Key Takeaways
  • Performance management software comes in two main categories: objectives and key results (OKR) systems and review-based systems.
  • Essential features of performance management software include goal setting, real-time 360-degree feedback, reports and analytics, and performance review automation.
  • Metrics to track with performance management software include overall company performance, revenue per employee, individual employee performance, goal performance, and employee potential.
  • Performance management software empowers HR strategies by providing data for decisions, better monitoring, engagement, and goal alignment.

Digitization in HR can completely transform how an organization operates, from hiring and retaining talent to improving performance. 

According to Gartner, 88% of HR executives want to invest in three or more HR technologies going forward, which indicates a need to move from traditional to tech-driven HR strategies. 

In this guide, we’ll discuss performance management software as a solution to empower HR processes. 

Traditional performance management vs. tech-driven performance management

When you think of performance management, what usually comes to mind is an annual review filled with meetings, emails, and paperwork. 

This is the traditional approach to employee performance that has been used for decades. These manual processes are often time-consuming and rely on past information rather than real-time data. 

They also heighten employee stress and anxiety, whether they’re top performers or not. 

With tech-driven performance management, however, an organization relies on software to monitor performance throughout the year instead of once or twice a year. 

Continuous performance monitoring enables managers and employees to communicate more openly about their targets and challenges and generates real-time data to guide decisions and strategies. 

It shifts your focus from a stressful annual or bi-annual review to streamlined performance tracking with tangible KPIs and actionable insights. 

Key features of performance management software


Performance management systems come in two main categories: objectives and key results (OKR) systems and review-based systems. 

OKR performance management software helps break down employee goals into concrete objectives and KPIs. It gives quantifiable performance results on a scale, a percentage, or dollar amounts in revenue growth. 

Review-based systems work alongside OKRs to evaluate employees on strategic factors that impact their performance. These systems measure competencies, skill sets, work culture, communication styles, and other metrics from an HR standpoint. 

A review-based performance software can help with annual and biannual reviews when paired with OKR results for each employee. 

With that in mind, ensure your performance management software has the following essential features: 

  • Goal setting: Choose a platform that allows you to set SMART goals for individuals and teams across your organization. 
  • Real-time 360-degree feedback: Your system should allow open exchanges between management and employees and among peers to encourage creative problem-solving and reward achievements for each milestone. 
  • Reports and analytics: Use your software to generate employee performance reports with one click to identify performance trends, skill gaps, and training opportunities. 
  • Performance reviews: Your performance management software should also automate data collection and analysis for employee data, making the review process more effective. 

Top 5 metrics to track with performance management software

With a performance management system, you can track productivity, work quality, efficiency, and learning, using techniques like self-assessments, peer reviews, etc. Consider tracking the following performance metrics for your company: 

  • Overall company performance: This is a high-level look at employee performance compared to their engagement and satisfaction levels. 
  • Revenue per employee: This is another high-level metric that divides the total revenue by the number of employees to see how much each one contributes on average. 
  • Individual employee performance: Evaluate each employee to determine their share of revenue, effectiveness, initiative, etc.  
  • Goal performance: Assess which goals employees set, how they contribute to the company’s goals, and their progress and challenges in achieving them. 
  • Employee potential: Identify which team members can rise to leadership positions based on their current performance and offer training opportunities for them. 

Empowering HR strategies through performance management software

Performance management software presents numerous benefits for your organization, saving you precious time and resources. Here’s how this technology empowers your HR strategies: 

Reliable data for decision-making

Performance management software generates valuable performance data for HR professionals to use in decision-making. This data helps identify performance trends, identify training initiatives, and plan incentives to improve sales productivity and motivation. 

Better performance monitoring

A performance management system monitors employee progress continuously, meaning you can quickly spot poor performers, target support strategies like coaching, and bridge skill gaps with training.

Employee monitoring is a valuable tool for enhancing productivity and fostering professional growth within an organization.

It also helps HR managers to identify top talent and plan for promotions, rewards, and succession. You can efficiently manage HR and payroll tasks with our comprehensive HR payroll software.

Better employee engagement

A performance management system enables HR managers to offer timely advice and clarifications about goals and targets and clear performance metrics to manage employee expectations.

With transparent feedback and practical goal-setting strategies, employees feel more engaged and accountable for their performance, increasing job satisfaction and motivation. You can use various creative techniques to boost engagement in remote teams.

Aligning individual and corporate goals

Performance management software helps everyone work toward the same objectives. Organizations can outline and clarify their goals, and then use technology to assign the right KPIs to the right employees to deliver results.

This saves time, allocates your resources better, and reduces administrative burdens through automation. 


As more organizations shift from traditional to tech-driven performance management, there is a greater focus on ongoing monitoring, open communication channels, and collaborative work culture.

Leveraging a performance management system enables a business to become more agile by adapting its workforce to meet internal and external demands. Implement this technology to streamline HR practices and transform employee performance.