Business News Daily receives compensation from some of the companies listed on this page. Advertising Disclosure
BND Hamburger Icon


BND Logo
Search Icon
Updated Jan 12, 2024

The Benefits of Performance Management Software

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

author image
Andrew Martins, Business Operations Insider and Senior Writer
Verified Check With BorderEditor Reviewed
Verified Check With Border
Editor Reviewed
This guide was reviewed by a Business News Daily editor to ensure it provides comprehensive and accurate information to aid your buying decision.

Table of Contents

Open row

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 identify 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 HR departments, the push for actionable workplace data is constant when it comes to talent management. Though filing cabinets filled with employee evaluations, internal advancement trajectories, payment information and other sensitive data were the norm not too long ago, today’s human resources 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. HR 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. 

Employee performance management software efficiently collects data to help ease some of the burdens on your HR team. It can free them up to analyze that data so they can provide better and more objective constructive employee feedback. [See related article: Best Document Management Software and Systems of 2024]

Motivational information. Today’s workforce craves continuous feedback. Understanding where they’re excelling and what areas need improvement can be a huge help to employees. When they know exactly how they’re doing, employees can ultimately feel motivated to do better. If that sounds like your workforce, an employee performance software suite could help ensure employees receive real-time feedback 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 in that area. When managers are able to examine individual performance data, they can quickly find areas where employees excel and place them in positions that allow them to capitalize on their strong suits. This results in more positive outcomes. 

Similarly, some employees tend to lag behind their colleagues. Just as with employee strengths, employee performance management software suite can quickly identify weaknesses. Ideally, once employees learn of their inefficiencies, they work to adjust them.

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 the company is looking to reward employees, this type of performance management solution makes finding exemplary workers a faster and simpler process.

Joe Wilson, a senior career advisor at MintResume, said performance management software has become increasingly beneficial to small businesses given the trend toward remote work for many Americans.

“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, your HR team and managers need to quickly find problem employees before things fester. 

Employees who fail to improve run the risk of dragging the rest of the team down. The ability to locate bad employees and remove them from the equation can be a huge boon to the bottom line.

FYIDid you know
Employee performance management software helps businesses in several ways, including 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 of employee performance management software is important, you need to have a clear picture of exactly what it is and how it performs before you move forward. 

At its most basic, employee performance management software, otherwise known as employee performance management tools, is a digital tool or set of tools for managers to track how well employees perform their jobs. Numerous data points are used to determine an employee’s effectiveness within the company. These form 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.

Did You Know?Did you know
According to a recent report by Betterworks, organizations with continuous performance processes are 39 percent better at attracting top talent, and 44 percent better at retaining talent.

How does employee performance software work?

It’s best to think of employee performance management software as the 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. Typically considered 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. More granular data collected on a more frequent basis can help employees improve their performance throughout the year, 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 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 streamlines the performance management process.

Schedule more frequent data collection and discussions to address any negative trends in employee performance before they become larger problems.

Best performance management software

Scores of employee performance management software options are  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 third-party applications, BambooHR is an intuitive solution that doesn’t need additional human capital management software to run. BambooHR’s flexibility and 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. [See our BambooHR review.]


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, UKG Pro (formerly 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, UKG Pro can also integrate into your existing HR software. Accessible through numerous platforms, UKG Pro lets supervisors, managers and 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, 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 individual members 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 TakeawayKey takeaway
BambooHR, UKG Pro, Lattice Performance Management and Reflektive are a few of the numerous employee performance management software solutions available for businesses today.

Use performance management software to make informed decisions 

Performance management should be an ongoing process throughout the employee lifecycle. Using the right performance management software helps you make data-driven decisions about employee development, organizational goals and business growth.

Casey Conway and Sammi Caramela contributed to this article. Some source interviews were conducted for a previous version of this article.

author image
Andrew Martins, Business Operations Insider and Senior Writer
Andrew Martins is an award-winning business and economics expert who has spent years studying trends and profiling small businesses. Based on his on-the-ground reporting and hands-on experience, Martins has developed guides on small business technology and finance-related operations. In recent years, he focused on the small business impacts of the 2020 presidential election and the COVID-19 pandemic. Martins, who has a bachelor's degree in communication, has been published on trusted financial sites like Investopedia, The Balance and LowerMyBills, on technology outlet Lifewire and in the New York Daily News.
Back to top
Desktop background imageMobile background image
In partnership with BDCBND presents the b. newsletter:

Building Better Businesses

Insights on business strategy and culture, right to your inbox.
Part of the network.