The Complete Guide to the Employee Performance Review

Not everyone is a big fan of performance reviews. Managers and employees dread it alike. And studies show that most leaders find it a sheer waste of resources. 

But then, why does every other organization conduct employee performance reviews? 

The answer lies in understanding its importance. Employee performance review, or performance evaluation, isn’t just a process of identifying the most talented employees and rewarding them; it is about creating a performance-driven, data-backed, and employee-centered culture that helps employees and organizations accomplish bigger goals. 

Research has shown that organizations that conduct effective performance reviews are 1.4 times more likely to meet their financial goals, have a more engaged workforce (2.7 times), and are 4 times more likely to encourage appropriate risk taking.


research on employee performance review


Effective performance reviews help employees and teams improve their performance and lead organizations to better business outcomes. In this article, we will understand the intricacies of employee performance reviews and discuss the following:

What is an Employee Performance Review?

An employee performance review, or performance evaluation, is an assessment conducted by a manager to review the overall performance of an employee during a particular time period. The review provides managers with an opportunity to discuss the employee’s strengths, weaknesses, and opportunities. 

It is a two-way conversation that generally involves asking questions, offering feedback, setting goals and expectations, and making a rational and empirical analysis of an employee’s overall contributions.

two way conversations in a performance review

A performance review is meant to leverage the talent by offering them guidance, appreciating their efforts, motivating them to perform better, and discussing the learning and development opportunities to enhance their skills. 

It is a process that helps managers identify the potential of their employees and offers a constructive approach to guide them on the path of their highest potential.

Performance evaluations serve multiple functions in organizations, but the most rudimentary among them are:

  • Ensuring effective communication and providing feedback to employees
  • Help change or alter the behavior of employees so as to make them more productive and aligned towards organizational goals
  • Planning for future assignments and projects based on the data gathered during the employee review process

For a long time, organizations have relied on traditional performance reviews of conducting annual assessments, but with the change in the global business market, most organizations are moving towards a continuous review process. 

Companies like Google, Adobe, Microsoft, and Accenture have completely replaced their traditional review systems with a more frequent and accessible process. It usually involves conducting frequent check-ins, providing on-going feedback, and establishing clear communication between managers and employees.

Performance Review Process Flowchart

The following infographic highlights the complete performance review process followed by organizations.

performance review process flowchart

Types of Employee Performance Review 

Performance reviews are constantly evolving. What was once a top-down approach has now metamorphosed into a holistic, continuous, and dynamic process. Though the top-down approach is still in practice, it is loaded with inconsistencies that cause disengagement among employees. 

A more practical approach towards employee development and engagement is to conduct continuous performance reviews. As modern HR strategies talk about improving the employee experience, it is important to incorporate a wholesome and action-oriented review approach that helps employees in their personal and professional development. 

Overall, organizations use different types of reviews to rate the performance of their employees. You can refer to the below list to understand which process will be more effective and suitable for your organization.

Annual Performance Review 

annual employee reviews

A form of traditional review wherein a manager and employee discuss the various aspects of employee performance once a year. It usually takes into consideration the annual accomplishments, contributions, and challenges of an employee and offers feedback based on the discussion. Most organizations are transitioning from annual reviews to more frequent and actionable processes. Also Read: Problems with annual performance reviews

Semi-Annual Performance Review

semi annual employee evaluation

Held twice a year, once at the beginning and the other one towards the middle of the year, semi-annual performance reviews provide opportunities for adjustments in the plan and to take corrective action, if required. 

Quarterly Employee Performance Review

quarterly staff reviews

Quarterly reviews help managers take quick action on the performance of their employees and make adjustments to the plan during the review meetings. It is a more proactive approach towards improving employee performance.

30 60 90 Day Employee Performance Review

30 60 90 Day Employee Performance Review

30 60 90 Day performance review is a review process used specifically for new hires during their probationary period. Managers assess the performance of new employees on their 30, 60, and 90 day anniversaries and offer them support to easily transition into their new roles.

