Best Performance Management Software
Buyer's Guide
Is your HR team struggling to keep up with endless performance calculations and never-ending check-in backlogs? If you're nodding your head, it’s time to ditch the age-old traditional performance management process and usher in an efficient and engaging future for your organization with performance management software — the solution to unlocking your workforce’s potential and starting inspiring performance and feedback dialogues.
Executive Summary
- Employee performance management software automates and streamlines repetitive tasks, saving time and boosting overall productivity.
- Knowing your company-specific requirements and business goals is vital for an informed software selection process.
- Developing a requirements list helps you identify vendors offering the most features and services you need.
- Asking vendors key questions will help you select the best software for your requirements.
- What Is Performance Management Software?
- Deployment Methods
- Primary Benefits
- Implementation Goals
- Basic Features & Functionality
- Advanced Features to Consider
- Current & Upcoming Trends
- Software Comparison Strategy
- Cost & Pricing Considerations
- Best Performance Management Software
- Questions To Ask Yourself
- Questions To Ask Vendors
- Next Steps
- Product Comparisons
- Additional Resources
What Is Performance Management Software?
Performance management software is an HR tool used to measure and improve productivity and overall business performance throughout the employee lifecycle. It provides goal setting, performance evaluation, continuous feedback and reporting solutions that adjust and align with company-specific human capital management (HCM) goals.
Deployment Methods
You have two choices when implementing performance management systems: on-premise and cloud-based deployments, each with its own set of benefits and considerations:
Cloud-Based Performance Management Systems
Cloud performance management software stores your information on external servers and is accessible online. This deployment method brings the following to the table:
- Accessibility: Gain remote data access and view real-time changes, updates and progress. While collaborating with your team on the go.
- Integrations: Acquire extensive integration options with cloud-based systems. Handpick your choice of productivity apps and connect with existing tools to create a cohesive and productive software ecosystem.
- Responsive Design: Cloud deployments are typically compatible with different devices, ensuring on-the-go performance tracking on desktops, phones and tablets.
- Automatic Updates: Cloud-based software providers typically handle updates and maintenance, ensuring your system is always up-to-date with the latest features and security enhancements.
- Cost Efficiency: Tackle relatively lower upfront costs and predictable subscription pricing, making resource planning and allocation much easier.
On-Premise Performance Management Systems
On-premise systems store your information on your company's internal databases. While they offer advantages such as data control, they come with their own considerations:
- Data Security: You’ll have complete control over your data. Your data security is as strong as your internal IT infrastructure and data centers.
- Implementation and Maintenance Costs: On-premise solutions typically incur higher initial implementation costs and ongoing maintenance expenses. Organizations need to invest in hardware, software licenses, and IT expertise.
- Control: On-premise systems grant you greater control over your performance management system, letting you customize the platform to meet specific requirements.
Cloud-based solutions are ideal for those seeking flexibility, scalability, and remote access, making them suitable for startups and organizations looking to streamline operations across various locations.
On the other hand, on-premise solutions are the top choice for larger businesses prioritizing stringent data management, where maintaining direct control over infrastructure is essential.
Ultimately, your software choice must align with your company‘s unique requirements.
Primary Benefits
Effective performance management empowers your managers to make better developmental decisions and inspires your workforce to excel in their fields. Here’s how implementing the right performance management system brings a bevy of advantages to the table:
Boost Consistency and Reduce Bias
Traditional performance reviews are often overwhelming for employees and managers. The process can be contentious and reductive, missing precise performance data essential for constructive feedback. Performance management systems save your HR teams from manually measuring productivity and performance.
Internal frameworks ensure a level playing field, leaving no room for favoritism and bias. This way, your employees receive well-deserved recognition and opportunities. Your managers can breathe a sigh of relief as automated workflows streamline everything from objective insights to upcoming check-ins to real-time progress.
Track Real-Time Progress
Your team’s performance directly impacts your business outcome. Performance management systems help create a flexible performance evaluation strategy to measure individual, team, departmental and organizational progress and adjust your goals to meet current talent needs. An objective, data-driven process helps pinpoint what’s driving your team and set realistic benchmarks to motivate your workforce.
Improve Retention Rates
Is low pay the sole reason employees leave, or is there more to the picture? A recent Pew Research study found that growth opportunities and disrespect at work are top reasons for resignations. Safe to say: if employees can't see a future with your organization, they’ll likely leave.
Transparent communication and good manager-employee relationships are key to effective talent management. Performance management tools support this endeavor with insights that allow career advancements and skill development initiatives that foster a sense of accomplishment and ownership.
