5 Benefits of a Strong Performance Management System

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Employees influence every fibre of company culture. When they’re productive, organizations reach lofty goals. When their morale is high, intrinsic motivation becomes contagious. 

In other words …

Engaged employees create thriving organizations. 

But an engaged team doesn’t appear overnight.

It takes intention and a strong performance management system to nurture a team of happy, high-performing employees. 

Let’s take a closer look at some of the benefits of using a trusted performance management system. 

We’ll also discuss what to look for in performance management software, as well as some complementary tools to support your performance goals.

1. Helps set clear expectations

A well-executed performance management system helps managers set clear performance expectations, keeping everyone on the same page. 

When employees understand what’s expected of them, they’re better equipped to align their efforts with organizational goals and objectives. 

This clarity fosters a sense of purpose and direction, empowering teams to work together toward common targets.

Managers can set Key Performance Indicators (KPIs), sales goals, and other metrics to help employees stay in the know. 

2. Supports employee goals 

Employees also benefit from a performance management system when organizations take their words seriously.

With the option to provide ongoing feedback, team members can discuss their needs and individual goals with their managers.

As a company, these insights are pivotal to helping you attract and retain top talent.

Employees can also use feedback forms to define what meaningful work means to them. 

By leaving room for extensive notes or listing open-ended questions, you can better understand which projects, initiatives, and big-picture goals matter most to each individual employee. 

But employees aren’t the only ones who can provide continuous feedback …

3. Helps facilitate manager feedback and coaching loops 

Performance management systems give managers a streamlined way to monitor and manage individual performance. 

From scheduling annual performance reviews to hosting regular feedback and coaching sessions, leaders can manage every aspect of the performance management cycle.

However, it’s important to note that some systems come with a steep learning curve. Managers may need training if you invest in a robust performance management system, such as SAP SuccessFactors.

Consider leaning on the expertise of SAP consulting experts to train managers on complex or important features. Consultants can also help optimize your internal processes when using the software so they’re tailored to your organizational goals.

4. Manages employee recognition and rewards

Keeping morale high is easier with performance management software, many of which offer features to recognize and reward employees.

For example an LSA or lifestyle spending account. This plan comes with a taxable benefit for our members, aimed at boosting your well-being and cutting down on days missed at work. Just to give you an idea, you can use it for gym memberships, childcare and pet care costs, and even your public transit passes.

Recognizing individual achievements increases employee engagement and promotes overall worker well-being. 

5. Improves communication

Effective performance management tools encourage ongoing communication, leading to better team collaboration and understanding.

Employees can easily request time off, schedule training, and see company updates in real time on one convenient platform. 

They can also check shared team schedules to see who’s available and who’s currently out of the office, among other collaborative features.

What to look for in an effective performance management system 

Performance management software plays a critical role in your tech stack. 

But it’s important to choose one that aligns with your strategic goals, budget, and team size. 

To help you hone in on the best options, make sure your contenders include the features below. 

Performance management software should offer the following components and features: 

Our system checks all of the boxes above, combining HRIS and HRMS for one affordable price. Manage all your Core HR work and employee performance in one place with Collage HR.

Tools to complement your performance management system 

Let’s review some additional tools you can use in tandem with your performance software. 

The following recommendations can help smooth collaboration, secure sensitive data, and support managers with detailed employee insights. While many performance tools offer analytics, going deeper with additional software helps refine your employee development programs to a tee. 

Keep reading to see what we mean. 

Password managers

Streamline access controls to ensure sensitive information remains secure within your organization with a password manager.

A performance management system that integrates with a business password management tool, not only fortifies data integrity but also fosters a seamless workflow, empowering teams to collaborate with confidence. 

Employees can sign into their dashboards with one quick click instead of memorizing or compromising their passwords by writing them down. They can also use the password manager across other tech tools you give them access to, so they never have to worry about forgetting important login credentials in the middle of work.

These additional security measures are key to keeping your HR data and other sensitive employee and company information safe from cybercriminals. 

Business Intelligence tools

Use BI tools to aggregate data from diverse sources and present it using visually intuitive dashboards. Facilitate real-time reporting, support prompt decision-making, and track KPIs through scorecards and trend analysis. 

You can also use drill-down capabilities for detailed insights, benchmark against industry standards, and set up data analysis process automation.

For instance, use smart filters to pinpoint which employees excelled in specific areas. 

Choosing filters, such as “Q4 2023,” “top product sales,” and “skincare,” for example, can show you which account executives sold the most skincare products in the final quarter of 2023. Choose a graph, chart, or other options to visualize your data quickly and easily. 

Ad-hoc reporting and user-friendly interfaces also make these tools accessible to a broader audience, fostering a data-driven culture. 

Looker vs. Tableau is a popular comparison of BI tools that can help you create dashboards, reports, and insights from your data. They also have some essential differences that might affect your decision. 

For example, Looker is part of the Google Cloud Platform and uses its own language, LookML, to create data models — while Tableau is owned by Salesforce and has a drag-and-drop interface for ease of use. 

Choose the option that best fits your budget, data team size, integration needs, and user preferences. 

Data onboarding 

Get a holistic 360 view of each employee with data onboarding, a tool commonly used to inform marketing strategies.

Performance Management Systems are pivotal in monitoring employee progress and fostering organizational success. However, the true potency of these systems unfolds when seamlessly paired with data onboarding — a process that integrates performance data with crucial additional information. 

This dynamic synergy unleashes a host of benefits, transforming talent management into a data-driven journey.

When you apply data onboarding principles in HR, you can essentially create smart “profiles” for your team members. These detail who they are, their skills, and how they’re expected to perform over time. 

While having intentional conversations with your employees reveals their innermost wants and needs, having a profile based on data can help you better understand their skills and talent. 

Let’s take a quick look at some specific benefits of implementing data onboarding:

Deeper insights

Go beyond numbers. 

Data onboarding connects performance data with skills, demographics, and aspirations, revealing hidden patterns and predicting future performance. 

This empowers you to identify high-potential talent and make informed resource allocation decisions. It’s also a great resource for personalizing employee development plans.

Tailored growth

Ditch the one-size-fits-all approach. Data-driven insights pinpoint individual strengths and weaknesses, so you can create personalized development plans that support growth. 

This helps you recommend relevant learning pathways and opportunities based on real performance data.

Smarter and fairer decision-making

Promote fair and equitable talent management practices by basing decisions on clear, comprehensive data — instead of unconscious bias.

This fosters trust, transparency, and a more engaged and productive workforce.

Wrap up 

Having a system in place to manage employee performance benefits everyone. 

Team members feel seen and supported to do meaningful work. And managers can rely on their staff to thrive without hovering over them. 

With ongoing feedback loops and access to real-time communication, managers can set clear expectations, helping employees and the organization reach their goals. 

For good measure, here’s a quick recap of the five benefits of using a strong performance management system:

  1. Helps set clear expectations
  2. Supports employee goals
  3. Helps facilitate manager feedback and coaching loops
  4. Manages employee recognition and rewards
  5. Improves communication

If you’re still on the hunt for an effective performance management system, you’ll love how easy Collage HR is to use. 

Book a demo to learn more.

Here’s to your (and your employees’) success!

Ioana Wilkinson

Ioana specializes in Business, Digital Marketing, and SaaS content for B2B brands. Born in Transylvania and raised in Texas, Ioana has been living the digital nomad life since 2016. From Barcelona to Puerto Vallarta to her new abode in windy Oklahoma City, you’ll never know where Ioana will head off next.

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