360 Performance Review 

360 employee Performance Review

In a 360 performance review, employees get feedback from the people they deal with quite frequently. It usually involves input from the manager, direct reports, clients, vendors, customers, and employee self rating. It is one of the most effective ways to understand the strengths, weaknesses, and behaviors of employees that affect their performance. 

Peer to Peer Performance Review

It is a multi-rater approach in which co-workers review the performance of their peers and evaluate them on their skills, competencies, behaviors, attitudes, and various other aspects. Peer to peer review provides a holistic view of employee performance and helps weed out any bias and inconsistencies.

Employee Self Evaluation

It is a form of review in which employees assess their own performance during a particular time period. By highlighting their aspirations, goals, and challenges at work, employees give a fair view of how they think and feel about their work.

As per Arthur Worsley, Founder, The Art Of Living, employee self evaluation is becoming more integral to the efficacy and effectiveness of performance reviews. It allows management to understand where it’s doing well and where it needs to improve, according to the employees.

They are a great way to determine the essential areas each individual employee needs further support in. The more effective your support provision, the more likely that your employees’ performance will improve and the more likely you’ll be able to retain them for the long term.

Benefits of Performance Review

The purpose of conducting performance reviews is multifaceted. It helps in setting a performance benchmark and evaluating employees against it. It helps managers identify their most potential employees and those whose performance is not on par with the set standard. Furthermore, managers use reviews to understand employees’ personal ambitions and align them towards organizational objectives. 

Performance appraisals help employees evaluate their own performance and provide them with comprehensive feedback to hone their skills and alter their attitudes and behaviors for higher performance and productivity.

Conducting continuous performance reviews can be extremely beneficial to your organization. Effective, planned, and structured reviews can help achieve the following:

  • Maintain a record of employee performance and use it to create a customized development plan for every employee
  • Identify strengths and weaknesses of employees and assign them projects based on this knowledge
  • Create a performance plan at the beginning of the year and set clear expectations 
  • Enhance employee engagement by making employees a part of the organizational journey
  • Increase performance and productivity by motivating employees
  • Improves communication between employees and managers
  • Improves organizational effectiveness and efficiency in achieving goals and objectives

Performance Review in a Hybrid Workplace (Process)

Effective performance reviews can lead organizations towards success. It helps increase employee engagement, productivity, and the overall efficiency of the organization. Furthermore, it helps both managers and employees improve relationships and collaborate to achieve higher goals.

But then why do most managers and employees feel uncomfortable just with the idea of a performance review?

According to a survey conducted by Gallup, only 14% of employees agree that performance reviews inspire them to improve. Another report by Deloitte found that 58% of HR managers think of performance reviews as an ineffective use of time. 

Traditional performance reviews with a top-down approach do more harm than good. Most leaders believe that traditional performance reviews are ineffective and actually make the performance worse about one-third of the time.

Max Wesman, Chief Operating Officer at GoodHire, views traditional performance reviews as ineffective and a waste of important resources. As per him, traditional performance reviews, which were once a cornerstone of the workplace, have since faded into obscurity as the global workplace takes shape and adapts. Most workers resent the performance review process—as do many managers—owing to its focus on punishing and reprimanding rather than fuelling positive change. In response, formal appraisals have since been gradually replaced with frequent, informal check-ins that reward employees for productive behavior rather than chastise them for past mistakes.

The challenges of employee evaluations have been further aggravated by the hybrid work environment. 

Most managers haven’t met their team members in-person, which leads to biases and unclear perceptions about their performance. With a growing number of employees opting for remote and hybrid work, it becomes increasingly difficult for managers to provide fair and accurate evaluations of their employees. 

If you are facing similar challenges, then follow the below employee performance review process to conduct meaningful employee evaluations in a hybrid workplace.

Create a Standard Employee Evaluation Criteria

To avoid any bias and inconsistencies creeping into the process, it is better to create standard evaluation criteria. Managers should discuss the criteria with employees before the start of the year. HR managers and leaders must ensure that every employee is aware of the performance evaluation process being followed by the organization.

Bonus Tip: Use a real-time performance management system like Engagedly to create a standardized process for employee evaluation.