Optimize Internal Processes
Behind every successful business is a workforce that knows and works towards accomplishing company-wide goals. So, it’s vital to support your people when necessary. Time-saving automation capabilities, data insights and unified goal management capabilities help you adapt your performance goals as talent requirements change. Performance management systems reinvent how you track, manage and measure performance.
Expert recommendations and analysis on the top performance management solutions
Implementation Goals
It’s important to have a game plan when implementing new software. Gather your team and discuss what you want to achieve with new tools. To kick things off, performance management software should help you achieve these goals:
| Goal 1 Automate Workflows & Streamline Tasks |
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| Goal 2 Align Employee Goals With Business Objectives |
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| Goal 3 Track Individual & Team Performance |
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| Goal 4 Enable 360-Degree Feedback Management |
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| Goal 5 Address Internal Talent Needs |
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Expert recommendations and analysis on the top performance management solutions
Basic Features & Functionality
Performance management systems come in all shapes and sizes. However, certain feature sets are common among all alternatives. Here are the essential features you’ll require in an ideal system:
| Goal Setting & OKRs Management | Set realistic targets that energize your teams instead of stressing them out with unsuitable objectives. Access valuable metrics and KPIs to track progress, create customizable plans and identify top performers. Receive alerts that remind you to check on employees. |
|---|---|
| 360-Degree Assessments | Leverage various assessment techniques like peer, manager and self-assigned assessments to measure performance levels holistically. Certain vendors offer built-in talent intelligence frameworks that go beyond typical assessments by analyzing qualities like team dynamics, internal performance standards and individual potential. |
| Feedback and Check-In Management | Use surveys, forms and check-in meetings to send and receive input from key people. Foster continuous growth conversations by scheduling one-on-one meetings with specific employees. Clear doubts, address issues and strengthen manager-employee relations with regular communication. |
| Career and Employee Development | Create suitable individual development plans (IDPs) and employee skill development paths with actionable insights. Assign training and learning resources to bridge internal skill gaps and support people when necessary. |
| Reporting & Performance Analytics | Identify top performers, pinpoint factors influencing productivity and develop realistic performance benchmarks for every role. The reporting and analytics feature processes complex employee data and provides performance reports based on talent and people analytics. |
Expert recommendations and analysis on the top performance management solutions
Advanced Features & Functionality
| Learning & Development | Follow up after performance evaluations end by developing suitable learning, coaching and development paths. Track learning progress and provide feedback throughout the process. Ensure that your employees have everything they need to meet the goals defined by their performance review. |
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| Succession Planning and Talent Pipelines | Identify high-potential employees and create succession plans to set your employees on a path to successful careers. Prepare for leadership transitions and ensure steady talent is always available when critical and non-managerial roles open up. |
| Artificial Intelligence (AI) Functionality | Take things up a notch by leveraging AI and machine learning algorithms to predict future performance trends, and address potential issues before they occur and identify opportunities. Access tailored employee development recommendations based on past performance data. |
Current & Upcoming Trends
The recent years brought on a host of changes in performance management software. The rise of hybrid work models is changing how businesses and their workforces operate, prioritizing seamless communication and real-time performance tracking. Here are the top trends to remember:
Continuous Performance Management
The annual performance review relays a bygone era. These reviews, though well-intentioned, can unintentionally cause stress and anxiety among employees. Today, more and more businesses are reinventing their performance management strategies to adapt to the new reality. The continuous performance management model is at the forefront of this shift.
Replacing annual or quarterly performance reviews with ongoing coaching and feedback dialogues doesn’t mean eliminating all performance reviews. Quite the contrary, continuous performance dialogues increase the check-in frequency.
Continuous performance management acknowledges that everyone has room for growth and aims to create an environment where employees are encouraged to express themselves openly and honestly.
Talent Intelligence
A recent Harvard Business Review article revealed that the key to equitable talent management lies in fair, accurate and bias-free performance management.
The same article noted the rise of behavioral science and HR technology advancements contribute to informed development and promotional decisions. The increase in data insight availability encourages quality practices.
Talent intelligence tools significantly shifted how organizations approach performance management. I/O psychology frameworks analyze team dynamics and develop company-specific job criteria to enhance talent selection, placement and development, ultimately optimizing workforce effectiveness and productivity.
Integrating talent intelligence into performance management practices ensures that companies hire people with the potential to grow in their organization for the long haul.
Employee-Centric Performance Management
Today's workforce has higher expectations and is looking for something more meaningful from their employers.
