How to Create a Performance Management Plan?

With so many elements to manage, your performance management plan must work well for HR professionals and your employees. In this article, we will discuss how to create a performance management plan that will motivate your employees and help them be the best they can be in their job roles. Whether you’re dealing with high performers or those who need improvement, this article will help you manage them well.

Learn how to determine benchmarks and goals, communicate effectively, and follow up with employees to create an effective performance management plan for your company. Along with HR, we have interacted with leaders from accounting, IT, sales, marketing, customer service, and management who have all shared their tips on how to design a PMP that works well in their organizations. 

What is a Performance Plan?

A Performance Plan or Performance Management Plan is an official document used in business to highlight the goals for a specific employee and identifies any potential performance issues that may impede their progress in achieving those goals.

Performance management plans are required to document an employee’s goals and objectives related to the organization’s goals, along with the skills and competencies needed to achieve these goals. Effective performance management plans can help an organization thrive, and they can even help keep your employees happy and engaged in their jobs! 

How to Create a Performance Management Plan? 

The following section talks about the performance management planning processes. It is important to have skilled and experienced HR leaders onboard while planning the process. It will help steer the team in the right direction and avoid any discrepancies from creeping in. 

  1. Document goals clearly: Once you know the direction to be taken, it’s time to create clear and measurable goals.
  2. Communicate with your employees: Once the goals have been created, it’s important to communicate them with employees so they can work towards them. Check-ins are an effective way of providing feedback to employees on their progress and rewarding them when they do well. 
  3. Provide feedback regularly: It’s also important to provide regular feedback to your employees by monitoring their progress. By checking in regularly with your employee, you’ll learn how they’re doing and provide helpful guidance as needed. When there are problems, give timely and constructive feedback so they know where they stand.
  4. Keep track of progress: There’s no point in holding back until the end of the year to evaluate performance! Track your employees’ progress throughout the year and make adjustments where necessary. At least once a quarter, review past assessments with your team members to identify any changes that may be needed going forward.

performance management

Photo Courtesy: Deloitte

Questions to Consider While Creating a Performance Management Plan

As an HR professional, you need to be clear on the business objectives of your organization to create an effective performance management plan. What are the goals of the company? What does success look like? Once you have answers to these questions, you can begin to create a plan that will help employees achieve these objectives.

  • Define what the organization’s goals are and what success looks like.
  • Assess where the organization is currently at in terms of achieving these goals.
  • Identify any gaps between where the organization is currently and where it wants to be.
  • Develop strategies for closing these gaps. 
  • Determine how each strategy will help the organization reach its goal. 
  • Determine who needs to be involved in this process, including managers and staff members who should be measured using this process 
  • Establish a timeline for implementing each strategy (e.g., set specific dates by which certain tasks must be completed). 
  • Put everything together into one document – preferably with short sections and bulleted points – so that it’s easy to read and understand.
  • Send out to appropriate stakeholders or colleagues for feedback or edit as needed

Get Up-to-date Responses

This will give you insight into how others perceive your work and where you can improve. Here are some tips for getting started: 

  • Talk to your manager – ask for specific feedback on your recent performance and where improvement is needed. 
  • Talk to your peers – ask them how they perceive your work and what areas they think you could improve in. 
  • Use performance review tools – many online tools can help you assess your performance, such as 360-degree feedback tools or performance appraisal software. These types of assessment tools will provide you with objective data about how well you’re doing in certain aspects of your job and can help guide your development.
  • Identify strengths and weaknesses – make a list of both the strengths and weaknesses that were identified by others, then take some time to really explore these ideas. Consider the possibility that some of the perceived weaknesses may be strengths in disguise! 
Also Read: The Ultimate Guide: Develop a KPI System for Performance Reviews

Measure Current Performance

To create an effective performance management plan, you first need to measure current performance. This will give you a baseline against which you can measure future progress. There are several ways to measure performance, but some common methods include surveys, interviews, focus groups, and data analysis.

