The employee review process is crucial to driving employee and company growth. However, the process is often ineffective, time-intensive, and cumbersome. In today's cloud-based, digital-driven world, there has to be a better way.
Performance management systems are the answer. But are they right for your company? What do you need to know to find the right solution? This guide explains everything you need to know to choose the right performance management platform.
What is performance management software?
Performance management (PM) software is a platform that helps businesses track employee performance, set actionable goals, manage performance review cycles, and provide timely, accurate feedback all in one place.
Combining the data in a single dashboard helps managers provide faster, more accurate performance reviews, motivate employees, and spot struggling employees faster so they can get the support they need to thrive.
Traditionally, performance reviews occur once or twice a year. They are stressful for employees and managers, and often ineffective because they require recalling events and goals from months in the past. PM software systems allow you to easily set and track goals over time, so performance review cycles are a breeze.
Many PM software platforms offer feedback tools, so you can tell Nicole in Compliance that she nailed that presentation or give John in IT some constructive feedback on some pain points around the onboarding process.
As a result, managers become expert career coaches, employees are happier, and HR spends less time on paperwork and more time on what matters — your employees.
The core features and functions of performance management software
Not all performance management systems are created equal. However, most solutions offer similar features designed to improve and streamline goal setting, performance reviews, and career conversations.
Here are a few functions and features you can expect, no matter which performance management system you choose.
Goals management
Setting actionable goals is the core of most employee management plans. Performance management systems make goal management easier by storing the information in one location and providing access to both employees and their managers.
Performance reviews
Whether you conduct performance reviews or performance appraisals quarterly, annually, or somewhere in between, a performance management system can make the review process less stressful and more effective.
Managers and employees can track current performance, create new goals, review past achievements, and view specific KPIs. This helps employees see what goals they have met — or missed—and highlight which employees might benefit from training or career development.
Career development plans
Career growth and development are key to keeping employees engaged and happy. Most PM systems offer career and employee development tools that let employees and managers collaborate on goals and expectations for the future.
Employees can share where they are struggling or what new skills they would like to learn, and managers can provide resources and feedback to help employees reach their full potential.
Reporting and analytics
What good is data if you can't do anything with it? Reporting and analytical tools help you get the most out of your performance management data by allowing managers to track individual employee performance over time, gauge how employees feel about topics like the quality of leadership, and view reports about overall company performance.
What are the benefits of adopting performance management as a practice and using performance management software?
Switching from your current performance management system (or spreadsheet) can feel overwhelming. Is it worth the effort and the cost?
It might be. Consider the following benefits of switching from your current process to a performance management solution.
Employees feel appreciated and supported.
Employees are more effective when they feel appreciated and understood. PM systems provide employees with timely, clear communication about their job performance and available training.
Managers can quickly provide positive feedback to keep employees motivated and engaged with the company. Performance management solutions also reduce the stress (and annoyance) of performance reviews by making the process quicker and more actionable.
Managers spend less time on evaluations and deliver more actionable feedback.
PM software systems helps managers streamline the employee review process to provide actionable feedback in less time. That means they have more time to focus on important tasks like analyzing data, developing new revenue streams, or closing deals.
The data from PM systems can also help managers identify high-performing employees or training gaps, so struggling employees get the support they need to be successful.
Reduce paperwork and improve employee retention company-wide.
Happier employees are more productive, but the benefits of a PM system go beyond productivity. PM systems establish consistent benchmarks to ensure all employees are held to the same standards, reduce paperwork for HR and managers, and improve employee retention by ensuring your team feels supported and appreciated.
Reducing paperwork and back-and-forth means evaluations can be completed, processed, and tracked faster than ever — which makes it easy to scale as your business grows.
Free performance management tools, templates and resources
Looking to inspire team members and create an engaged, high-performance workforce? Setting goals is the first step to driving growth. These free templates can help your team set actionable goals.
- SMART Goals Template: Use this template to build actionable goals that align with your company targets.
- Quarterly OKRs Template: Objective and key results help teams and individuals build to major goals over time. This template helps make OKRs more effective.
- 30-60-90 Day Plan Template: Create a goal roadmap that sets expectations over time, setting the stage for more effective one-on-ones and performance reviews.
When and why should you upgrade from a template or Google Doc to performance management software?
Performance reviews help employees get motivated and access the support they need to stay on track. Many teams use spreadsheets or Google Docs to manage their performance reviews and offer feedback.
As companies grow, however, the process becomes time-consuming and ineffective. Employees and managers don't have access to real-time feedback, making it hard to stay on track and support long-term goals. Even appraisal systems, which track and measure goals, fail to provide the holistic views growing companies need.
PM software integrates reviews, goal tracking, and sometimes even training into one, easy-to-use platform. This means employees can see their goals and metrics in real time, managers can engage in the moment, and HR teams get access to data about what works— and what doesn't.
If you already use an HRIS or HCM, a performance management software can add the features you need to improve employee engagement. Some HRIS systems do offer PM tools; however, those features are often limited. Before making a decision, you'll want to consider all your options and decide which features you need most. We'll walk through how to evaluate if a PM software fits your needs in a later section.