The Talent Strategy Group found that only 50% of companies let employees set their own goals, while managers take charge of goal-setting in about 40% of organizations. Interestingly, the same report suggests that managers should only offer a guiding hand in this process instead of directly setting goals for their team members.
Another report by Betterworks uncovered employee experience is a package deal. Elements like finding purpose, experiencing fairness, enjoying inclusion, having flexible work options and opportunities to advance collectively create a fulfilling journey for everyone on board.
Forward-thinking companies that embraced collaborative goal-setting and aligned career development with individual aspirations experienced greater success in increasing employees’ sense of productivity, jumping from 40% to 67%.
Expert recommendations and analysis on the top performance management solutions
Software Comparison Strategy
Before we dive headfirst into the steps, it's essential to have a clear vision of what you're after. Here are the key factors to remember as you kickstart your software comparison journey:
- Usability: Look for a system with an intuitive interface that employees and managers can navigate effortlessly. A user-friendly system streamlines the performance review process, making conducting and participating a breeze.
- Scalability: When your company is on the rise, your performance management system should be ready to grow with you. Think of it like an elastic band, capable of stretching to accommodate your expanding workforce and evolving needs, but doesn’t snap under pressure.
- Accessibility: Your chosen system must be as accessible as a well-traveled highway, letting users easily navigate it from any location or device and making information readily available. Seek systems that offer role-based permissions, granting basic access to certain employees and additional access to managerial staff.
- Integrations: Your selected performance management system should match other tools and software your company uses. Look for a system that effortlessly integrates with HRIS, payroll software and other applications to ensure a smooth data flow across your organization, making your work life much easier.
Assemble your squad of top management, decision-makers and HR folks who’ll use the platform extensively. Follow these steps:
- Determine Your Performance Goals: Discuss precisely what you want to achieve with the new software. Your goals can be anything like simplifying performance appraisals, enhancing feedback processes or improving employee development tracking. Organize a team brainstorming session to list out your goals and challenges. Keep this list handy throughout your search.
- Develop a Requirements List: Performance management systems come in all shapes and sizes, so it’s vital to distinguish the must-have features from the good-to-have features. Check out our requirements template to identify and rank key criteria.
- Research and Compare Your Options: Refer to software review websites, ask industry peers for recommendations and identify systems your competition uses. Use a spreadsheet to compare each software option's features, pricing, and user reviews. Systems that align with your industry should jump to the top of your list.
- Request Demos and Trials: Schedule product demos and use free trials to see things in action. Prepare a list of questions to ask during demos to ensure you cover all aspects. Encourage your team to provide honest feedback.
- Make a Decision: Aggregate your insights and findings documented in a shareable report or spreadsheet. Evaluate each vendor's usability, efficiency and overall user satisfaction to identify the ideal choice.
Still confused about where to start? We’re here to help! Check out our article on lean selection, which covers the nine critical steps of conducting an informed software selection process.
Cost & Pricing Considerations
Once you’re familiar with what a comprehensive performance system can do, it’s time to calculate how much those essential features and functions cost.
Firstly, implementing performance management software incurs an upfront cost with recurring subscription fees depending on your pricing plan. Following are the most common pricing plans:
- Tiered Plans: Vendors often provide tiered pricing with varying depths of feature sets and capabilities. You can choose a plan that aligns with your organization's needs, with basic, standard and premium features options.
- Pay-Per-User Plans: The number of users with platform access determines the cost. This method is ideal for growing businesses and startups seeking solutions that scale with their workforce sizes.
- Enterprise Plans: Some providers offer customized enterprise-level plans tailored to the specific requirements of large organizations. These plans often include advanced features, dedicated support and scalability for extensive user bases.
- Pay-Per-Use Plans: In some cases, you can pay based on the number of performance reviews, assessments or other specific actions you perform within the software.
- Module-Based Plans: Certain vendors offer ancillary or related modules or add-ons for additional functionalities, such as performance appraisals, employee recognition, performance-based compensation calculations, learning management capabilities or analytics. You can choose and pay for the modules that suit your needs.
- Free Plans: Here’s the good news: some providers offer free plans. However, free solutions are often bare-bones versions of the premium plans, with the most basic functions and limitations on the number of users, storage, support and actions.
See prices for the top solutions... Plus get important questions to ask.
Best Performance Management Software
To put things into perspective, our analysts curated a list of industry leaders to aid your comparison process. Here are our top recommendations:
Lattice
Lattice is a cloud-based product performance management system catering to businesses of all sizes and industries. It provides performance management, employee engagement and career path planning capabilities. The growth and analytics modules help create engaged and high-performing teams.