All these methods have pros and cons. Hence, you need to identify what is most appropriate for your company. Once the right approach is known, you need to set SMART (Specific, Measurable, Actionable (and specific), Realistic (and challenging), and Time-bound (to define when objectives should be met)) goals. Next comes the tricky part – determining what type of disciplinary action or reward system is apt for your employees’ needs.

Here are some tips on how to go about this process: When defining punishments for bad behavior or rewards for good behavior, keep in mind that there are two different types of motivation – extrinsic and intrinsic. Extrinsic motivations come from outside sources like money, recognition, promotion, etc., while intrinsic motivations come from within sources like personal growth and accomplishment. So make sure to pay attention to both extrinsic and intrinsic when designing your reward/punishment systems. Also, remember that the severity of punishment or reward should match the severity of the infraction – never give a minor punishment for a major infraction or vice versa.

Important Steps to Follow 

The steps below outline the process for creating a plan and should be followed when creating new plans or updating existing ones.

  • Define what you want to achieve with your performance management system: What do you hope to gain from this system? How will it help improve organizational culture? How will it support succession planning efforts? Why is this important for the company’s growth and success? 
  •  Assess your current performance management system: Do evaluations happen annually or more often? Do employees know their strengths, areas for improvement, goals, objectives, and competencies? Are 360 reviews used in addition to the manager’s feedback? Is formal training provided before starting a new position or after each evaluation cycle starts (6 months)? Does everyone get constructive feedback no matter their job level or rank within the company? 
  • Define what you want to achieve with your performance management system
  • Assess your current performance management system
  • Identify gaps in your current performance management system
  • Choose the right performance management software for your needs
  • Implement your performance management system
  • Train employees on how to use the system
  • Evaluate and adjust your system as needed
  • Establish an appropriate timeline
  • Monitor the results of your new system by looking at metrics and employee feedback surveys
  • Check in periodically to see if there are any changes or issues that need attention, and make adjustments accordingly

Set Goals and Start Working For it

  • Set up performance goals and objectives early on
  • Align those goals with the company’s overall strategy
  • Involve employees in setting their own individual goals
  • Monitor progress against goals regularly
  • Use data to identify issues and areas of improvement
  • Address problems and give feedback promptly
  • Celebrate successes and lessons learned along the way 
  • Ensure that all parties understand their roles and responsibilties
  • Give regular, meaningful feedback that supports your employees’ development
  • Revisit performance management throughout the year as needed to support employee growth and business success
  • Follow through on corrective action plans, based on conversations and/or documented behaviors
  • Document everything! 
  • Evaluate if there is a need for any changes before starting over again with the same process at the end of every year
  • Commit to the ongoing dialogue about an employee’s performance from both sides to foster an environment where everyone feels heard and valued

Design an Incentive Plan to Nudge Employees in the Right Direction

If you want your employees to perform better, you need to give them a reason to do so. That’s where incentives come in. By offering rewards for meeting or exceeding goals, you can encourage your team to put forth their best effort. But how do you design an incentive plan that will work? Here are a few tips to keep in mind when designing an incentive plan: 

  • Incorporate at least two different types of rewards (cash and non-cash) 
  • Offer larger prizes for reaching ambitious targets 
  • Use well-established company metrics as your criteria 
  • Offer prizes every quarter instead of waiting until the end of the year – Pay out large sums of money incrementally over time to increase interest 
  • Put together a committee with representation from across the organization before creating an incentive plan

Make it Easy for Employees to Track Progress Towards Goals

It can be difficult for employees to keep track of their progress towards goals if there is no system in place. By creating a performance management plan, you can make it easy for employees to track their progress and see how they are doing. This will help them stay on track and motivated to achieve their goals. The performance management plan should include specific objectives that the employee is working on. 

These objectives should align with the company’s strategic goals and the employee’s personal career goals. When determining objectives, managers should consider the needs of both themselves and their team members before deciding what an objective might be. After establishing the objectives, supervisors need to monitor employees’ progress against their goals regularly.

