Your Guide to Software Selection

Employee Performance Management System Requirements and Features

The overall performance of your organization depends solely on the performance of your employees, but it can be very difficult to track employee performance using paper-based systems. That’s why more and more organizations try to improve their performance management system (PM system) using the innovative software solutions that are available today.

The performance management process employed by most businesses centers on employee appraisals that happen every year. These are very time-consuming, and are considered to be largely ineffective.

A performance management system can make decision making a lot easier, along with streamlining the performance management process.

What to Look for In a Performance Management System

With the right PM system, it’s much easier to inspire workers to improve their performance. You can provide them with ongoing updates on their performance and offer opportunities for recognition and feedback. This allows your employees to actively contribute to progress and even provide input themselves.

The net result of this is that the system of performance is a lot more collaborative, which improves engagement between workers and management. The employees also benefit from the opportunity for skills development all year round.

There are other benefits to a good performance management system, too. A streamlined workflow for both field managers and the HR team can be a big benefit as well, as long as the right system is implemented.

Automation of the Performance Review Process

While there are quite a lot of employers that want to scrap the annual review process, others still believe in it, provided that it’s simplified and additional tools for performance management are available. Luckily, the best systems can achieve both.

You also need to look for tools that’ll save you time:

  • Job descriptions and templates for performance review, which must be totally customizable
  • Capabilities of eSignature
  • Reminders and notifications that prompt managers and employees to keep the whole process moving forward
  • The ability for employees to undertake self-evaluations

The best performance management systems provide consistency for every organization and ensure that all managers and employees follow the same process, regardless of what level they are and where they’re located.

Take a very close look at the way that a performance management system handles job descriptions. All employees, no matter if they’re at management or sub-management levels, need to have a very clear understanding of what’s expected of them.

Without a clear job description, there’ll be confusion, so people won’t be clear on what their responsibilities are. A good job description isn’t just a list of tasks — it needs to include the essential elements of every position and the qualifications that are required to perform that job.

An Effective Feedback Program

All of the best performance management systems provide 360-degree feedback. What does that mean? Well, an employee works with many other people, such as customers, suppliers and colleagues. Any feedback provided by those that the employee interacts with needs to be added to the employee’s record so that a holistic performance appraisal system can function properly.

A good performance management system makes it easy to collect and record 360-degree appraisal data. The HR team can relate the survey questions that have been prepared in advance with the flexibility to create their own.

The HR team can also send out status updates so that all parties are up to date. A performance management system can even produce summary reports after the entry of the data. These reports can be very useful for managers and employees alike.

The Ability for Goal Setting and Management

One of the biggest criticisms of management by workers is that they have no idea what their employer expects of them, which makes them unsure of their part in achieving the overall goals of the organization. A good performance management system should be able to rectify this problem.

Look for a system that provides a goal setting facility that’s straightforward to use and tracks progress. Managers should be able to set goals for individual workers so that the organization can use them to set departmental goals, as well as their overall goals for the long- and short-term.

Good Journaling Facilities

The best performance management systems prompt managers to hold regular discussions with employees about their performance. Shortly after these discussions take place, the key points from the discussion can be noted using a journal.

Your system must have these capabilities so that the manager can record any performance-related ideas and suggestions. This should be very easy to do anytime, and there should also be a facility to include any attachments to the notes that are relevant.

Having a journaling feature for each employee record can be a great tool for the continuous improvement of employee performance. It allows you to paint a more accurate picture of the employee’s performance throughout the year, and can help make the annual reviews a lot easier and quicker.

Compensation for Good Performance

More and more organizations are now linking good performance to compensation. Even some of the top performance management systems don’t have the capability to accommodate this, which is very surprising.

When you can’t link compensation with good performance on your system, manual systems have to be implemented, which creates additional work for field managers and HR staff. Payroll mistakes are then likely to happen, at which point your employees very well may become disgruntled if they don’t receive their compensation in a timely manner.

So look out for a compensation translator when you’re evaluating performance management systems. Also known as a “dashboard,” it takes into account the pay grade of the worker and the ratings that they receive in their performance reviews. The system then makes automated recommendations for compensation.

What are the advantages of a compensation translator? Well, the first is that the approval of pay raises happen a lot quicker, which is very good for employee morale. Secondly, it improves the consistency of compensation throughout the organization.

Additional Learning Through an Online Portal

All organizations should offer their employees the capability for skills development, as this provides additional motivation for them to improve their performance. If employees want to advance, then this also serves as a good way to get them to the next level.

Most of the performance management systems available enable employees to upload their own skills development documents, as well as other media. The best systems even provide access to external libraries of online training that can enhance employee education.

When workers use these facilities, they’re showing that they’re keen to improve themselves and grow as an employee. It helps the organization retain their employees for a longer period of time, as there’s a defined career path that they can follow. It’s your duty to provide all of the tools possible for employee development, and as such, it’s an essential tool to have as part of your performance management system.

Social Sharing Functionality

When you invest in a performance management system, you want to encourage a culture of improved performance across your entire organization. To assist in this process, the best performance management systems usually have a social sharing feature that allows you to easily share achievements with every employee (or with groups of employees).

This system should be very similar to conventional social network platforms, meaning that employees can post photos and other team members can leave comments. A system of hashtags can also be employed to make searching and browsing easier.


Managers should be able to analyze and consolidate real-time data about their team members. A good example of this is analyzing the impact of a training initiative on the team’s performance as a whole, as well as individually.

You may want to look at performance trends and identify any inconsistencies in the system. There are countless other analytics reports that would be useful, so find out what the flexibility is for creating them. If you find that a vendor’s system is lacking in this area, then you might want to consider exploring other options.

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