A Performance Management System Buyer's Guide


What Is Performance Management?

For most company leaders, the idea of performance management is automatically linked to the process of conducting employee performance reviews. However, the two are separate practices that can work together to improve employee performance as well as satisfaction. A performance review is designed to measure performance during a given period of time, while performance management is the continuous process of improving performance through a variety of methods.

A performance management system works to improve employee performance through individual and team goals and improve company performance with the alignment of those goals with corporate objectives. Your performance management system will likely include tools like software and procedures designed to work with your unique organizational structure. With continuous performance management, company leaders can improve the frequency and value of feedback and ensure a fair performance appraisal process. 

Your performance management program should begin with a clear plan that outlines objectives for success. With methods in place to track progress and identify obstacles, your system can continually improve for success. Furthermore, the process has a cyclic effect that builds continued engagement and improved performance review processes.


The Performance Management Cycle

Performance management isn't designed to be a “set it and forget it” solution. It's a continuous cycle used to encourage ongoing professional growth. A carefully planned performance management cycle not only generates improved performance, but also increases job satisfaction and employee engagement. While the performance management cycle has distinct stages, it's not necessarily a step-by-step process. Some stages are continuous actions that offer results for continued planning and data collection. The performance cycle can include added stages but is typically composed of some variation of these four stages.




As the foundation of the process, the planning stage lays the groundwork for future success. Planning a successful management system requires the creation of a business strategy along with individual and/or team goals for employees. By utilizing SMART goals, employee and team goals will be more likely to automatically align with those of the company. It's common for performance management cycles to span short periods for more frequent feedback. Your plan should reflect objectives for a specific period of time.



Once planning is in place and SMART objectives are set, it's time for all involved members to take action. As employees and teams work toward structured goals, consistent monitoring will offer insight into the actions that are leading to the most progress and those that aren't working. Regular communication through formal and informal conversations keeps both parties up to date on progress. These conversations can also provide opportunities for timely feedback. Taking notes to document progress leads to more accurate and fair yearly performance reviews.





If SMART goals were set during the planning phase, and discussions were an ongoing part of the monitoring phase, the yearly performance review should be productive and fruitful. Management and employees will have the opportunity to review if goals are accomplished. During the review meeting, employees and managers can consider ways to improve processes and attain goals.



Rewarding good performance is the final stage of the performance management cycle. Employee and team recognition is a vital way to keep your team motivated and engaged throughout the year. Rewards should reflect your employees' interests and provide incentives for improved behavior. These may include bonuses, increased compensation, vacation or flex time, and promotions.



How a Performance Management System Improves the Review Process 

An effective performance management cycle naturally leads to a more productive review process. When SMART goals are created through a collaborative process, they're more likely to be attainable and aligned with company goals. Furthermore, when employees  have a hand in creating goals, they're more likely to be engaged and motivated to achieve high performance. Two-thirds of millennial and Gen Z employees say autonomy is important in the workplace. When these employees can collaborate with managers about who they work with and what  tools they use, productivity and creativity can increase, leading to stronger  performance.

The increased communication built by the performance management cycle leads to a transparent review process that acts as a coaching session for employees. An effective management system improves the review process in these ways:

  • Personal and team employee development plans are aligned with company goals.
  • Continuous performance management offers feedback for ongoing collaboration and improved behavior.
  • Notes taken during the monitoring process ensure a fair performance appraisal process.
  • Improved employee and team tracking is improved through frequent check-ins and measurable data.
  • Makes it easier to identify weak spots and create training requirements.
  • By using measurable data, you can provide accurate ratings and scores. 
  • Collaborative performance reviews act as a coaching session.
  • The use of data creates a fairer rewards system, important in building employee engagement.
  • Transparent communication leads to a culture of trust.

Choosing the Right Performance Management System

An effective performance management system evaluates both qualitative and quantitative aspects of performance. By only measuring quantity, a wealth of low-level work gets done. This results in a work environment with less opportunity for learning and advancement. Conversely, a performance management system that neglects quantity leads to low production.

Performance management software can help you track, analyze, and evaluate the performance of a single employee, team, or entire company. Leaders rarely have the ability to invest as much time as they'd like working with their teams, which leads to limited visibility into team performance. Employees can recognize this limited visibility. In fact, 50% of millennials and Gen Z employees feel that management does not recognize strong job performance. This is why the right performance management system is vital. 

Performance management software provides easy-to-use tools that diagnose, measure, and improve collaborative behavior for improved performance. By using measurable data, employers can easily track employee and team performance for more accurate reviews and incentive programs. 

When choosing an effective performance management system, it's important to recognize how the software will interact with your current environment and offer avenues of improvement. Take these steps to ensure you're choosing a system that will help you reach your company performance goals.

  • Identify the strengths and weaknesses of your existing process.
  • Create company goals and determine how the system will help you break down those goals for teams and individual employees.
  • Find software that integrates with your current systems and procedures.
  • Choose software that utilizes measurable data to track employee and team performance.
  • Seek user-friendly software that will be easy to adopt and use frequently.

The Right Tools Make the Difference

As millennials and Gen Z workers become the most populous group of employees in the workforce, it's important to consider how the ways they work together can improve company performance and enhance productivity. Utilizing tools and procedures that give these employees opportunities to collaborate with managers about their careers and build autonomous teams that naturally fit together can improve engagement, build loyalty, and improve performance. By integrating software that uses measurable data into your performance management system, you can create a more accurate and fairer rewards system to further motivate employees.

 An effective performance management system is one that works in a continuous flow to improve company performance. Using dependable tools for this process will allow you to build a long-term system that is always improving as your company grows and changes.


RallyBright provides organizations with easy-to-use tools that rely on proven behavioral science to track and improve employee and team performance over time. By integrating these tools into your performance management system, you can create more accurate performance reviews and incentive programs. Request a demo to learn more about how RallyBright can help you create a customized performance management system.

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