Ideally, reviews should happen every six months but this timeline may vary depending on the situation. Objectives could also change throughout the year as new priorities arise and evolve.  The final part of any performance management plan is annual reviews which take place during the first quarter of each year at most companies. Reviews usually involve a conversation between supervisor and employee about how well they achieved their goal targets over the past year and plans for next year.

Metrics & Dashboards

Employees need to know where they stand to improve or maintain their performance. Regular feedback loops are essential, which is why managers and employees need to use objective data (aka metrics) and visual dashboards when communicating progress.

This way, both parties can see if an employee is on-track with his or her goals. It will also make it easy for employees to look back on how they were performing at specific times of their careers for reflection purposes. If you want your employees to succeed, you need to give them opportunities for training and education. Formal classroom training is good, but hands-on experience—whether through internships or apprenticeships—is even better. 

Training gives your team new skills and knowledge while improving existing ones. Training may cost money upfront, but there’s no better investment than in your team’s future capabilities. Investing in their development now ensures that they’ll continue to be valuable members of your organization long into the future. 

Provide Necessary Training and Resources to Employees

Employee development is essential in an employee performance management plan. Employees who underperform and those who do well need ongoing training to achieve optimal levels of competence. A range of training and development methods can be integrated into a performance management plan. Performance management software allows business leaders to see an overview of the organization’s composition. Organizational charts and people databases reveal the distribution of skills and qualifications across teams and departments. Experienced employees often take on mentoring new employees because they can share knowledge and insight with someone who hasn’t been doing the job for long. Through one-on-one coaching, mentors can answer questions and get to know their protegees better while allowing the employer flexibility in managing other roles. Although this means experienced workers have less time for themselves, they understand what needs to be done to keep their company running smoothly.


The most difficult part of creating an effective performance management plan is making sure that it is based on solid data. When you base your performance management plan on numbers and real-time information, it becomes easier to create goals that are specific, measurable, achievable, relevant, and time-bound (aka SMART). 

Also Read: How to Implement SMART Employee Goal Setting in Your Company

After assessing each employee’s strengths and weaknesses, use those details to craft individualized plans for each team member. This step is crucial because employees react better when there is personal involvement in their career path. With clear expectations, insight into how their performance impacts other workers, and regular feedback from managers/leaders/supervisors, employees can get clarity around what needs improvement or what they should do if something goes wrong.

As long as all parties are communicating with one another, everyone has access to information at all times. This makes it easy for everyone involved to stay up-to-date on where things stand at any given moment and solve problems before they spiral out of control into something much bigger down the road.


Want to know how Engagedly can help you in developing a performance management plan? Book a live demo with us.

Request A Demo

Get In Touch With Us

Performance Management Tricks for Successful Partner Management

The success of your business partners has a great impact on the success of your own business. And contrary to what you may think, their performance is well within your control. Learn what performance management can do and then apply the knowledge to your own business through these tricks for successful partner management.

The importance of successful performance management

There’s a reason performance management has become an integral part of business. It involves setting goals, gathering data and analyzing that data to improve future performance. And with that kind of effort, the potential for success is much greater than it is otherwise.

In fact, businesses with successful performance management systems routinely outperform their competitors. According to Betterworks, companies that have implemented changes in the way they provide performance feedback have a 24 percent higher success rate than those that stick to traditional models.

But of course, not every performance management system is either cost-effective or viable. A study conducted by Gartner shows us exactly how easy it can be to make the wrong moves. For example, the average time managers spend on work related to performance management is 210 hours a year. 

So how do you develop a performance management system that will help you make the most out of your partnerships?

There are a few tricks you can employ to make sure your performance management system is the one that will bring you the best possible results. 

Also read: What is performance management system?

Choosing potential partners

Performance management can start even before you partner with another business. After all, one of the major elements of success, in any field of work, is being able to plan ahead. So instead of focusing on your existing partners, why not increase your chances of success by making sure you only choose the partners that are a great fit for your business? 

