Dec 22, 2022
6 min read

Performance Management Tools That Every HR Manager Should Know About

In this article:

Performance management tools are a must for business owners and HR managers who want to keep their teams on track.

A report shows that over 80% of HR leaders are making changes to performance management but are unsure of the impact. That's mostly because they don't rely on performance management tools to track, analyze, and enhance employee engagement and efficiency.

The only surefire way to boost employee performance and fulfill organizational goals is to use the right performance management software. There are quite a few variations in the performance management process, so we will discuss the basic solutions you should be aware of.

Let's take a look!

What is performance management?

Performance management is a process that helps employees grow and develop by providing ongoing and regular feedback. The strategy focuses on setting goals and expectations, thus creating preconditions for realistic personal development plans.

It's a critical business feature—one in five workers is likely to switch to a new employer, mainly because they are not satisfied with the current one. Performance management involves employees, their managers, and other organizational stakeholders.

The ultimate goal is to assess how well employees are achieving their objectives and working towards organizational goals. This type of management seeks to create a positive environment where HR teams can measure progress and provide employee feedback. It concentrates on key work-related metrics, such as:

  • Job competencies
  • Behavior
  • Attendance
  • Communication skills

Performance management encourages open dialogue between the employee and manager. It facilitates the development of professional skills while creating a productive work dynamic that benefits both parties.

Ultimately, performance management ensures a predictable level of quality performance throughout an organization. But all that is not possible without HR performance management tools. We will go through the most important employee performance management tools in the next section.

What do you look for in a performance management tool?

Some aspects to keep in mind when choosing a performance management program are:

  • Ease of use and good UX
  • Minimal learning curve
  • Good balance between value and cost
  • Smooth integrations with other tools
  • Positive customer opinions
  • Trustworthy customer support

What are the benefits of a performance management tool?

Performance management tools typically help you save time and money by automating processes and making them run smoother. They also reduce the risk of human error and make information easy to access and find.

Performance management is valuable primarily because it helps you reach your goals – faster and more efficiently. However, it can also make work more fulfilling for your staff. This, in turn, improves employee satisfaction, productivity, and retention. Moreover, having happier team members frequently translates to better customer service. 

Performance management tools to have in mind

Performance management techniques and tools come in all shapes and sizes. In such circumstances, you need to know the goals of your performance management process in order to pick the right tool. Here are four types of tools for performance management that align with typical business requirements.

1. Employee feedback tools

Collecting feedback is a critical part of employee performance management. Employee feedback tools provide HR teams with the opportunity to capture opinions, feelings, and suggestions from employees in order to facilitate future decision-making.

These platforms encourage two-way communication between employers and employees, making everyone feel valued and acknowledged. This type of performance management tool also allows for regular check-ins and reviews, helping HR teams to ensure employees are staying on track and feeling engaged. Popular types of performance feedback include:

Companies that leverage a feedback-based employee performance management system foster an open culture of teamwork and collaboration. That way, they promote success both for the employer and the workplace as a whole.

Performance review template

2. Performance goal-setting tools

Goal-setting tools are another type of performance management software. You can use this platform to set objectives and measurable results that each employee must meet to remain successful. Simply put, it's a way to improve employee engagement in the long run.

Performance management software that focuses on goal-setting comes with many features:

  • Reporting dashboards
  • Data analysis
  • Task management
  • Real-time scheduling

However, HR managers have to be careful here–-it is important to set ambitious but realistic goals that employees can actually achieve. Objectives that are impossible to meet will only discourage and demotivate the workforce. In this case, even the best performance management system can't help you improve employee performance.

3. HR management tools

HR performance management tools can be a great way to manage employee data, track progress, and monitor compliance with HR policies. This kind of performance management software does a lot of things:

  • Eliminates paperwork
  • Automates processes
  • Conduct skill gap analysis
  • Facilitates collaboration between HR teams and other stakeholders
  • Enhances personal information security and management

With HR performance management tools, your organization can securely store worker-related details. Besides that, you will make the entire database easily accessible whenever needed. It also helps you to monitor individual performance metrics effectively and identify trends in the workplace.

Besides that, HR performance management tools allow for effortless data entry. That way, you can quickly register new hires or update existing employee records. The entire system is easy to use and manage, saving HR teams a lot of time and energy.

4. Employee recognition tools

Recognizing employee accomplishments is a nice way to motivate them and boost their engagement. But if you fail to do that, the consequences will be harsh. According to the report, nearly 70% of workers said recognition and rewards would motivate them to stay with their company.

In such circumstances, employee recognition platforms are among the most effective performance management tools. That's because they help you recognize hard work and dedication. These tools enable HR teams to:

  • Reward top-performing employees with points and badges
  • Give public recognition for professional achievements
  • Recognize and reward employees for going above and beyond their standard duties
  • Analyze employees to track performance levels across the team

Having a good employee recognition system in place adds value to organizational culture, increases engagement levels, and boosts morale. However, it is essential to keep your recognition efforts fair and continuous. It is the only way to foster a culture of appreciation in a consistent manner.