Review Employees Based on Their Monthly, Quarterly, or Annual Goals

Evaluating employees based on the achievement of their goals is the best way to conduct performance reviews. Whether your employees work remotely or from office space, setting and tracking goals helps keep their efforts aligned in one direction. 

Moreover, employees have something to look forward to every day. They are clear about their tasks and responsibilities and know that their performance appraisals will be based on the goals discussed during the performance planning process.

Bonus Tip: Use aspirational and committed OKRs to monitor the performance of your employees.

Use 360-Degree Feedback for a Comprehensive Performance Review

Using 360 degree feedback provides employees with a more equitable, fair, accurate, and holistic review of their performance. It also helps in eliminating personal bias as there are multiple reviewers in the process. 

In fact, research has shown that feedback from peers is more effective at improving performance and enhancing engagement in the workplace.

Bonus Tip:  360 degree feedback should be conducted every quarter to monitor changes in an employee’s performance and provide them with guidance to overcome any challenges.

Use Performance Management Systems to Track Employee Performance

A performance management system like Engagedly helps in continuous tracking and analysis of employees’ performance and provides insights to leaders to take appropriate action. It provides an overarching mechanism for evaluating performance, creating customized learning paths, and developing talent towards optimal performance. 

Talent Management Software

Tips for Conducting Effective Performance Reviews

Just like an effective employee evaluation review drives performance, an ineffective one leads to disengagement and can even leave employees feeling disconnected from the organization. It is therefore important to understand how to effectively conduct performance reviews that support employees and encourage them to work towards their betterment. 

The crux of conducting employee reviews is to create a conducive environment that encourages employees to openly talk about their achievements, challenges, aspirations, and inhibitions. 

Performance Review Employee Experience Infographic

Managers must ensure that they provide a positive environment for their employees to ask questions and be more involved in the review process. 

The following tips will help both managers and employees get the most out of their review discussions.

Performance Review Tips for Employees

  • Be prepared for the review process
  • Keep records of accomplishments handy
  • Listen carefully and ask for clarification
  • Ask more questions to have a clear and effective discussion
  • Discuss your personal and professional goals
  • Ask for help in areas you need improvement

Also Read: How to conduct performance review for managers

benefits of performance assessments

Performance Review Tips for Managers

  • Prepare for the review meeting
  • Keep employee performance notes handy while conducting the review
  • Be specific about the feedback
  • Talk about behaviors and attitudes that help employees excel
  • Keep compensation out of the review 
  • Cite instances and examples of both good work and areas of improvement
  • Be more empathetic and involved 
  • Learn how to write performance reviews effectively

Employee Performance Review Best Practices

There is a fine line between an effective performance review and a bad one. When done right, performance evaluations lead to motivation, goal alignment, and enhanced productivity and engagement.

On the contrary, a badly conducted review can stray your employees from the path of optimal performance and can even lead to disengagement and frustration among them.

A performance review is an opportunity for both managers and employees to create bridges and find ways to overcome challenges and celebrate accomplishments. That’s why it is suggested to conduct frequent reviews rather than wait for problems to grow bigger. 

Also Read: Performance Review Phrases And Wordings To Use

Without proper execution, performance reviews fail to fulfill their purpose and eventually lead to a waste of time and resources. The review process laid out in the previous section, along with the below performance review best practices, will help to get the most out of the discussions.

Also Read: 5 Ways to improve performance review process

Employee Performance Review Template

A performance review template helps conduct effective reviews in a strategic and action-oriented manner. A customizable template allows reviewers and human resource managers to make adjustments to include/exclude the evaluation parameters and create a standard performance review form for employees. 

Depending upon the areas of assessment, you can use different evaluation forms to have open and two-way communication with your employees. Furthermore, it helps keep track of employee performance records in one place and can be used during appraisals. 