How do you do that? You gather all the necessary information on the prospective partner and you ask yourself a few questions regarding your potential partnership. A business that would be a great fit for you will:

  • Share your business’ target audience
  • Be okay with your terms and processes
  • Boast a stable business model
  • Be technically equipped to deliver results
  • Share your business’ values

Maybe it’s not necessary for the potential partner to check all the boxes, but it’s a great thing to strive for. And the more boxes they check, the more successful your collaboration will be and the less work you’ll have managing their performance.

Offering incentives & training programs

When you think about performance management, the first thing that comes to mind are yearly reviews. The employee or the partner has already done the work and now it’s time for you to evaluate it. But you don’t need to limit yourself to a purely reactionary way of doing things when there are plenty of actions you can take as well. 

Of course, here we’re talking about incentive programs. These make for an excellent way to steer your partners into the right direction even before they’ve done anything. Instead of waiting a year to tell them they should be achieving better results, incentivize them to excel right from the start. 

But a quality incentive program will do you no good if your partners aren’t trained to meet your requirements. Luckily, there are partner training programs that allow you to onboard and train all your partners in a way that’s highly efficient and even lowers your operational costs. Using this type of software is yet another way to be proactive about your performance management.

Constantly checking the progress

To make the most out of your performance management system, you need to come to terms with the fact that conducting yearly reviews simply doesn’t work. It’s an outdated system that many Forbes 500 companies have stopped using. 

What should you do instead? When developing your performance management system, you should aim for implementing continuous performance evaluation. The exact process will, of course, depend on your business. But to give a few examples, this could mean anything from evaluating performance whenever necessary or possible, to measure it at the end of every individual project or campaign. 

Why does this make for a better approach? It’s in line with the latest advances in the way project management, in general, is done. We’re talking about the so-called agile methodology, which has proven itself a lot more efficient than traditional project management. It’s been argued that this is simply because this methodology is aimed at breaking processes up into shorter phases and getting feedback as soon as they’re complete. As a result, there are fewer deviations from the end goal.

Also read: Performance Review Phrases And Wordings 2022

Setting expectations

Of course, checking the progress your partners are making can only result in true success if you keep them in the loop. So if you want your performance management system to work, you need to be able to explain it to your partners, and informing them about it should be part of your process. 

To be able to explain your evaluation process, it needs to be structured. You need to know what events trigger evaluation, how the process is done and which members of your team are responsible for it. But what’s more important than anything, you need to be able to explain to your partners exactly what they need to do to pass the process with flying colors. 

This is where the concept of SMART goals can prove extremely helpful. SMART goals is an acronym that stands for goals that are:

  • Specific 
  • Measurable
  • Achievable
  • Relevant
  • Timely 

And if the expectations you set for your partners check all the above boxes, there will be no uncertainties as to what they need to do to achieve a successful collaboration with you.

Consistent feedback and rewards

If you want your partners to perform as you need them to, it’s important to keep them engaged. One aspect of this is providing regular and consistent feedback. The other aspect is to reward them whenever they do something right. After all, a partner that doesn’t feel like they’re out of the loop and one that feels appreciated will almost surely become a valuable asset to your company.


There’s a lot of good that a quality performance management can do for your business. From choosing your partners wisely to keeping them constantly engaged, a smart, structured, and transparent system brings you closer to making the most out of your partnerships.

Want to know how Engagedly can help enhance your organization’s performance management? Fix a quick demo with our experts.

Request A Demo

About the Author:

Lianna Arakelyan - Guest blogger

Lianna Arakelyan is a content writer at, with a knack for B2B programs, such as channel incentive programs, partner training and onboarding programs and not only. She is extreme in her work, with a deep goal of always being updated on online and offline marketing and technology news of the world.

Performance Management Tools Every HR Leader Needs

Employee performance management tools and techniques are two of the critical management tools that influence employee growth and organizational development significantly. A Gartner report shows that 95% of managers are unhappy with their organization’s present performance management practices. If you take the time to review your processes and how you can best utilise performance management tools, it can help you keep your employees engaged as well as your business get ahead of the competition. 

A performance management system includes various important HR functions, like goal-setting, feedback, rewards, and performance review. An effective performance management system helps HR managers establish clear performance expectations through which employees can easily understand what to expect out of their job. Moreover, it allows managers to reinforce individual accountability to meet their goals and evaluate their own performance for employees.

