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How to Choose the Right Performance Management Software

Jennifer Post

Performance reviews are an important way for employers to gauge the success of their employees, and for employees to know where they stand with a company. While there are many ways to conduct performance reviews, software designed for the task of performance management makes the process easier.

"Business owners can save valuable time and act with confidence using powerful technology," said Aldor Delp, division vice president and general manager of ADP Resource.

What is performance management software?

Performance management software allows organizations to streamline the performance review process online. Julie Rieken, CEO of Trakstar and Reviewsnap, explains that employees and managers expect modern tools to communicate workplace expectations, and HR and C-suite expect to document and justify employee-related decisions.

"Organizations want to provide timely, relevant communication to employees around workplace expectations. Performance management software empowers managers and employees to interact," said Rieken.

Rusty Lindquist, vice president of human capital management (HCM) strategy and insights at BambooHR, noted that "people systems" have become the most important systems in organizations. Human capital, he said, is now even higher in demand than financial capital. Organizations today are more serious than ever about measuring and improving their people and their performance and productivity, or their ability to create value at speed.

"[Performance management software] comes in all shapes and sizes, but generally speaking, it represents an industry-wide initiative to understand and quantify how our employees are doing, how much they are doing and how well they are doing it," Lindquist said.

Brian Crofts, vice president of product at Namely, noted three main benefits of performance management software:

  1. Organization. Software can help HR departments easily administer performance reviews and store reviews for later reference.
  2. Accurate system of record. Consolidating performance data in aggregate helps companies get a 360-degree view of an employee's growth and development.
  3. Reporting. Easy access to performance data reports enables HR teams and company leadership to make strategic talent decisions.

"We believe the modern HR platform drives employee experience. It helps HR professionals simplify their administrative duties so they can focus on strategy," Crofts said.

The benefit doesn't solely lie with the business owner and HR staff, however, as Delp points out: "For employees – especially the millennial generation – it satisfies their need for frequent feedback and helps them define a career path. It can keep all employees focused on what is most important to the business and help them engage in its success," he said.

Do you need performance management software?

According to Rieken, an organization needs performance management software if:

  • Your organization is still doing reviews on paper, in Word or Excel, or not at all
  • Your organization makes salary decisions based on performance (if so, you should have consistent, accurate performance data, Rieken noted)
  • You're weary and need to modernize your appraisal process

"[I]n truth, no matter what market you're in or where you're at in your evolution, everyone stands to benefit from improved visibility into their people systems," Lindquist said.

Crofts said the need for performance management software also depends on the type of problem you're solving.

"If you want to streamline administrative tasks and engage employees, software is the answer. If you're not using software now, it's not a question of 'if' but 'when,'" he said.

According to Delp, there's actually a debate underway about the value, frequency and validity of the process used to rate, rank and reward employees. To determine if your business needs this software, he suggested business owners ask themselves  one important question: What value does performance management contribute to my businesses success?

"To find the answer to this question, it may be worthwhile to take a look at the talent the business may need based on projected business growth and dynamics over the next two years," Delp said.

He added that this may help a business owner develop a performance management plan to support many employees, while a performance management solution may help business owners implement and streamline new processes.

What to consider when choosing a performance management software

Rieken advised choosing a provider that helps train your staff and record the training for new employees. Also, it's important to remember that organizations need to champion the review process internally and have a provider that supports their initiatives for the best success.

"Above all, pick a provider with amazing customer service. You'll want to love interacting with your performance provider when questions arise," Rieken said.

Delp agreed that it's important to find a trusted partner that not only offers powerful tools, but one that provides HR expertise on how and when to use them.

"User-friendly HR tools and personalized guidance can help a business owner conduct performance appraisals, create employee handbooks, engage employees, handle difficult employee situations, hire and onboard employees, and determine compensation for new positions," Delp told Business News Daily. "Consider a partner with a successful track record of providing this type of expertise as well as one that has the tools to help a business automate time-consuming manual processes."

Lindquist offered a few clear "dos and don'ts" when it comes to choosing a provider:

  • DO buy into an approach that is simple and easy to use.
  • DON'T fall into the trap of trying to measure everything. That's what caused the old-school performance solutions to fail so badly.
  • DO focus on solutions that create conversations.
  • DON'T become too fixated on the quantification of performance. The idea isn't so much that you can quantify the performance of every person in every role, but rather to get a sense of how they are doing.

Software is only worthwhile if your company uses it, so consider whether the platform is one that your employees will adopt, and whether it is simple and intuitive, said Crofts. If it has the features you need and can easily set and track goals that align with larger goals, and offer different review types and smart performance data, performance management software should be considered.

"Bottom line, it needs to be better than pen and paper," said Crofts.

Image Credit: garagestock/Shutterstock
Jennifer Post
Business News Daily Contributing Writer
Jennifer Post is a professional writer with published works focusing on small business topics including marketing, financing, and how-to guides. She has also published articles on business formation, business software, public relations and human resources. Her work has also appeared in Fundera and The Motley Fool.