A performance review template should be

  • Clear, concise, and easy to follow
  • Provide an in-depth analysis of the evaluation parameters
  • Offer insights to gauge the overall employee performance
  • Assist in development and career planning of employees

Concluding Words

Performance reviews don’t have to be dreadful. Instead, they should motivate and empower employees to make strategic changes to be more productive and resourceful for the organizations. Only by making reviews continuous, on-going, and action-oriented can organizations get buy-in from employees and use the data insights to leverage their talent and achieve higher goals. 

Employee Engagement

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Employee Performance Review for Remote Employees

The thought of employee performance review and evaluation is often very painful for most employees. The process is tedious, complex and time-consuming in most cases, especially for remote workers. But, it does not necessarily need to be so.

The most important factor of a performance review is the performance analysis of an employee. If that is done right, the data can be used to improve employee output as well as in other decision-making processes. Things get slightly more complex when the employees are working remotely. While some traditional in-office methods can be used to evaluate remote employees, it’s best to streamline the process according to the situation.

Here are some tips to improve your employee performance review process for remote employees:

It’s the output that matters

If an employee is professionally dressed, comes in on time, pours over his or her system throughout the day, is that enough signs to show that he or she is working efficiently? How does that help when it comes to evaluating remote employees?

You can act like an obsessive boss and keep checking their login, logout details and the quantity of work, but does that really showcase productivity?

It does not. In all great companies, the focus is on the quality of work, the output, not the input. To be honest, in the current world affairs all businesses are focusing more on sustenance, not profit. So don’t push your employees to produce enormous work that does not really add value to the organization. Give them the peace of mind and the liberty to give in their best and produce great work. This is what will keep the company afloat through the COVID-19 crisis. It’s not the other way round.

Also read: Is Lack Of Employee Recognition Damaging To The Company?

Gather 360-degree feedback

An employee does not just work with their direct manager, they work with team members, other teams and departments, other managers and supervisors among others. So when you are evaluating remote employee performance, make sure you gather feedback from everyone else who is associated with them. That way you don’t have to rely only on your evaluation but gather more insight about their performance, their style of work, their coordination skills, and where their talent and skills can be best utilized. This is a great way to accurately review your remote employees’ performance.

Get them to Self-evaluate

A Harvard Business Review article says that an employee can be susceptible to two different traps when it comes to self-evaluation. One of them is, they tend to get overconfident (termed as the Overconfidence Effect) and set higher bars than they can possibly achieve. The second one is, they attribute their successes to talent and skill, overlooking the other environmental factors (termed as Fundamental Attribution Error).

So when you get your remote employees to review themselves, you can then compare what other employees think of them, how they see themselves and then compare those data to how you as their manager see them. That gives a wholesome view of each employee.  Moreover, the employees also feel that their own perspectives matter. So giving them a chance to evaluate their own performance can also lead to employee engagement and drive them to access themselves better.

Provide valuable feedback consistently

Most employees are used to working in an office environment where they interact well and receive regular feedback. So when these employees start working from home, they might feel anxious in the face of prolonged silence and may start thinking up negative scenarios. As a manager it is important for you to keep providing them feedback often, and document it. That way they won’t feel disconnected from the work environment and would continue to perform stably. And you will be able to follow the pattern of their performances.

Also read: Why You Need A Real Time Performance Management Software

Have a sense of trust

It’s not easy to trust employees, even when you are working with them in an office environment, let alone when they are working remotely. But in the given situation, it’s something you would need to practice. Even if you are not able to see them in action, you need to trust them, unless you have evidence of them not working.

Evaluating remote employee performance efficiently is a significant element of consideration in the coming quarter. Given the world scenario, it’s important to get it right and make sure that your company and your people, both benefit from your employee performance review process.

Want to know how Engagedly can help you implement seamless performance reviews for your remote employees?

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10 Employee Performance Review Tips To Improve Performance

Performance review is a term both managers and employees dread hearing. Most managers think it’s a waste of time, and most employees believe it doesn’t improve their productivity. Research has found the old traditional once-in-a-year employee performance review is becoming very unpopular. 

A study published by Workhuman showed companies using annual performance reviews declined on a year-to-year basis from 2016 to 2019. It reduced from 85% to 54% in the years under study. There is talk of the growth of more agile companies that will succeed from continuous feedback, and the rise of the 360 degree feedback system is one sign of this change. 