Most organizations use performance management systems suitable to their needs based on factors like industry, number of employees, etc.

What is Performance Management?

Performance management is the process of establishing a motivating work culture in an organization, where employees and managers constantly review themselves and work towards a few common organizational goals. Essentially, it includes goal-setting, goals tracking, ongoing check-ins, real-time feedback, 360 degree feedback, rewards and recognition, learning and development and talent analytics.

What happens in an organization that doesn’t have a performance management system? It fails to motivate its employees and leaves them directionless and disengaged. A system helps an organization build a skilled and efficient workforce, which increases its overall productivity. Here are some tools you can utilize to draw the best results. 

Also Read: Download the ultimate guide to employee engagement survey and templates

7 Performance Management Tools in 2023

Performance management tools and techniques

1. Goal Setting Tools

Setting proper goals for employees is one of the initial steps that leads to increased employee and organizational productivity.

It is important to define performance plans and objectives clearly. Having plans that are open-ended and unclear creates a lack of interest in employees. At the beginning of the year or at the

beginning of the quarter, managers meet with their employees and set clear goals and objectives for them. In this phase, managers plan on ‘how’ their employees should fulfill their goals and accomplish results. These goals should be SMART and challenging.

We recommend the use of goal-setting tools that help you create objectives and key results (OKRs and KPIs) and align your individual goals to those of the organization. Performance management tools like Engagedly can help you use OKRs and get the best out of them. 

Also Read: 7 Reasons Why Goal Setting is Important

2. Feedback Tools

Frequent employee feedback is one of the best practices for tracking employee progress and improving it from time to time. This practice helps not only employees but also the team and the entire organization increase their productivity.

While most organizations already have digitized the process of employee feedback, many organizations claim that implementing a feedback tool has helped them create a culture of frequent feedback, which in turn, promotes employee engagement. These feedback tools also include 360 degree feedback and peer-to-peer feedback

Encourage your employees to come forward and share frequent feedback with their managers. This practice helps you build a culture of trust and continuous development. Using employee feedback software can make this practice easier to implement. Engagedly allows users to share, receive, and request feedback from their managers, team members, and peers. 

3. Employee Appreciation Tools

Most employers forget to appreciate their employees’ good work, but they specifically remember to criticize when something goes wrong. This practice not only promotes disengagement, but creates a sense of dissatisfaction in employees, which directly affects their productivity. So, always remember to appreciate and recognize the good work of your employees. 

Using an employee recognition tool could be a start to changing your company culture to a culture that promotes appreciation and recognizes employees for even the smallest of their progress. Engagedly allows you to recognize and praise your employees socially for any contribution that they’ve made to the organization. 

Progressive performance management software

4. HR Management Tools

HR is undoubtedly one of the most crucial functions in any organization. Managing employees manually is time-taking and exhausting for HR personnel.

Therefore, having automated HR management software at your organization can ease many daily HR activities and solve many HR management issues.

When looking for HR software, there are many things HR managers need to consider, such as ease of set-up, strong data security, good customer support, powerful performance management, etc. Besides those features, it is also important to find a performance management tool that can adapt to your needs and grow with you.

5. Performance Appraisal Tools

When it comes to having a performance management tool in place, performance appraisal is possibly the most ordinarily used one. It’s a powerful tool that can help an organization align its goals to individual ones and track their progress and performance over time. But if you are looking to derive the best results out of this tool, you need to make sure that the appraisal process is a regular, fair and constructive two-way conversation between your employees. If you fail to create an environment where your employees can speak freely, they will get demotivated and will not stay with the organization for too long.

Also Read: Performance Appraisal Software: Why do you need it?

