A key principle in business is that an organization is only as good as its people. So, how do you make sure yours are reaching their full potential?
Well, the secret isn’t to just rely on hiring people who are already great—even your highest performers can excel far past what they think they’re capable of when given the right support and resources. But it’s down to you as an organization to provide them with the very support that they need.
Performance management is a vital part of this and enables you to not only track how well your employees are excelling in their roles but also share honest feedback, set long-term goals, and identify areas for improvement.
It’s about a lot more than handing out gold stars and pats on the back once or twice a year during performance reviews—it’s a continuous process that focuses on employee development, rather than ratings alone.
Throughout this article, we’ll cover how performance management tools can help you optimize your performance management processes, as well as some of the key features you should look for when selecting one for your business.
What Are Performance Management Tools?
In a nutshell, performance management tools are designed to help you understand and evaluate employees’ performance over time.
And, while solutions may vary and you should always evaluate your organization’s specific requirements before investing, performance management software can help you streamline employee development, collect real-time feedback, set goals, identify areas for improvement, track performance across all employees via a centralized dashboard, and more.
Employees should always know where they stand and feel supported throughout their journey at your organization—and performance management software can go a long way towards achieving that. The software should provide a centralized area where your employees can set goals and check progress towards their objectives, as well as give and receive feedback to and from colleagues.
Many solutions also come with helpful tools, such as automatic reminders for reviews and one-on-one meetings, rewards for high performers, e-signing capabilities, and customizable templates for self-evaluations, performance reviews, and questionnaires.
But now that we know what performance management tools are and how they can strengthen your people development initiatives, what are the key features you should look for when selecting a solution for your organization?
What’s troubling is that just a tiny 4% of HR leaders believe their organizations accurately assess employee performance. So, it’s unsurprising that surveyed employees report that more focus is needed on career opportunities and training, feedback on performance, shorter and more regular reviews, and goal setting.
Luckily, you can leverage performance management tools that are designed to address these very requirements, more accurately assessing performance and driving higher employee engagement, as well as saving up to 50% of the time spent on administrating reviews.
To help you find the right solution for your organization, here are the five key features you should look for in a performance management tool.
1. Goal Setting
For many people, setting goals is how we improve and progress. And it’s also how we measure how far we’ve come.
In fact, the simple act of writing a goal down is proven to increase the likelihood of achieving it by 42%, according to research by Dominican University’s Dr. Gail Matthews.
Performance management tools make it easy for employees to record and set long-term career goals and short-term personal development goals, as well as objectives and key results (OKRs).
Via one centralized dashboard, both employees and managers should be able to set clear timeframes for completion, edit and update entries, track progress, and view completed goals. Most solutions can also be customized to encourage or mandate employees to set goals that align with company objectives.
2. Feedback Portals
People love to feel valued—and in the workplace, it’s no different. Sometimes all it takes is a positive piece of feedback from a colleague to warm the cockles of an employee’s heart, while constructive feedback ensures that they’re continuously improving and developing. In fact, 89% of HR leaders agree that ongoing peer feedback has a positive impact on their organization.
By providing regular, real-time, and performance-related feedback, any issues or areas for improvement can be addressed as soon as they arise, and employees can receive instant assurance that they’re valued and appreciated by their colleagues—which can be a great morale booster.
Performance management tools can facilitate the collection of real-time feedback in many ways. Many solutions supply portals where employees can request and collect 360° feedback from a range of colleagues following the completion of a piece of work or project, and, conversely, provide feedback to colleagues when required. What’s great about using software to do this is that the solution can automatically notify a requestee that they’ve been asked to provide feedback, and instantly log that feedback in the requester’s profile once completed.
Some solutions might also include portals where employees can upload feedback—such as positive emails from clients or wider members of the business—which can be used as evidence during performance reviews.
3. Automated Performance Reviews
Performance reviews—we either love them or we dread them. But they’re a critical component of performance management.
What’s surprising—or perhaps to some, not surprising at all—is that 55% of employees go more than a year without documented performance feedback, while 14.1% never have this type of feedback at all.
Often, it can be difficult for managers to find the time to conduct reviews, or to keep on top of when they’re due. But performance management software can help with that.
Performance management software can automate review cycles, setting auto-reminders at specified frequencies throughout the year—some solutions can also schedule reviews that coincide with promotions or work anniversaries. The software can also automate workflows, meaning that reviews and evaluations are automatically sent to the right teams or individuals for approval if needed.
For reviewers, the software can also give them access to their reviewee’s full performance history—including colleague feedback, self-evaluations, goals and objectives, and past performance reviews—which can be discussed throughout the review.
4. Training And Personal Development
Your people are your greatest strength—while that’s a cliché, it’s invariably true. So, nurturing and investing in your people and their development is a key aspect of any performance management process.
Performance management software can enable both employees and managers to easily identify strengths, skill gaps, areas for development, and training opportunities, to ensure continuous growth. Most solutions will come with customizable, built-in templates for personal development plans, which employees can use to plan, log, and update their development initiatives.
Some solutions might even enable you to assign specific training to employees where an area for development is identified. Some tools come with development modules built-in or, alternatively, you might be able to integrate the solution with your learning management system (LMS) to more easily assign and track training.
5. Reporting And Analytics
A well-rounded performance management tool should incorporate data from a combination of both qualitativeand quantitative sources. And while 360° feedback, for example, might show that employees are working efficiently and effectively, analytics can evidence how many employees are completing their goals within agreed timeframes.
Reporting and analytics capabilities can provide teams and managers not just with an overview of individual employee progress, but of entire teams and departments, organization-wide. From a centralized dashboard, most solutions can show skills, areas for development, goals met, and more, as well as completion rates of performance reviews and any overdue evaluations or tasks to be completed.
Using these analytics, teams and managers can also identify consistently high-performing employees and reward them for their work, as well as offer support to those who may be struggling.
There are a few things you should consider before investing in any performance management tool.
Firstly, your business requirements. You might find one solution offers more features than you’re ever going to use, while another lacks some of your most basic requirements. It’s important to select a solution that fulfills all your needs without overwhelming you with unnecessary features and expenses.
But how will you know what to look for if you don’t know what you need? We recommend taking the time to evaluate your current performance management processes to identify the tools that you need. We also recommend bringing your employees into the conversation. After all, they’ll be using the software, so it’s important to invest in a tool that they’ll enjoy using and gain real value from.
Secondly, look for a solution that’s easy to use and user intuitive. The last thing you want is a bunch of frustrated employees who find that the solution makes their roles harder, instead of easier.
We recommend making the most of product demos and free trials before investing in a solution—you should trial the solution live in your environment to test how well users can get to grips with its features. It’s worth also checking expert product reviews to identify the best solutions in the industry. To help you out, we’ve put together a guide to the Top 10 Performance Management Tools.
And, lastly, make sure you select a solution that integrates seamlessly with any other HR tools you might already have in place.
To sum up our article, performance management tools can not only simplify and automate your performance review cycles, but also facilitate goal setting, ensure ongoing feedback, support training and personal development initiatives, and provide organizational-wide analytics on performance.
The benefits you can reap by using these tools can be enormous—so what are you waiting for?