This article will explore the meaning of an employee performance review, the benefits of using them, and tips to improve it.

What is a Performance Review?

A performance review is an assessment carried out by managers to rate the performance of employees over a specific period. The goal is to help the employees improve on their weaknesses while also encouraging and rewarding them for good work. In the past, most companies conducted annual performance reviews to look retrospectively and grade the employee, which would qualify them for a bonus or promotion. But now it has become more future and development focussed.

Most of the feedback wasn’t helpful since they were after many months. Recently, companies have adopted quarterly, monthly, and some weekly reviews to improve the effectiveness of the employee performance review. Noting that a frequent review will lead to improved performance from the employees, leading to better results for the company.

Benefits of Performance Review

Conducting an employee performance review can lead to many benefits for a company. In this section, we will discuss some of them.

  • It Helps Employees to Stay Engaged 

An employee performance review helps to keep the employees engaged. Most employees want feedback for their work, and studies have shown a 23% increase in a company’s profitability if they have an engaged workforce.

  • Recognize and Reward Achievements

A job performance review is also a time to reward the achievement and efforts of their workers. Doing this will serve as an encouragement and incentive for them to work harder and do more for the company. Statistics have shown that recognition is an excellent incentive for employees, and employees quit their jobs because of a lack of recognition. Rewards like bonuses and promotions are powerful incentives for employees.

Also read: Employee Rewards and Recognition For An Engaged Workforce
  • It Addresses Areas that Need Improvement

An employee performance review is vital in helping to address the areas that need improvement. The manager and staff can discuss the areas that need fine-tuning and discuss the steps, training, or activities they can incorporate to help them improve.

  • Provides a Place for conversation 

A review is also a time when a two-way conversation can take place. Since daily activities may not permit the time to sit and have long discussions on performance, a performance review is a perfect occasion. The conversations can cover topics ranging from hindrances stopping the employee from doing their job to advice or tips on their career path. It can be a place to find guidance and motivation. 

  • It Improves Communication

A crucial benefit of an employee performance review is it helps to improve the communication between the team or group. It helps to clarify the goal and aim of each individual in the organization. Misunderstandings about carrying out an assignment or project are removed through frequent reviews. It also can help to provide regular guidance and direction.

Also read: How Internal Communications Can Align Your Employees With Organisational Goals

Tips To Improve Employees Performance

90% of HR leaders believe annual performance reviews don’t reflect accurate information, while 51% of employees believed their performance review was wrong. There is a cry to improve performance reviews, and in this section, we will help by giving some tips we think will be helpful to you.

  • Learn to Host Regular Review Sessions

The first tip is to adopt a culture of hosting regular reviews. If an annual performance review is the only source of feedback your employees receive, then it’s likely they aren’t performing at their best. Alternatively, if you are a manager, you can adopt a walk-in feedback session, a monthly or a quarterly review session. Practising this allows you to monitor your team closely and gives you more data to work with when giving an annual review. 

  • Prepare For the Meeting

This point is obvious, but it’s vital to re-emphasize it. Preparing for a meeting is on two levels. Since you are not going into a meeting with yourself, schedule a time convenient for both of you. You can share your calendar with your team and agree on the dates to meet with each of them. 

You should also collect all relevant data on the employee. Use the 360 degree feedback system to help you collect feedback from colleagues, other managers, clients, and peers, along with your notes. You will have the data needed for an objective review. The last thing to do in preparation is to have a list of topics you will discuss. 

You can decide to share the subjects with the staff, but we advise you to give the employee some heads up on what you will discuss. Doing this will make the process less anxious for both the manager and the employee.

  • Clear definition of Performance Criteria

Have a clear criterion to measure excellent performance is. The company should provide a proper explanation and detailed breakdown for both the manager and the employee. There should be a rational way to measure impact and define success. 

A system that allows and accurately describes the quantitative and qualitative aspects of the rating. This clarification is to limit bias and unjust ratings, bringing about transparency.