6. Personal Development Plans

A performance development plan is a very effective mechanism for building up employee performance. Both managers and employees benefit greatly from the PDP process, which helps in identifying areas for growth, strategies to achieve that growth, goal setting and tracking. Some key benefits of the tool include:

  • A definite path to achieve goals
  • Measurable goals, improvement and results
  • More distinctive alignment with organizational and team goals
  • Definitive employee development and accountability

The PDP process encourages and motivates employees to direct their growth towards organizational progress. It helps streamline the performance process and inspires success. Engagedly’s LMS (Learning Management System) can help your organization in setting this process up for your employees.

7. Pulse Survey tool

Pulse survey tools are a simple, powerful and flexible way of collecting employee feedback and reading the pulse of your employees. The result can help you understand your employees better and, in turn, can help your organization in strategising for better employee engagement. Proper engagement surveys come from a well-set intention and well-defined goals. Moreover, they need to be frequent enough to show trends in temperament and attitude. If the intention is unclear, these surveys will ask unimportant questions and receive vague responses. In such a scenario, it won’t be compelling enough to take any action. Read here if you wish to know more about pulse surveys.

Performance Management Techniques

It is crucial for organizations to have an effective performance management system. But no matter how good the system is, its success depends on the managers who implement it.

1. Plan

The planning stage comes first. Here, you define individual goals & strategies clearly and communicate them organization-wide so that your employees understand that meeting their individual goals contributes to the organizational goals.

Coordinate with your employees before setting up their individual goals and make sure that the goals are SMART (Specific, Measurable, Achievable, Relevant, and Time-bound).

Also Read: How To Write Good Employee Goals & Objectives

2. Monitor

After you define the goals and strategies for your employees, you should constantly keep track of their improvements and take care of their developmental needs. Monitoring continually means providing ongoing feedback and consistently measuring employee performance.

It helps you check if the employees are meeting their goals as planned.

3. Rate

Rating means evaluating employees based on their performance standards. Though this step is a part of monitoring and giving feedback, it is considered as a more formal way to evaluate employee performance. It also helps managers know who their best employees are.

Rating employees at regular intervals helps them improve themselves. It also helps managers look at and compare performance over time or across a set of employees.

4. Reward

Effective managers understand the importance of rewarding employees who perform well. Employees feel empowered and motivated when their work is recognized.

This leads to increased productivity in the organization. So reward the employees who meet your expectations or exceed your expectations.

5. Upgrade

Keep upgrading the goals & strategies at regular intervals. If your employees feel that their existing goals seem unattainable or that they have a negative impact on the organizational work culture, then it is time to coordinate with your employees and change them.

6. Mentor and Coach

It is said that there are no such things as poor performers. So if there are employees in your organization that are showing up with mediocre performance, then they are just waiting to be discovered for the right talent that they have. With coaching and mentoring tools in place, your organization can bring out the best in every employee. If tapped right, can you imagine where these tools can take your organization?

The growing divide between employees and organizations have made it difficult to engage workforce and lead them to a path of optimal performance. Leaders need to be cognizant of their employees’ needs and take a progressive approach to meeting them. Performance management tools and techniques help human resource managers find blindspots and take corrective action.

Which performance management tools do you use in your organization? Let us know in the comments section below.

performance review discussion

Frequently Asked Questions

Q1. What are performance management tools?

Ans. Performance management tools are real-time software that help managers and leaders track the productivity of their team members. With the help of an inbuilt data management system, these tools organize and interpret the data to get productivity insights of the organization. These insights further help leaders in taking informed decisions for organizational growth.

Q2. What are the four stages of performance management?

Ans. The following are the stages/cycle of performance management: Planning, Monitoring, Reviewing, and Rewarding.

Q3. What are some of the performance management tools?

Ans. The following performance management tools are highly beneficial for businesses: Goal setting, Real-time performance analysis, Surveys, Real-time feedback, Learning and Development, and 360 performance reviews.



Why You Need An Employee Performance Management System

Employee performance management systems have become exceedingly popular these days among all organizations, big or small, and it’s easy to see why. The COVID-19 pandemic has made remote work all but universal and an increasing number of companies recognize the advantages of remote work: lower costs and higher productivity. But to take complete advantage of the benefits of remote work, it’s key to monitor your employees and record their performance, and there is no better way to do that than by using an employee performance review system. These systems are a must-have for any modern organization, even if they don’t extensively use remote work.