What is the average cost of performance management software?
How much does PM software typically cost per employee? Like most software solutions, the pricing can vary dramatically depending on the features and tools you need.
On average, businesses can expect to spend between $1 and $15 per month, per employee on performance review software and management systems.
That cost can add up, but the ROI of PM software is clear — it will save your company money in the long run.
Here's how:
- Employees are less likely to leave a job they love: The average company spends more than $4,000 to hire a new employee. Higher employee retention is good for your bottom line.
- Goal setting helps teams focus on what matters: Setting priorities is crucial in a fast-paced business world. Setting goals helps teams stay laser-focused on the skills and priorities that matter, reducing wasted time.
- Get access to more data: Data is no longer a nice-to-have; it's a must-have. Performance management systems offer data-backed reports and analytics you can use to drive smarter business decisions. That can save you money and help the entire company work more efficiently.
- Setting goals actually improves performance: You are 42% more likely to actually reach a goal if you write them down. PM systems help your team think more deeply about what they want to achieve — and help them actually get there.
An independent report found that Lattice's People Management Platform delivers a 135% ROI over three years. Want to learn more?
How to evaluate performance management software for your company
How do you choose the right PM software solution for your company? With so many options on the market, it can be challenging to find one that fits your needs and budget. Here are a few questions to ask vendors before making a decision.
What features does it offer?
Make a list of the struggles your company currently faces with the employee management and review process. Do reviews take too long? Do managers struggle to provide employees with actionable goals? Does the process require hours of paperwork? Then, make a list of areas you'd like to improve and ask how the PM system can help.
Do they offer sufficient support and training?
Even the best system won't solve your problems if no one knows how to use it. Does the company offer training to increase adoption rates? Does the platform offer support during your business hours? For example, if your company is in Pacific time and support is only offered during Eastern time, there may be several hours a day where support is unavailable. Don't forget to ask about onboarding support and training, as well.
What reporting tools does the system offer?
Reports help managers and executives better gauge employee potential, growth, and overall satisfaction with the company. Ask what reports the system offers, including filters you might need, such as reporting by team, location, time, or employee level.
Is it compatible with your current systems?
The goal of a performance management system is to make it easier to set goals, track employee engagement, and manage the review process. If the system doesn't work with your current communication, login, and HRIS systems, it may create more problems than it solves.
The best performance management software in 2021
Overwhelmed by all the performance management options? Here's a rundown of the top solutions for 2021, including pricing, reviews, and pros and cons.
Lattice
Review Score: 4.6/5 stars
Pricing: Starts at $9 per user per month
Lattice is a performance management system designed to transform how your company approaches employee performance, engagement, and development. Use it to track individual employee performance, provide timely feedback, set individual and organizational goals, and make one-on-one's more effective.
Lattice does more than just help make annual reviews easier. It helps teams build 360-degree feedback loops, keep employees engaged with action plans, and create integrated workflows that drive long-term employee growth.
More than 2,500 top organizations trust Lattice to drive their companies forward, including Reddit, Slack, Samsara, and Asana. Ready to get started with Lattice? Request a demo.
Pros:
- Provides a centralized location for goals, reviews, and feedback
- Transparent pricing structure
- Simple and straightforward to use
Cons:
- Not a complete HRIS system
- May require training to make the most of all the features
Learn more about how Lattice can help your company drive growth and save you money with our The Total Economic Impact Of Lattice guide.
15Five
Review Score: 4.6/5 stars
Pricing: Starts at $7 per person, per month, billed annually for limited features or $14 per person, per month, billed annually for their complete solution.
15Five is a performance management platform that drives employee growth and helps managers navigate employee reviews, 1-on-1 meetings, and objective tracking. Features of note include "high fives," which makes it easier to provide employee praise, and detailed reporting tools to track engagement, objectives, and feedback.
Pros:
- Designed with remote teams in mind
- "Temperature checks" help managers check in with employees regularly
- Integrates with Slack, Salesforce, and Google Calendar
Cons:
- Limited training for the platform
- Limited integrations with other platforms, like Jira
Reflektive
Review Score: 4.2/5 stars
Pricing: Contact for pricing information
Reflektive is a performance management platform designed to help improve productivity, engagement, and employee retention. Top features include continuous performance management, goal and employee engagement tracking, and customizable reporting tools to help brands invest in their employees.
Pros:
- Plenty of integrations to connect with HRIS, email platforms, and payment platforms
- User-friendly platform
- Fuels continuous communication so employees feel heard and engaged
Cons
- Lack of transparency in pricing
- Not ideal for small or enterprise businesses; best suited for mid-market
- Limited search features
PerformYard
Review Score: 4.7/5 stars
Pricing: $4-$8 per month, per person for limited features
PerformYard's platform helps employees stay connected and motivated. Popular features include employee reviews and check-ins, goal management, onboarding workflows, and document storage. The platform is easy to use and leverages automation to streamline employee management tasks.