  • Ask the Right Questions

An employee performance review session is not an interrogation session. The employee should see you as a coach or mentor. Ensure your questions are not ‘leading questions’ in nature. Leading questions makes assumptions. 

A good example is, “I saw you taking your time with the assignment. Why were you struggling?” This question assumes the employee struggled because they took their time on the project. It puts the employee on the spot, making them more likely to lie – rather than correct that notion (If wrong). 

The manager can phrase the question as “What was easy and difficult about the assignment?” This question gives room for the staff to explain themselves. If the assignment is difficult or easy, you will hear it in their explanation. Other generic questions you can ask include:

What obstacles did you face?

What accomplishment are you proud of? 

Remember, the aim is not to come on as a judge, but to appear like a coach. 

  • Improve on How Feedback is Given 

Feedback is one of the crucial aspects of a job performance review. In sharing feedback, avoid falling in the feedback sandwich loop. A feedback sandwich is when a manager gives positive feedback and then follows it up with a negative one before finally crowning it up with a positive one.

While the intention is to soften the blow of the negative comment, it can have different effects on different recipients. Some may decide to ignore the positive part of the comment, while others take only the positive portion. This style defeats the goal of employee feedback. 

Instead of the sandwich method of giving feedback, use an approach that separates positive and negative feedback. An example is if you are giving negative feedback, provide examples of how their actions are affecting the business or teammates in real-time. Ensure the person understands this and then suggest potential solutions to address it or them. 

The positive feedback should also highlight how well the employee has done and how well their actions have helped move the department or company forward. The whole point is to be straightforward when giving feedback.

Also read: 10 Best Employee Feedback Tools To Track Performance
  • Constructive Feedback

Constructive feedback is a type of feedback where managers try to provide feedback to their employees constructively. The main aim is to share feedback in a way which doesn’t discourage them and instead make feedback a yardstick for growth and development. It helps employees to solve their work-related issues and problems.

  • Be an active listener 

A performance review is a two-way discussion and, in as much as the employee is the one receiving their review. It is vital to listen to what they have to say. When managers listen, they show their employees they care about their growth. 

This view is powerful because it determines if the employee sees you as someone on their side or not. It’s easier to take feedback from someone you feel is trying to help you. To ensure you are listening to your team members, summarise what they have said and repeat it to them. 

Try not to ignore them and give a rehearsed answer as this shows them you didn’t listen to them but only heard their voice.

  • Get the employee feedback on their performance

Days before the reviews, give the employees their review form to fill. Let them also score themselves and provide honest feedback on what they have done so far. You will be shocked by how self-aware some of them are. 

This makes the conversation flow naturally, and it’s faster to agree on the steps to take going forward. You will have some problems if you perceive the employees differently from how they perceive themselves. Then the manager and the team member will discuss why they see things from different views for the performance review.

  • Decide on the next steps

A good tip for a review is to have an action plan. It isn’t enough to give feedback on areas to improve, but also practical steps or actions the employee can take. A good employee performance review should leave the employee feeling motivated and directed at what to do next.

  • Follow-up

A performance review should be an ongoing exercise and shouldn’t stop when the employee leaves. A follow-up is also part of the process. Keeping tabs on the employee’s performance will help them stay accountable and bring out the best in them.

Using Software In Performance Review

Gathering data, monitoring goals, and giving feedback to a team of individuals is time-consuming and hectic. A study found it takes a manager an average of 17 hours to prepare for an employee performance review. Monitoring and giving feedback in real-time can help improve productivity and create a culture of regular feedback. 

An employee performance review software makes the process simpler and effective. Most performance review software has inbuilt and integrated 360 degree feedback, goals, feedback, survey, learning, and recognition modules. So, using employee performance review software makes the complete process more holistic. Moreover, all the information regarding an employee is available at the same place and allows everyone to access historical data on employee performance.


In conclusion, improving the performance review of any company will require the organization to take a step back and look at what they are doing wrong. It requires them to understand and know their employees and take steps in the right direction. The tips which we have mentioned above will make the process more effective.

