How Performance Management Software Helps in Employee Development

by Srikant Chellappa Jan 18,2022

The People Strategy Leaders Podcast

with Srikant Chellappa, CEO

A report by LinkedIn shows that 64% of learning and development professionals believe reskilling their current workforce to fill skills gaps is more of a priority in a post-pandemic world. Furthermore, employee development has been recognized as one of the most important factors in organizational development by various Fortune 500 companies. 

Annually, US organizations spend over $180 billion on the formal training and development of their employees. The focus on employee development has increased since the pandemic. It created a need for a dynamic and skilled workforce to handle critical and unprecedented business challenges. 

As organizations are competing for the right talent in the global marketplace, it is becoming important to nurture their current employees as well. It has been observed that organizations that invest in employee professional development programs see a substantial increase in employee productivity, higher engagement, mitigation of critical loss making risks, reduced turnover, and increased revenue. Moreover, it gives employees opportunities to understand their career growth and become attuned to the organizational goals. Engaged and productive employees stay longer in the organization and help in achieving better results.

Many organizations are now emphasizing the importance of performance management software to develop and engage their workforce. Employee development is at the core of performance management. It incorporates a performance management program that helps organizations scale up their workforce effectively and methodically. 

Also Read: What is a performance management system?

What Is Employee Development?

Employee development is not a new concept. It gained prominence during and after the Second World War, when countries needed skilled people to carry out work in factories and warehouses. It led to the development of employee training programs that helped unskilled workers gain the skills required to perform their tasks efficiently and effectively. Soon, with the development of technologies and the introduction of power computing, employee training and development initiatives became the norm. 

Organizations throughout the world have started developing programs for employee development to cater to changing market demands, increasing global competition, overcoming quality issues, and developing a workforce for the future.

Continuous employee development involves activities undertaken by organizations to improve the overall performance of employees. It can be based on the goals set by organizations, like reducing employee turnover, increasing diversity and inclusion, and increasing employee engagement, and productivity. 

Based on the goals, organizations can use different approaches to employee development. Training and development programs, mentoring and coaching, employee counselling, cross-functional training, job rotation, job enrichment and enhancement are some of the employee development activities.

Let us discuss the importance of employee development from a performance management standpoint.

Also Read: 10 best employee feedback tools to track performance

Why Is Employee Development Important?

To remain competitive in the ever-changing business environment, it is important to focus on continuous employee development. A skilled and competitive workforce helps in building strategies that are aligned with organizational goals and objectives. 

By adopting performance management software, it becomes easier to organize, monitor, and measure the success of human resources. It assists upper management in strategizing employee development activities and automates the manual processes of goal setting and performance review.

Some of the benefits of employee development that can be achieved through performance management software are discussed below.

Attracting New Talent

A report by Gallup highlights that 59% of millennials focus on learning and development opportunities while applying for jobs. In comparison, 44% of Gen X and 41% of baby boomers focus on skills development as a major criterion for job selection. The increasing reliance on learning and development showcases the paradigm shift among job seekers. 

Organizations that invest in their employees, develop a brand image that helps them attract the right talent. In the last decade, many organizations have started allocating more funds to the learning and development of employees in order to keep themselves more attractive to job seekers. 

Also Read: Impact of employee development on productivity

Reskilling and Upskilling Current Employees

A staggering 87% of millennials see career and professional development as an important parameter in their job. Giving opportunities to employees to reskill and upskill themselves keeps them involved in their career progression and also gives them a feeling of being cared for by their employer. 

By utilizing the features of 360 degree feedback and continuous performance management, organizations can keep track of their employees’ performance and conduct training programs for improvement. It also helps in recognizing and rewarding the best performers 

Improve Employee Engagement

A report published by Gallup states that only 36% of US employees are engaged in their workplace. Globally, this figure is just 20%. Employee engagement is directly related to an employee’s commitment towards the organization. Many executives cite employee engagement as one of the key strategies in building a performance-driven organization.

Focusing on employees’ professional development helps in building an engaged workforce that is more productive and is ready to go the extra mile to achieve their targets. An engaged workforce is less prone to making critical errors and helps in increasing the overall productivity of an organization.

Also Read: 10 best tools for employee goal setting

Succession Planning

Succession planning is important for maintaining a strong position in the market. It is an integrated and systematic process that involves identifying important positions in the organization and creating a talent pipeline for filling those vacancies internally. 

