paycor Talent Development might be the performance management software for you.

Written by
Anastasia Belyh
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