Do you want to know how Engagedly can help you with employee performance review? Request a demo from our experts.

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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.

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4 Ways Your Performance Review Is Destroying Teamwork!

Employee performance review is one of the most popular practices for evaluating employee performance. We have written various articles on our blog that talk about the importance of employee performance reviews and can help you get familiar with the process.

With performance reviews, everything seems to be advantageous to the organization; but there is a less commonly discussed aspect of performance reviews that tells a different story. What if your performance review is destroying your team?

Continue reading “4 Ways Your Performance Review Is Destroying Teamwork!”

6 Must-Haves For An Employee Performance Review Software!

Employee performance evaluation is one of the most important aspects of the workplace. Many organizations have discarded their traditional paper-based performance reviews for a digital solution; employee performance review software and they are right in doing so!

A performance review software can help you keep track of employee performance more accurately. You can clearly communicate your performance expectations with your employees and stay connected with everyone.

Also Read: Employee Engagement Tips To Avoid Burnout

There’s a wide range of performance review software available online for you to choose from. Depending on your organization’s requirements, you can select the software that best suits you. But don’t forget to go through this list of must-haves for performance review software before you choose one!

Customizable Review Templates

Performance review templates make the performance evaluation process more organized and help you follow a specific standard for evaluating each team. There is performance review software that has sample review templates for different departments in an organization. The problem here is that these sample templates are not usually customizable.

Having a customizable review template allows you to change the contents of the review template based on changing work practices and industry trends. So, customizable review templates in performance review software are a must-have!

Ease Of Use

In every article so far, we have mentioned that software should be easy to use and understand; we stand by that maxim in this article too. The performance review process should be easy to understand and implement in an organization.

There are many performance review software out there, which have many features but are very confusing. Software should follow a process to execute a specific action. A performance review software should have a concrete procedure to carry out performance evaluation, without affecting other activities in an organization. It should be simple and understandable and shouldn’t take employees hours just to get familiar with the software. So a simple user interface and a clear procedure are must-haves!

Also Read: You Received Negative Performance Review, What Next?

Continuity Of Performance Evaluation

Performance evaluation is not a ‘one-time in a year’ activity. It is important to continue it at regular intervals throughout the year. Choose a performance review software that supports performance evaluation anytime throughout the year.

This helps you keep track of employee performance efficiently and perceive their personal development.

Performance Review Competencies

When you evaluate the performance of an employee, it is important to list out the performance review competencies.


Competency: Analytical Thinking

Representative Behaviors:

  • Approaches a situation or problem by defining the problem or issue; determining its significance; collecting data; using tools such as flow charts, Pareto charts, fish diagrams, etc. to disclose meaningful patterns in the data; making inferences about the meaning of the data; and using logic and intuition to arrive at conclusions or decisions.
  • Approaches a complex task or problem by breaking it down into its component parts and considering each part in detail.
  • Carefully weighs the priority of things to be done.

In some software, there are competencies that are already listed for you to choose from and some software allow you to create performance review competencies yourself. Having an option to choose/ create competencies gives you an opportunity to add more to a performance review.

Associated With Goals And Objectives

When evaluating the performance of an employee, you need all the details of their performance over a particular period of time to keep the review accurate. Not many software give this option but associating individual/organizational goals and objectives with their performance review can help improve the quality of the review.

Choose a performance review software that allows you to associate employee goals and their progress with the review for reference.

Also Read: Smart On-Boarding Practices That Go A Long Way


Sometimes it is very important to assess yourself accurately. Self-evaluation gives you a chance to improve yourself and contribute to organizational productivity. You cannot do it without having a proper system to measure your performance.

A performance review software must allow you to assess yourself accurately by allowing you to create your individual goals, check in to them, and use these as references to measure your own performance.

If you want to know how Engagedly can help you with performance reviews, request for a demo!

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Don’t Just Review Employee Performance, Improve It!

Every manager wants their employees to be enthusiastic at work and be productive. But are they helping their employees stay motivated and use their talents to the fullest?

Continue reading “Don’t Just Review Employee Performance, Improve It!”