Succession planning requires taking into consideration the current and future organizational needs. It ensures that people with the requisite skills are available to take up the jobs in the future. Succession planning strengthens the overall capabilities of the organization by undertaking the following process:

  • Identifying key areas and positions
  • Determine the capabilities and skills required for key areas and positions.
  • Identifying internal resources interested in the positions and assessing their capabilities
  • Develop and implement knowledge transfer plans
  • Evaluate the effectiveness of the plan

Performance management software aids in the overall succession planning process by identifying employee skill sets and providing a strategic path to develop capabilities and measure the plan’s effectiveness.

Reducing Employee Turnover

Employee training and development have a direct impact on employee turnover and absenteeism. It is generally thought that skilled employees have a greater chance of leaving the organization, but research has shown that by investing in employee development, organizations can reduce the turnover rate and can also prevent frequent layoffs. 

Also Read: 8 steps to effective employee surveys

Aligning Business Strategy With Organizational Goals

Aligning business strategy with organizational goals helps in making informed decisions. It also ensures that everyone in the organization is working towards a common goal. A business strategy has a direct impact on the revenue, sales and marketing initiatives of an organization. To achieve higher results, organizations need to focus on aligning their strategy with organizational goals and objectives.

Performance management software helps with resource alignment by defining employee goals, employee development, and fixing performance criteria that support the organizational vision and mission.

Diversity and Inclusion

One of the most important aspects of employee development is strengthening the DEI (diversity, equity, and inclusion) initiatives. Much research has shown that less represented groups feel the burden of not getting enough support from the management. Thus leading them to quit the organization early. But with the increasing focus on DEI, employers can now create focused programs that help such groups in their learning and development.

Also Read: 10 features to look for in an OKR software

Utilizing Performance Management Software for Employee Development

Performance management software, also known as an employee performance management tool, helps managers track the performance of their direct reports and provide them with real time feedback for improvements. Therefore, many organizations have started switching from traditional performance management systems to data-driven performance management systems, powered by the intelligent insights offered by the tools. 

The features offered by the software help in solving complex human resource challenges. It uses technologies like advanced analytics, AI, and machine learning, and psychological concepts embedded into the system. 

Enagedly is a performance management platform that offers a wide range of features to engage, enable, and develop employees. Its scalable and customizable features like OKRs/goal setting, real time feedback, ongoing check-ins, 360 degree feedback, and talent analytics make it a comprehensive solution for managing a workforce of any size.

Let us look at the salient features of performance management software that help in employee development.

Rewards and Recognition

Researchers have found a direct link between employee recognition and productivity. Employees who are frequently recognized for their efforts are more likely to stay longer in the organization. They are also focused on the achievement of organizational objectives. As many organizations are utilizing the advantages of rewards and recognition, it has become an astounding $46 billion market- Forbes.

Organizations must focus on employee development by rewarding their employees for their efforts and contributions to organizational success. 

Also Read: Performance management tools for employee engagement

Setting SMART Goals

The first and foremost step towards employee development is setting up SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals. It helps managers and employees track their performance and take corrective action whenever their performance drops. The feature also helps the upper management keep track of the employees from various departments, teams, and roles .

Setting SMART goals streamlines business ideas and focuses the efforts of employees on allocating their time to tasks and activities that bring in the highest ROI. It helps in tracking the progress of employees and can provide insights on actions to be taken for employee development.

360 Degree Feedback

Feedback helps in holistic employee development by providing them with improvement plans, tactics, and measures to enhance their performance. 360 degree feedback is a process in which employees receive anonymous and confidential feedback from their colleagues (including supervisors, managers, direct reports, and peers). 

It is an effective tool for analyzing employees’ performance and motivating them to improve their skills, capabilities, and overall performance. It further helps in the recognition of employees with learning gaps and puts them on employee development programs.

Also Read: Common leadership challenges at workplace

Learning Management System

Learning opportunities are one of the most crucial parameters that define the success of an employee in an organization. Having a performance management system solves the challenges of learning and development. It helps in identifying the current skills of employees and promotes continuous learning on any topic. 

The most advantageous feature of an LMS is its ability to track the learning of employees. Managers can check the progress of their employees, their current performance on assessments, and the learning gaps highlighted by the tool. 


To thrive and grow in these turbulent times, organizations need to focus on the development of their most potential resource: employees. Therefore, by investing in their learning and development initiatives, organizations can create a skilled and performance-driven workforce that is able to take challenges head on and contribute towards the achievement of organizational goals.

We hope the article answers your question about “How software helps in employee development?”.

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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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