8 Attributes of an Effective Performance Management Software

by Srikant Chellappa Feb 9,2022

The People Strategy Leaders Podcast

with Srikant Chellappa, CEO

The current trends show a shift in the thinking of managers and how they evaluate employee performances. The rise of the culture of ongoing feedback, 360 degree feedback, and regular employee engagement have resulted in a review of existing performance management processes. This change has also affected the design and function of performance management software. The mental shift has revamped what any company should look for in an effective employee performance management solution.

This article will help define employee management software and discuss its importance to companies. We also discuss attributes to watch out for when purchasing it.

What is a Performance Management Software?

A performance management software is a tool that helps companies enforce their performance systems more effectively. Companies do this by setting and monitoring goals, giving feedback, and streamlining other performance management processes. It aims to analyze and evaluate employees’ performances over a period. 

Also read: Top 10 Performance Management Software to use in 2022

The primary aim of a performance management tool is to simplify and speed up the performance management system of a company. And because it speeds up the process, the performance evaluation solution must be the right fit for the company’s existing performance management systems.

Why Does a Business Need Performance Management Software?

A business needs performance evaluation software for various reasons. Some of them are:

  • Employee engagement
  • Saves time
  • Motivates employees
  • It is the future

Let’s know about the reasons in details.

Employee Engagement

A performance management tool helps in improving employee engagement in more ways than one.

  • Goal-setting keeps them focus and on track.
  • Feedback and recognition help them reinforce what they do.
  • Advanced analytics and reports help them understand their strengths and weaknesses.

Using a performance software solution is one of the many ways managers can improve how engaged their employees are.

Also read: Do These 8 Things To Improve Employee Engagement 

Saves Time

Manually monitoring, providing feedback, and conducting follow-ups are time-consuming and ineffective in the 21st century. A company adopting and using performance management solutions will save time and help improve the company’s productivity – which improves profits. 

It Helps to Motivate Employees

Its human nature to dwell on the mistakes or shortcomings of others and not praise or give due recognition after achieving their goals or performing other feats for the company. This behavior can easily lead to an unhappy and unmotivated workforce. The performance solution recognizes achievements faster and gives due credit for reaching their goals on time – creating a happy and motivated workforce.

The Future

The last point here is performance management tool is the future of evaluating employees. Zion market research expects the industry to grow by 13% in the next seven years and earn $5.63 billion by 2026.

Attributes of an Effective Performance Management Software

When a company wants to purchase performance evaluation software, there are some essential features to look out for. We look at eight of them in this section.

The 8 attributes of an effective performance management software are:

  1. Ability to set goals
  2. Provide reports and analytics
  3. Tailored and continuous feedback
  4. 360 degree feedback software
  5. Self assessment
  6. Process a simple interface
  7. Allow for effective communication
  8. Recognition

1. Ability to Set Goals

A study by Harvard Business  covering some group of students over ten years found that students who had clear written goals were on average earning ten times those who didn’t have a one or commit it on paper. The study teaches the importance of setting goals.

A good performance management solution allows for its users to customize their goals. Adding, updating, and setting a deadline date should be possible. The application should also permit supervisors and peers to monitor the set goals and the progress. Possessing this feature will allow managers to monitor their teams, especially if a large unit. It also helps motivate the employees.

It should be flexible, allowing the company to assign goals and objectives in line with the company’s goals. 

Also read: 7 Reasons Why Goal Setting Is Important

2. Provide Reports and Analytics

An organization has a lot of data to process in a limited amount of time. This is true when the data is necessary to make vital decisions.

A good performance management software will summarise all of this data and make a concise report on the activities of individual employees. The software should be able to display employee’s progress in the form of charts and graphs. Doing this makes the information easily digestible.

3. Tailored and Continuous Feedback 

The cry for feedback from employees has only gotten louder every passing year.

A Study analysed by HR Drive found that business leaders expect managers to give daily feedback, which is 170% higher than in 2018. The study also showed that the number of employees who want a formal monthly performance conversation is 89%. The significant change means management needs an employee performance management solution tailored to the employee needs and supportive of continuous feedback.

This feature should give the manager or supervisor the option to send a direct message straight to an employee using the data provided by the software. The manager should also have the ability to comment on the progress of a project, the employee meeting their set goals, or missing out on the deadline. The aim is to have an application that supports feedback and growth within the company.

4. 360Degree Feedback Software

Alongside regular feedback, there is also the growing trend of a 360degree feedback system. Most employees who go in for their review feel a sense of unfairness, as managers can be subjective in their judgement. 360 degree feedback helps to amend this by getting feedback from other managers /superiors, clients, and peers, making the review more objective. 