Why are employee performance management systems so popular? 

Performance management systems have become one of the most demanded solutions because of their elegance and simplicity. These applications are fully attuned to the needs of a modern work environment, even if it isn’t remote.

Decentralized Work Environment 

Work environments have been becoming increasingly decentralized since the start of the twenty-first century, long before the pandemic hit. Decentralization has many advantages: It allows companies to structure themselves flexibly and in an era of increased specialization in white-collared work. It just makes sense to give individual experts more freedom of movement and decision-making. 

Not to mention decentralization has resulted in improvements to employee morale and increased employee satisfaction with jobs. Employee performance management systems are key to maintaining a good decentralized work environment since they guarantee that employees remain productive and at work, even when not directly supervised.

Also Read: The Complete Guide To Working From Home

Increasing Automation in Workplace

According to a survey by McKinsey & Company, 50% of organizations use AI for at least one business function.

The latest wave of automation is a direct result of the internet and the information age. There are so many things software does cheaper and better than people. Nowadays, fewer and fewer people are working in the traditional workplace. One consequence of automation has been that the people whose jobs don’t get automated usually fulfill very specialized and cognitively demanding roles like management or consultation. 

Therefore, using performance management tools can help to vastly improve the performance of these specialized professionals. They are accurate, objective, and help managers automate the managing process.

So there are a lot of practical reasons why most organizations today are motivated to invest in performance management software: the advantages of acquiring performance management tools are very high, and, conversely, the disadvantages of not acquiring them are also significant. 

Organizational Benefits of using performance management systems 

Detailed Information

Chiefly, performance management systems provide detailed information about employees’ performance metrics. This information is invaluable in assessing what areas an employee is lacking in and where they’re doing well. Managers can use this information to accurately construct an image of what their employees are doing right and what they’re doing wrong. Managers can also use this information to figure what tasks employees are better at doing and assign them tasks accordingly. Essentially, managers receive an overall perspective on how their employees are performing individually and collectively. It will allow them to vastly improve employee performance management. 

Objective Feedback 

Most performance management systems also have in-built feedback mechanisms that let managers directly inform employees of their shortcomings and offer them advice on how to improve. Managers can also easily provide feedback scores for employees on applications that are objective, accurate, and impartial. When evaluations are done by employee performance systems, employees don’t have to worry about any biases or prejudices creeping in. The accuracy of performance management systems is especially important for large corporations with large numbers of remote employees, as it is difficult to enforce impartiality in manager reviews on a large scale. 

Also Read: 10 Best Employee Feedback Tools To Track Performance

Employee engagement and morale

Performance management systems also boost employee engagement with their organization since the applications allow employees to obtain detailed information on their performance metrics as well as about how their managers see them. The increased engagement is particularly important for remote work operations since more people report feeling alienated from working remotely than on-site. Improved employee engagement is important since it allows employees to experience higher morale, which translates to higher productivity. As such, organizations have a lot to gain from achieving higher morale by using employee performance software.

Growth and Consistency 

Employee performance management systems help organizations streamline their workflows by identifying what their employee’s individual strengths are. Organizations can take advantage of this information by assigning employees’ tasks according to what they do best, which would maximize productivity and minimize inefficiency. Consistently assigning tasks to the employees best-suited to performing them will have important long-term consequences for organizations. Their ability to produce a consistent quality of work within predictable time periods will provide organizations with many growth and expansion opportunities. 

Reducing Firing Risk

Employee performance management systems objectively identify which employees are the best performers, but they can also help identify the low performers. This information can assist HR and managers identify the weakest links in their organization and terminate  their employment if needed. Employees also benefit from performance management systems. Their job security increases from knowing that as long as their performance is objectively reviewed,they won’t be fired unless their performance metrics decline by a certain amount. The clarity offered by these systems is effective in improving company morale. 