Pros:
- Offers several HRIS features, including a company directory, activity logs, and enterprise-level security
- Easy-to-use dashboard
- Dedicated success manager to help new companies get up and running fast
Cons
- Limited video tutorials for set up
- Limited search function
- Limited reporting capabilities
Leapsome
Review Score: 4.8/5 stars
Pricing: Starts at $7 per month, per user (however, modular pricing means this could add up quickly)
Leapsome is a performance management solution designed to help businesses manage employee performance and create customizable engagement plans. Top features include performance review management, OKRs, 1-on-1 meeting management, training, and engagement surveys.
Pros:
- Customizable packages allow you to pay for just the features you need
- Designed specifically to help businesses scale
- Visual reporting tools make it easy to check in on employees
Cons
- Uses a "modular" pricing structure, which can add up quickly for teams that want access to all features.
- Not user-friendly
- Limited integrations
Betterworks
Review Score: 4.2/5 stars
Pricing: Contact for custom quote
Betterworks is a performance enablement platform to help businesses engage employees, track goals, and gain access to detailed insights. Popular features include goal tracking, continuous coaching capabilities, and employee listening tools.
Pros:
- Individual and team tracking features
- Detailed insights and analytics for actionable data
- Clean, easy-to-use interface
Cons
- No mobile app
- Pricing is not transparent
Culture Amp
Review Score: 4.6/5 stars
Pricing: Contact for pricing information
Culture Amp is a "people and culture platform" designed to help companies understand engagement, evaluations, reviews, and goal tracking across their company. Features of note include 360 reviews, continuous feedback capabilities, performance evaluations, surveys, and powerful reporting tools.
Pros:
- Actionable insights on engagement, performance, and retention
- Support for set up and launch
- Provides survey templates, which make it easy to check-in with employees on a range of topics
Cons:
- Importing past reviews is challenging
- Reporting tools are not user-friendly
- Limited admin functions
Engagedly
Average Review Score: 4.7/5 stars
Pricing: Call for a custom quote
Engagedly is a "people engagement platform" designed to help companies manage employee performance, engagement, and development. It helps streamline performance reviews, competency assessments, goal setting, and provides real-time feedback for HR, managers, and employees. It uses gamification to offer recognition and drive core company values.
Pros:
- Mobile-enabled, so employees and managers can update it in real-time
- Gamification to keep employees engaged
- Online learning platform where employees can gain new skills
Cons:
- The reporting tool can be difficult to use
- Mobile usage may decrease adoption rates
- Not particularly user-friendly
Clear Review
Review Score: 4.9/5 stars
Pricing: Starts at $2400/year for up to 50 users
Clear Review is a performance management solution that uses conversations to power employee engagement. Features include goal setting for teams and individuals, instant feedback, conversation-based check-ins, and robust reporting tools.
Pros:
- 78% average user adoption rates
- Easily adaptable to your company culture
- Detailed metrics and insights to drive business decisions
Cons:
- No collective feedback feature
- Lacks document upload feature
Best HRIS and HCM platforms that include performance management features
Looking for more than just a performance management software? Take a look at the top HRIS tools that offer built-in performance management features.
Kissflow HR
Review Score: 3.9/5 stars
Pricing: Starts at $690/month for up to 50 users
Kissflow HR is a start-to-finish human resource solution that handles all employee processes, including applicant tracking, talent management, onboarding, time-off requests, timesheets, and employee performance management.
Pros:
- Robust HR tool that helps manage all HR processes
- Customizable review processes that fit your company culture
Cons:
- More costly than other options
- Complete HRIS system, not ideal for those just looking for PM
- Limited PR functionality
Bamboo HR
Review Score: 4.3/5 stars
Pricing: Call for custom quote
Bamboo HR is a complete HR system that helps small and medium-sized businesses manage payroll, applicants, time-off requests, and improve employee performance. Performance management features include streamlined employee performance appraisals, goal tracking, and individual and company-wide performance reports.
Pros:
- Start to finish HR software, so you don't have to juggle multiple tools
- Well-reviewed customer support
- Powerful reporting tools
Cons:
- Lack of transparency in pricing makes it difficult to compare to other options
- Not ideal for fast-growing or enterprise companies
- Not user-friendly, features like document management can be challenging to use
Workday HCM
Review Score:4.0/5 stars
Pricing: Contact for custom quote
Workday HCM is a full-service human capital management platform that helps businesses seamlessly manage their workforce. Features of note include payroll management, talent recruitment, performance management, and employee benefits administration.
Pros:
- Combines features for HR, finance, and planning into one agile platform
- Automates tedious tasks
- Constantly adding new features using new technology, like machine learning
Cons:
- Lack of pricing transparency
- Not ideal for SMB
- May require training to successfully launch
Trends in the PM software space buyers should be aware of
The way we work is changing. AI, big data, and an increase in remote work impact our day-to-day tasks and how employees collaborate, view their companies, and plan for the future.
Performance management systems help companies stay connected with employees no matter where they work.
Lattice is a performance management system designed for the future of work. Get a demo to see how Lattice can help your company grow.