The system seamlessly integrates with other HR software like BambooHR, Namely, Zenefits, Workday, Gusto, ADP Workforce Now and Microsoft Teams.
What We Like: The public praise feature lets employees share praises, celebrate accomplishments and appreciate their colleagues’ wins within the platform, promoting a positive and collaborative work culture.
Lattice’s employee profiles allow you to view individual performance overviews, sentiment ratings, upcoming one-on-one meetings and action items in one place. Source
15Five
15Five is a cloud-based performance management platform. It offers four modules like Engage, Perform, Focus and Transform to focus on employee engagement and retention while boosting productivity.
Leverage engagement surveys, feedback tools and performance reviews to streamline performance tracking. Provide immersive learning paths to upskill managers with LMS modules backed by blended technology.
What We Like: The Best-Self Review feature encourages employees to reflect on their strengths, values and personal growth alongside their job performance. The system offers a bias-free, evidence-based performance review process, letting you adjust visibility, assign admins and set cycle frequency.
Develop a continuous performance management review cycle in 15Five. Source
Betterworks
Betterworks is a cloud-based performance management system that links company objectives and key results with end goals. The system boosts employee performance and promotes workforce engagement via continuous feedback, training and recognition.
Integrate the platform with pre-existing HR systems and productivity apps like GitHub, Slack, JIRA, ADP, Salesforce, Asana and Workday to support small to medium-sized organizations.
What We Like: Betterworks’ Goal Science framework incorporates behavioral science principles into goal setting. It helps organizations set more meaningful and achievable goals by considering human psychology and motivation.
Betterworks provides a holistic view of performance data with real-time updates and data visualization options.
Engagedly
Engagedly, an all-in-one cloud-based talent management solution, offers performance management, employee development and workforce engagement capabilities. The system offers a three-pillar framework that aligns people's and company strategies. Key features include performance reviews, OKRs and goal alignment, talent analytics, real-time feedback, LMS, employee surveys, recognition and rewards.
What We Like: Engagedly allows the creation of branded feedback walls where employees can share feedback and recognition with their peers in a public, social-media-like environment.
Leverage Engagedly’s multi-rate feedback system to offer constructive and actionable feedback to your employees.
Profit.co
Profit.co is a web-based performance management software ideal for small and medium-sized enterprises. A 30-day free trial is available without sharing any credit card information.
The suite solution provides performance tracking, employee recognition, performance evaluation and productivity management to support goal alignment throughout the employee lifecycle. Integrate with Slack, Microsoft Teams, Chrome Extension, Zapier, Google Calendar and HubSpot.
What We Like: This system offers a fully integrated OKR alignment and tracking platform that lets you set realistic performance standards based on internal performance benchmarks.
Use OKR frameworks to add individual or team-based objects, define key results and set suitable target dates in Profit.co. Source
Expert recommendations and analysis on the top performance management solutions
Questions To Ask Yourself
Asking questions internally helps uncover your company-specific needs and requirements. Use these questions as a starting point for internal conversations:
- How many employees will use the platform?
- Which essential features will improve internal processes?
- What are our requirements for on-the-go access, the scope of customization and workflow integration?
- Do we require AI-based benchmarking frameworks?
- What does the future of my business look like? Do we anticipate a need to add more users or functionality down the line?
- Will we require additional IT support to implement a performance management system?
Questions To Ask Vendors
Asking different vendors questions helps uncover the pros and cons of using their services. Use the following questions as a starting point for conversations with vendors:
About the Software
- Do you offer HR software that can integrate with your performance management platform? Or is it a stand-alone system?
- Is the platform customizable? Does it provide options to personalize the talent pipeline or create custom surveys?
- How often is the software updated? What does that process look like for users?
About the Vendor
- How do you position yourself to leverage the latest technologies?
- Do you offer any support, training, implementation or consulting services? Are they chargeable?
- What is your experience working with my company size and industry?
Expert recommendations and analysis on the top performance management solutions
Next Steps
Performance management software is a wise investment toward strengthening a workforce and improving company culture. As a buyer, you can ensure that you make the most of your resources by evaluating your business requirements, identifying software that provides the correct functionality and thoroughly analyzing those options.
Need help starting your software search? Consider our free, customizable comparison matrix report to access recommendations tailored to your company’s specific needs.
Product Comparisons
- Lattice vs. 15Five
- Lattice vs. Betterworks
- 15Five vs. Betterworks
- Betterworks vs. Engagedly
- Engagedly vs. Profit.co
Additional Resources
Top 10 Performance Management Systems Leaders by Analyst Rating (of 284 products)
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