While performance management responsibilities generally fall to… well, managers, it can’t be denied that they depend on HR’s support. This includes supplying the proper tools and frameworks for delivering feedback and making decisions. So, what is performance management software, and why is it absolutely essential?
- Key features of performance management software
- How performance management software benefits businesses
- Why performance management software is important
- Making the transition to performance management
- Free performance management eBook
Performance management software is a comprehensive platform for tracking performance, delivering feedback, and setting goals for progress. This ensures employees are clear on their responsibilities, and helps them to improve over time. Assuming they’re being managed effectively, that is.
Traditional performance management tools typically revolve around an annual performance review cycle. This then informs decision-making for things like promotions or raises. Shockingly, it turns out only giving feedback once a year isn’t the best way to cultivate employee development.
Modern performance management uses ongoing feedback and data-driven insights through AI analytics to ensure objectivity.

Key features of performance management software
For performance management software to be truly effective at improving performance conversations, it needs the following features:
- Employee check-ins and continuous feedback: Tools for continuous feedback are essential for both performance management and employee development. One of the best ways is through a regular employee check-in where managers can exchange feedback with individual team members.
- Goal-setting functionalities: The ability to set goals helps keep employees on task. Two of the most popular options are OKRs (which connect individual goals to company objectives) and SMART Goals (which break projects down into more immediate sub-goals).
- Recognition tools: Recognition tools allow both managers and employees to highlight good work or helpfulness from colleagues. Besides boosting morale and building coworker bonds, this helps to improve manager awareness about who their MVPs really are.
- Employee analytics and performance dashboards: The best SaaS providers offer AI-powered performance management solutions. These include performance dashboards with team analytics clearly displayed and visualized. Not to mention AI sentiment analysis for valuable engagement insights.
How the right software can benefit your business
If you’re struggling to pitch performance management software, be sure to include these major benefits in your proposal:
- Streamlining: What is performance management software, if not a tool to make life easier? Modern software streamlines busywork like performance tracking and feedback conversations. That way, they don’t disrupt daily workflows.
- Automation: Tools like Perform365 automate repetitive tasks such as performance review admin and analytics, saving a lot of time for HR and managers alike. This also means that good performance management software is scalable for larger businesses.
- Transparency and accountability: Having a solid framework for data-driven performance management ensures transparency and fairness for employees. Additionally, tools like 360 feedback software provide accountability while giving managers a deeper range of insights.
Why performance management software is critical
Effective performance management software is vital for both employee engagement and performance management. After all, people are more likely to be disengaged at work if they feel they’re not being managed fairly. Between continuous feedback tools and data-driven employee performance tracking, modern software gives managers everything they need to make informed decisions.
The cost of not using software
Gallup research has previously shown that traditional performance reviews cost businesses with 10,000 employees between $2.4 million and $35 million in lost work hours a year. More recent findings from their State of the Global Workplace report shows that disengagement has cost the global economy $8.8 trillion in lost productivity.
Performance management in the flow of work
What is performance management software good for if it disrupts productivity? The best software providers include integrations for the tools you’re already using.
For example, an integration with Microsoft Teams lets users do things like view feedback or submit check-ins without leaving their normal comms platform. That way, you can handle things like check-ins while waiting for a meeting to start.
Who does performance management well?
While plenty of organizations are ditching outdated performance management tools, we wanted to highlight a few who are leading the charge:
- Adobe: While check-ins as a performance management tool have grown in popularity, Adobe has been using them as a flexible alternative to annual reviews since 2012.
- Microsoft: They replaced their annual review systems with more flexible performance conversations, goal-tracking and performance journals for employees.
- Google: Often cited as one of the best places to work, Google shook up its performance management practices in 2022. Unlike other examples, they went down to one streamlined annual review, but also implemented regular employee check-ins.
For an example of a business improving performance conversations with Perform365, look no further than Flight Centre. They’ve used our platform to bridge the divide between employees and managers using ongoing, high-frequency feedback.

Transitioning to a software-based system
If you’ve been using traditional methods until now, you’ll need to prepare for the change over. We’ve outlined a few simple steps for switching to a software solution:
Choose a software vendor
Take your time selecting a software provider. There are plenty of options on the market, and some are certainly better than others. Even if your chosen vendor offers leading performance management software, do your research. Look for demos or free trials, so you can make an informed purchase.
Roll out your new platform
Implementing new software can take a while, especially on a massive network. You’ll need to plan ahead for disruption and the potential loss of productivity. Implementation times vary by the provider and the needs of your business. As such, it’s another thing to research before committing.
Implement software training
What is performance management software going to achieve if nobody knows how to use it? Probably not much. That’s why you need to factor staff training into your implementation assessment. Getting staff trained to use new performance management tools helps to prevent them from alienating your people, which is vital for the next step…
Secure employee buy-in
All performance management tools and tactics need employee buy-in to function successfully. After all, things like goal updates or 360 feedback are worthless if people don’t take them seriously.
To secure employee buy-in, you need to show your people why the new software is necessary, and also that it gets results. For example, finding insights from check-in data and acting on them shows employees their feedback can have an impact, encouraging them to be honest.
Review performance management effectiveness
Even if you choose the top-rated performance management software on the market, you still need to make sure you’re using it right. You can easily find areas for improvement by regularly reviewing performance data and employee feedback from across your whole organization.
Unlock the power of continuous performance management – Download your free eBook!
Discover how to build a culture of continuous feedback and performance improvement. Learn practical strategies to track progress, foster growth, and boost employee engagement all year round! Read this guide to move away from outdated annual reviews and embrace a more dynamic approach to managing performance.
Download your free copy of “Embracing Continuous Performance Management” and take your team’s performance to the next level.