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The Benefits of Performance Management Software

Andrew Martins
Andrew Martins

Information is a powerful tool as a small business owner, and performance management software can help you learn more about your employees.

  • Performance management software can help with normal small business processes, like employee reviews, compensation management and succession planning.
  • Performance management software helps determine which employees are performing better than others so you can make informed staffing decisions.
  • By taking a data-driven approach to employee management, you can foster a company culture based on merit while addressing organizational needs.
  • This article is for small business owners who want to know how employee performance management software can help their business.

Knowing what your employees can and cannot do is an essential part of running an efficient workplace. While watching them perform on a daily basis gives you some insight, it doesn’t always tell the whole picture. With performance management software, you can pinpoint key data points to get a better idea of your employees’ strengths and weaknesses. When used correctly, performance management software can add a lot of value to your business.

The benefits of performance management software

In most human resource departments, the push for actionable workplace data is constant when it comes to talent management. Though filing cabinets filled with every employee evaluation, internal advancement trajectories, payment information and other sensitive data were the norm not too long ago, today’s human resource departments use employee performance management software to help simplify the performance appraisal process and goal setting. Below are some of the benefits that this kind of human resources software can provide:

More efficient HR. Human resources can come with some level of tedium. As paperwork takes over, organization becomes paramount. With the advent of digital file management and searchable databases on nearly anything with an internet connection, employee performance management software allows your HR team, managers and employees to understand exactly where the latter’s place is within the community. By efficiently collecting data, employee performance management software can help ease some of the burdens on your HR team. It can free them up to analyze the data so they can provide better and more objective constructive employee feedback.

Motivational information. Today’s workforce craves continuous feedback. According to recent polling data conducted by OfficeVibe, 28% of respondents felt feedback was “not frequent enough to help them understand how to improve,” while 23% reported feeling unsatisfied with the frequency of feedback coming from their direct manager. Understanding where you’re excelling and what areas need improvement can be a huge help to employees. By knowing how they’re doing, employees could ultimately feel motivated to do better. If that sounds like your workforce, something like an employee performance software suite could help ensure real-time feedback is given to employees on a more granular and consistent basis.

Understand your employees’ strengths and weaknesses. No two employees are the same – while some are great at one aspect of their responsibilities, others may fail to meet your company’s standards. By being able to examine individual performance data, managers can quickly find areas where employees excel and place them in positions that allow them to capitalize on their strong suits, thus resulting in more positive outcomes. Similarly, some employees tend to lag behind their colleagues. Just as with employee strengths, an employee performance management software suite can quickly identify weaknesses. Ideally, once employees learn of their inefficiencies, they work to adjust it.

Incentivize good performance. Performance management software suite helps managers identify employee goals set during review cycles and compare them to organizational goals and values. When looking to reward employees, this type of performance management solution makes finding exemplary workers a faster and simpler process.

Because of the shift this year to remote work for many Americans, Joe Wilson, a senior career advisor at MintResume, said performance management software has become increasingly more beneficial to small businesses.

“More and more, companies are now relying on performance management software to help keep their businesses on track,” he said. “Performance management software can help employees from every function pull together towards achieving their individual, departmental and company objectives.”

Identify problem employees. Every workplace has a problem employee. Whether it’s through complaints from their colleagues or consistently poor performance, it’s important your HR team and managers can quickly find problem employees before things fester. Employees who fail to improve run the risk of dragging the rest of the team down. So, being able to locate truly bad employees and remove them from the equation can be a huge boon to the bottom line.

Key takeaway: Employee performance management software helps businesses in several ways, including by providing for simpler appraisal processes, better employee morale and a more tailored work environment for all involved.

What is employee performance management software?

While understanding the benefits is important, before moving forward with employee performance management software you need to have a clear picture of exactly what it is and how it performs. At its very basic, employee performance management software, otherwise known as employee performance management tools, is a digital tool for managers to track how well employees perform their jobs. Numerous data points are used to determine an employee’s effectiveness within the company, creating a comprehensive profile that can be referenced at a moment’s notice when making key staffing decisions. By collecting and studying the data found within an employee performance management system, each employee can be compared to the company’s expectations, values and goals to ensure only the best candidates remain on staff.

Key takeaway: Employee performance management software enables HR teams, managers and employees to efficiently check for and provide performance feedback.

How does employee performance software work?

It’s best to think of employee performance management software as a sum of its parts. Each platform has different functions that come together to help track an employee’s effectiveness. Everything is digitally collected and managed either on a local server or through a cloud-hosted service. Considered just a single part of a larger human capital management solution, employee performance management software helps quantify important workplace data.

For example, an annual performance review is a great way to check on a worker’s competency, but those only happen once a year. And while that works on an annual basis, more granular data collected on a more frequent basis can help employees improve their performance, bringing more productivity to the company and increasing overall morale.

At the same time, an employee performance software suite could help managers use pertinent information on whether an employee should be up for a promotion or to see if their lagging performance warrants the possibility of finding a replacement.

By moving the collection of your staff’s progress from yearly performance reviews to a more consistent flow of information, an employee performance software solution works by streamlining the performance management process.

Key takeaway: Like many software-based business solutions, employee performance software works by taking data and using it to create in-depth progress reports. This helps employees get more consistent feedback over the year.

Best performance management software

There are scores of employee performance management software options available – so many that it may be hard for you to find the right one for your small business. Here are some of the best options to consider:


Sporting an open API to facilitate the integration of other third-party applications, BambooHR is an intuitive solution that doesn’t need additional human capital management software installed with it to run. As an extremely flexible option, BambooHR’s easily understood interface lends itself well to the idea that a piece of employee performance management software should make finding relevant data quick and easy.


If your business has already done some growing up from its startup days and you consider your needs a little more in line with midsize or enterprise businesses, UltiPro is our pick for your situation. This is a full human capital management suite that comes with other modules to boost your performance management capabilities. With a highly customizable, yet intuitive interface, UltiPro can also integrate into your existing HR software. Accessible through numerous platforms, UltiPro lets everyone from supervisors and managers to employees access the system to offer or receive 360-degree feedback. This solution can also come with succession planning and employee development modules as add-ons that come with an additional price tag.

Lattice Performance Management

Built from the ground up as a performance management solution with employee improvement at the forefront, Lattice Performance Management comes with the tools needed to provide in-depth reviews, consistent feedback and goal management. Complete with an intuitive, yet customizable system, Lattice can help ensure meetings produce a meaningful dialog with employees and help your company recognize key wins.


Like similar solutions, Reflektive aims to help companies better collect and understand data regarding their employees’ value as a member of the team. The company estimates that its goals platform can “increase performance by 3x” by providing better alignment within the company. Reviews and check-ins, support for better one-on-ones, and “performance and talent calibration” are some of the features offered in Reflektive’s performance management suite.

Key takeaway: BambooHR, UlitPro, Lattice Performance Management and Reflektive are just some of the numerous employee performance management software solutions available for businesses today.

Image Credit: Monkey Business Images / Shutterstock
Andrew Martins
Andrew Martins
Staff Writer
Andrew Martins has written more than 300 articles for and Business News Daily focused on the tools and services that small businesses and entrepreneurs need to succeed. Andrew writes about office hardware such as digital copiers, multifunctional printers and wide format printers, as well as critical technology services like live chat and online fax. Andrew has a long history in publishing, having been named a four-time New Jersey Press Award winner.