What to look for when buying performance management software

In today’s super competitive business environment, companies are under pressure to find and keep the best talent. They also need to get the best performance out of their talent investment. This is where performance management software comes in.

Whether you’re a small businesses or large enterprise, how do you know which performance management software is right for you? Here are some features and functions to look for when shopping for performance management tools for your HR department.

What are the best performance management software tools?

Here are some benefits and advantages your company can expect when choosing a solution:

1. The No. 1 objective of a modern performance management system is to improve employee performance standards
2. The intent of a performance management system is to continuously support your employees to reach individual goals, so that your business achieves its wider objectives
3. Rather than annual reviews or a stagnant list of personal objectives, performance management is a multifaceted set of processes and behaviors to encourage high performance

The very best performance management systems create a close link between successful employees and successful companies.

It’s about reaching a common understanding between employer and employee about what “good” looks like and how an employee can contribute to the organization’s overall success. It links higher employee performance standards with better business results and overall employee experience.

What’s the difference between performance management and talent management?

Talent management and performance management are both responsibilities of HR, but focus on different things. Talent management addresses all aspects of the employee lifecycle, including recruiting, onboarding, performance, compensation, learning, succession, and development planning. Performance management is part of that overall employee journey.

It’s also a means of giving constant and job-specific coaching in between major reviews. Practically speaking, your performance management system might include a few different, interconnected processes and documents, such as:

• Personal achievements that list of major successes in an employee’s career, aligned to the company’s strategic objectives
• Individual goals and objectives matched to someone’s job description and required competencies
• 360 feedback from peers, direct reports, and managers
• Self-assessment that captures the employee’s view of their own performance
• Personal development plans with actions and objectives for the employee
• Performance appraisals given annual or quarterly, usually led by a manager
• Leadership development programs to nurture leaders and identify future ones

What you use will depend on your organizational structure and job-specific skills. In most companies, the above processes run on a yearly cycle. You list an employee’s achievements and set objectives with them at the start of the year, and 12 months later sit down with them and analyze how they’ve done, plus set new objectives for the coming year.

However, many big brands prefer more regular performance reviews, as frequently as every quarter. By shortening the performance management cycle, it allows employers to get closer to their employees and avoid having issues fester for months.

Cloud-based, real-time solutions for performance management

To make the most of HR data, organizations are leveraging cloud-based performance management systems for real-time insight.

People analytics is a data-driven method for managing employees during the entire lifecycle. Some solutions are designed so any business unit can use real-time and data to serve its employees, and get a better understanding of what’s driving performance. These systems:

• Utilize HR data and capitalize on opportunities to create high-performing teams
• Help leaders make smarter business decisions with real-time insights
• Identify leaders, develop key competencies, and create more effective workforce planning systems
• Drive higher customer satisfaction with a more engaged, diverse, and skilled workforce

Using advanced analytical methods, you can easily convert a treasure trove of employee data into clear, actionable insights.

Beyond traditional HR software

Traditional human resources software streamlines various HR-related tasks using automation and customization features. An effective performance management system goes beyond the basic and drills down to deliver results through the following:

• Fair, consistent and constant. From the VP of sales to a junior sales rep, everyone should feel as though the system will assess them even-handedly and reward their success
• Proven methodologies. Use measures that have been tested and validated outside of your organization to avoid any biases or favoritism
• Senior buy-in. If execs haven’t signed on to your performance management software, it’ll eventually fail, as employees recognize their objectives aren’t tied to business goals or their successes aren’t properly recognized
• Clear communication. Employees should understand what’s expected of them and how they fit into the company’s wider goals
• Facilitates continuous development. If it’s a box-ticking exercise, it won’t work
• Suited to your organization. Your employee performance management should be suited to your industry and structure, and support your current appraisal system and performance periods
• Linked to rewards. Integrate performance-based rewards as part of your system, a powerful way of rewarding good work
• Trackable. Managers and employees should have 360-degree feedback software that allows them to log how they’re doing and get an idea of how they’re tracking against objectives

The top objective is to improve employee performance standards. But you can connect your performance management system to bonuses and pay reviews.

In this way, you can incentivize employees to be more engaged in performance management processes. Keep in mind, though, that financial reward is only one part of what drives employees to succeed and shouldn’t be the only reason to engage.