A performance management tool should allow for this feature, making users anonymous when filling out a 360 feedback form. Some very comprehensive applications create a graph with the information gathered and show the company’s average grade. 

The primary purpose of this feature is to know areas they can make improvements and give recognition to an employee’s strong points. They should not make it into a competition, as even though it can be beneficial – if taken too far can be counterproductive to an organization.

Also read: 10 Benefits of 360 Degree Feedback 

5. Self-Assessment

Assessing yourself is a tough task. The Dunning-Kruger-effect study shows we tend to either downplay our skills or overestimate them. In summary, we are not good judges of ourselves. This problem goes even deeper because we aren’t the best judges of others either, as bias will always affect our judgement. Therefore, it’s necessary to have a data-driven focused approach, and that is what a good performance application will offer. 

The application should show the employees their stats on various KPIs. These stats give the employee a good image of where they are now and need to be. The employee can even suggest ways to improve their performance to their supervisors and the tool can act as a reality check for any employee since it only relies on data. It can also help spur individuals to grow and keep them accountable to themselves.

6. Possess a Simple Interface

A simple interface for a new software application is necessary to understand how it works and to adapt. The interface must be user-friendly to facilitate the implementation and learning phase. The entire organization will use it, and so it should have user-friendly dashboards that allow individuals to access information conveniently. A simple interface and an easily navigable dashboard make users adapt quickly and learn to maximize the application functions.

7. Allow For Effective Communication

Effective communication is the core of any successful company. Employees need information communicated to them to improve their KPI and stay in tune with the organizational goal. The management needs the information conveyed to them in a timely fashion to make strategic decisions. 

An excellent performance management tool should possess good communication options. The ability to send group messages, direct messages, and make group announcements should be present. It should also have the ability to create groups and set meeting schedules and reminders. Posting externally to other social apps like LinkedIn, Facebook and Twitter should be possible soon.

8. Recognition System

Recognition is a vital part of any employee’s life. It is what they crave, what helps them keep growing and improving, and what keeps them focused. Recognition is such a critical part of performance management, a recent study by achievers shows there is a 44% chance of losing employees if you don’t recognize them. So, it is not a debatable feature to have in performance management software. 

The solution should have features that highlight and reward employees who outperform their KPIs and meet their targets regularly. This feature will help employees stay encouraged concerning meeting their goals.

Also read: Employee Rewards And Recognition For An Engaged Workforce

Some Additional Points To Keep In Mind

While the characteristics above are some of the essential attributes to note, there are more we would like to highlight:


The software application scalability is necessary because it ensures the company and software application can grow together. No company wants an application that performs but isn’t scalable because they will need to change it in the long term. 


A cloud-based performance evaluation tool gives users the ability to access real-time information outside the office and working hours. It can also mean the application has a mobile version.

Before Buying a Performance Management Tool

After identifying the attributes needed in the performance management tool, it’s ideal to practice the following activities. Doing this will help avoid wasting funds and time on a software solution that doesn’t meet the company’s needs.

  • Cull-up and enquire about the features
  • Request for a free demo and trial
  • Read reviews on software listing sites
  • Seek consultations

Call-up And Enquire About the Features

Before investing in a new software program, it’s best to uncover what the product can do. They should be happy to walk you through the system and their features 

Request for a Free Demo and Trial

Ask for a demo version or a free trial and run a pilot process if possible. Most companies should be happy to allow you to test their software application for a specific period. It will help you select the one most suitable for your organization.

Also read: Have you set effective OKRs for your Customer Support Team

Read Reviews On Software Listing Sites

Visiting third-party websites and reading reviews from other customers is a great idea. Most of the employee management software applications available are present on software listing sites that have given customers the leeway to express their distinct experiences with the tool.

Seek Consultations

Consulting a team of experts can also help to simplify the process. The consultants can come in, look at the organization’s process and then recommend the performance software that will suit the organization’s needs.

In conclusion, purchasing performance management software will only help your organization be more productive and have more engaged employees. 

Want to know about Engagedly’s performance management software? Request for a live demo!

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Srikant Chellappa
CEO & Co-Founder of Engagedly

Srikant Chellappa is the Co-Founder and CEO at Engagedly and is a passionate entrepreneur and people leader. He is an author, producer/director of 6 feature films, a music album with his band Manchester Underground, and is the host of The People Strategy Leaders Podcast. He is currently working on his next book, Ikigai at the Workplace, which is slated for release in the fall of 2024.

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