Talent Retention and Development

Employee performance management systems are effective in highlighting rising talent and allowing managers to notice which employees have increased productivity. Managers can easily identify which employees have the most potential and offer them training and promotions accordingly. The improved ability to identify talent will also allow organizations to become more meritocratic, prioritizing individuals who have the most success. Long-term, this type of objective performance-based meritocracy ensures an organization’s employees to remain highly motivated, as they are recognized and awarded for their talent. The increased meritocracy translates to improved financial benefits for organizations long-term.

Also Read: Want To Know Why Your Employees Leave? Here’s Why

Disadvantages of not using employee performance management

Not employing a performance management software in today’s day and age has some serious drawbacks for most organizations. 

Lack of objectivity 

Without dedicated employee management software, at best your organization could use general database software to record information, costing a lot of unnecessary time and energy. Or worse, you don’t employ anything to track employee performance, which will make your performance reviews biased. Skewed employee performance reports mean that your managers don’t fully know who’s doing well and who’s not. Since their biases and prejudices can creep into the performance reviews, your managers might become disliked by your employees. Inaccurate employee reviews can lead to increasing tensions between management and team members, which will lower overall morale and hamper employee engagement. 

Mismanagement and lack of communication 

Without performance management software to provide them with easily accessible information, your employees will be left relatively unaware of how they’re performing. They won’t know what their respective strengths and weaknesses are. Also, it will be difficult for employees to communicate with managers regarding their feedback, especially if a single manager oversees a large team. The lack of effective communication and performance measurement means that in the long term, your organization could suffer from serious mismanagement problems that hinder productivity and prevent otherwise attainable growth.

Also Read: 10 Ways To Improve Communication At The Workplace

Poor planning and Task Management

Without precise knowledge of their employee’s respective strengths and weaknesses, managers will have to rely on guesswork and intuition for assigned tasks and planning for large projects. This lack of knowledge is a prime source for poor planning and task mismanagement problems to rise. Not only will it take longer for managers to decide which tasks to assign to which employees, but it’s also far less likely that your manager’s decisions will be optimal given the lack of data. Employees also suffer from this state of affairs since it’s likely they will be assigned work they’re not optimally prepared for. 

Training gap 

Without the ability to accurately and systematically highlight the weaknesses of their employees, organizations will not recognize what areas their employees need training in. Employees will continue working with their existing problems, and the organizations will have no knowledge of how to correct them. The lack of effective training from their employers will lead to employees suffering from decreased morale and, without their weaknesses corrected, both the employees and the organization will suffer from inefficiency. Investing in an employee review system will correct this problem by highlighting areas of weakness.

Poor Morale and Retention 

Without a performance review system, organizations suffer from unnecessary inefficiency. This inefficiency translates into financial losses in the long term. If employees begin to feel that they are not receiving enough recognition, it will lead to a decrease in morale and increased attrition. The most talented members of the organization are likely to leave earlier due to a lack of recognition, which will greatly damage the organization long term.

Also Read: Employee Retention Strategy – How To Retain Top Talent?

Lack of effective compensation methods 

It can be difficult to track overtime work and make overtime payments with conventional business tools, which discourages employees from working overtime, especially in large organizations. This issue is particularly bad for companies that have large and slow bureaucracies that take time to process overtime compensation requests. Many employees may even feel a sense of distrust towards their managers and employers for this lack of support during overtime work. A performance management system can bypass the issue with bureaucracies entirely and provide employees comfort in knowing that they will always be paid overtime, which will improve organizational morale.


In conclusion, employee performance management systems are a great investment. They help in managing today’s employees in a modern decentralized workplace. They help your managers make objective informed decisions about what your employees are doing right, what they’re doing wrong. It helps them recognize the right talent. Without using such a system, your organization is likely to suffer from inefficiency, which will result in long-term financial and productivity losses.

Want to know more employee about performance management systems? Request for a live demo.

Request A Demo


Best Practices For Conducting Employee Check-ins

Employee performance check-ins are one-on-one conversations between managers and employees about their goals and objectives and their performance plans.

Continue reading “Best Practices For Conducting Employee Check-ins”

Privacy Preference Center