Performance management software guide: how to deliver effective results

As the people process possibly most likely to be forgotten – or at least, procrastinated over – performance management is ripe for automation. Your HRMS performance management module can help you keep your processes on track, prompt managers to take necessary action, and provide essential data for learning and management and payroll.

If you’re looking at performance management software, the following information covers the key issues, including:

  • What is performance management?
  • How performance management software can help deliver effective results
  • Performance management software costs
  • Recommended vendors

What is performance management?

Each organization probably has its own idiosyncratic definition of performance management, but in its broadest sense, it is about enabling an organization to deliver its objectives, and enabling the individuals within that organization to be clear about what is expected of them in order to contribute to that goal.

The basic ingredients of a ‘classic’ performance management system are usually:

  • A clear statement of what the organization is aiming to achieve.
  • A clear statement of what is expected from each individual (this often takes the form of a detailed job description and clear standards stating to what level of quality and/or quantity each task should be performed).
  • Initial assessment (often involving a discussion between the employee and the manager) of the individual’s skills and knowledge in relation to the job; i.e. do they need further training or assistance to be able to do what is being asked of them.
  • Regular assessment of the individual’s performance; possible methods may include:
  1. one-to-one meetings with the manager
  2. the manager checking the individual’s work
  3. annual or biannual review meeting (the often-dreaded ‘appraisal’!) to discuss the individual’s performance in depth (informal systems, this often results in a rating from a scale being agreed which will then influence the individual’s pay increases and promotion prospects).

The benefits of performance management include improved individual and organizational performance, increased motivation, improved training, and better communications.

All that being said, of all HR processes, performance management is the one least likely to stand still. Many organizations are engaged in a constant cycle of tinkering and improvements. The following are three current performance management trends that may influence your choice of performance management software:

Continuous performance management

In this ‘just in time’ information age, performance management is more of a constant and less of a once-a-year occasion. Rather than a single appraisal meeting, individual employees are more likely to receive regular feedback from both managers and peers, and the software should support that with easy-to-use feedback tools.

Focus on career growth

Polls and studies suggest that Millennials generally place a high priority on career growth and development. Considering they are on the tipping point of becoming the most numerous age group in the labor force, any performance management software should be including a facility for career planning and development. To do otherwise risks your Millennials looking elsewhere for their next opportunity.


With an increase in multi-country and multi-territory organizations, delivery of business goals often requires colleagues to work across geographic barriers and time zones. In such circumstances, electronic communications and prompts are vital to build a performance management relationship between persons who may rarely or never meet face to face.

Download our up-to-date HRMS Software Pricing Guide to find out about and costing

How performance management software can help deliver effective results

As part of an integrated HRMS, performance management software can access all available HR and people data. These days, most interactions are electronic and therefore both recordable and recorded. That data is the raw material for targeted feedback designed to improve individual performance. The following key features will enable your performance management software to use that data to best effect…

Procrastination-busting – The first, simplest and possibly most impactful benefit is that an HRMS can notify parties of the action they need to take and when, simplifying the process of setting performance targets, gathering feedback, setting up review meetings, and writing reports. Such automation keeps your performance management process on track and also encourages proper preparation and follow up.

Real-time performance management – Easier recording and exchange of feedback actively discourages participants from ‘saving’ of that feedback for a single appraisal meeting (a common practice in the past). Your software should enable managers to give credit for a job well done when it’s done, and not at some distant future point.

Paperless – It’s worth remembering that, as with any automation, electronic performance management processes are paperless or nearly so, reducing your running costs, creating efficiencies, and benefiting the environment.

360 assessment – Previously, the biggest downside to 360-degree feedback systems was the time needed to properly administer them. The right software makes such feedback easy to give, crossing hierarchical levels and team boundaries more easily.

Objective reporting – Humans are fallible and tend to be subjective in their judgments, despite the principles of performance management resting on fair and objective feedback and assessment. The more data available, the more objective the assessment will be.

Better teamworking – As already mentioned, most interactions are recorded somewhere and a system that can access that data can be directed to focus, for example, on interactions between team members and colleagues. Individual performance can be assessed in a team context and feedback geared to maximize better team working and collaboration.

Performance management software costs

Performance management software costs are influenced by whether the system is cloud or on-premise, and also whether it is integrated as part of a broader HRMS package or a standalone module.

On the surface, the ‘pay as you go’ cloud subscription model of payment offers clear benefits. You avoid software license fees and the ongoing investment in hardware, only paying for what you use in terms of data storage. Almost always, a SaaS system price tag will be lower than its on-premises equivalent. (And don’t forget that in accounting terms, cloud subscriptions tend to be classed as operational expenditure and not a capital cost, which can make a significant difference to your internal budget management.)

Likewise, while an HRMS might be more expensive than a standalone module, the performance management slice of the HRMS total cost will almost certainly be smaller than its standalone equivalent. On the other hand, standalone systems often result in multiple data entry, requiring a greater investment of staff time which in turn means more cost.

Recommended vendors

Though your HRMS requirementswill, of course, vary, the following is a short list of well-established vendors of performance management software options:

BambooHR – This suite of HR applications includes customizable performance assessment tools for small and medium-sized businesses.

Cornerstone Performance – Offered by Cornerstone OnDemand and incorporated performance, succession and compensation, this suite is part of Cornerstone’s fully compatible range of people-focused software.

UltiPro – This cloud solution from Ultimate incorporates performance management alongside recruitment, onboarding, learning, and payroll.
Workday Performance Management – From business alignment to performance review to compensation, Workday offers a full performance management solution that sits within their broader HR suite of solutions.

TalTrack – This standalone performance management solution encourages continuous performance conversations with the goal of continuous improvement.


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Dave Foxall

About the author…

Dave has worked as HR Manager for the Ministry of Justice for a number of years, he now writes on a broad range of topics including jazz music, and, of course, the HRMS software market.

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Dave Foxall

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