Overall, performance management tools enable HR teams to efficiently keep track of employee engagement. That way, you can ensure that the entire organization is running at peak efficiency and effectiveness. Besides that, these tools also provide an excellent opportunity for employees to develop their skill sets and reach their highest potential.

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5. Mentor and coach tools

You can’t expect an individual to achieve extraordinary results by themselves. That’s where mentoring and coaching tools come in. To understand this better, let’s take a look at what the two terms entail:

  • Mentoring involves a long-term relationship between an experienced mentor and a less experienced mentee. The mentor shares their experiences, wisdom, and tips to guide their “student” on their professional journey.
  • Coaching is rather short-term and goal-oriented. The coach motivates and encourages the coachee in their improvement process and sometimes helps to develop specific skills.

Some tools you can use in the mentoring and coaching process include:

  • GROW model
  • SMART goals
  • Feedback model
  • Active listening
  • Mentoring agreement
  • SWOT analysis

6. Personal development plans

A personal development plan helps to identify improvement areas and create clear career goals. It should reflect strengths, weaknesses, and aspirations. A PDP should set a timeframe for the action plan to make it achievable and measurable. The “how” is also crucial – determine what workshops, training, or upskilling is necessary.

This detailed personal development plan takes a lot of work, especially if you want to conduct it for the whole company. That’s why we recommend dedicated tools and templates to streamline this process. When done correctly, it encourages and motivates individuals to continuously grow and indirectly propel the organization forward, too.

7. Pulse survey tools

Pulse survey tools are somewhat similar to employee feedback tools in that you can use them to gather workers’ opinions and satisfaction levels – i.e., read the “pulse” of your team. They provide a quick and easy way for HR experts to judge overall job satisfaction, engagement, and sentiment.

Such surveys must be frequent to illustrate trends and attitudes clearly. They’re usually concise, which makes them perfect for a continuous feedback loop, helping companies make informed management decisions based on employee feedback.

8. Performance appraisal tools

Performance appraisal software is yet another way to implement continuous feedback, goal setting, and performance tracking in your company. It automates the employee evaluation process, enabling the company to give unbiased and consistent reviews.

To make the most out of performance appraisal, it needs to be a regular, fair, constructive, and two-way process. It’s all about creating an environment where your employees can speak freely without fear of judgment.

There are plenty of performance appraisal tools on the market. The key features to look for in such software include:

  • Continuous performance reviews
  • Flexible, customizable forms
  • 360-degree feedback options
  • Rewards to boost motivation

How to get started with performance management tools

To get started with employee performance management tools, you'll need to identify the specific goals of your organization:

  • What metrics do you want to measure? 
  • How will these metrics be tracked? 
  • What are the best performance management tools for your industry?
  • Are you ready to deploy the new technology right away?

These questions can help you pick the best performance management software for your needs. Once you've got that covered, it is time to start tracking employee performance. 

An effective performance management system will allow you to capture and store employee data, set objectives, track progress, and measure results. You can also use analytical features of employee performance management tools to:

  • Gather insights on the team or individual employee performance
  • Identify trends in the workplace
  • Uncover areas of improvement
  • Compile convincing performance reviews

The right tool will help you understand what drives or hinders employee engagement. That way, you can take proactive steps to address any concerns and ensure that all workers are performing up to their highest potential.

You should also use your performance management software to set the rating system for the entire unit. It is essential to set up standards for performance reviews. After that, you can use them to measure employee performance and progress over time.

Finally, HR teams should ensure that they use feedback collected from the performance management system to make improvements. One way to do it is through recognition, rewards, and promotions. It is also a great way to reward excellence, which motivates employees to work harder and perform better. 

On the other hand, use your performance management tool to address issues and make changes in organizational policies. It’s a critical step toward creating a better working environment. 


The right performance management tools can make the difference between an average and a great workplace. In other words, it is essential to invest in performance management software that will help you get the most out of your team.

Our platform, Effy, proved to be a convenient solution for companies eager to track employee progress and boost organizational productivity. With this performance management tool, you can effectively manage data and automate workflows. Besides that, Effy will help you with the following:

  • Make a sustainable performance management strategy
  • Collect feedback from team members
  • Give performance appraisals
  • Create a positive and agile company culture

If this sounds interesting, make sure to sign up for free now. 

Our performance review software is just a click away, so let Effy deliver actionable insights on how to improve employee experience and efficiency.

FAQ: Performance Management Tools Every HR Pro Should Know 

What are the 4 tools of performance?

4 main performance management tools include: 

What are performance management instruments?

Performance management instruments are powerful tools used by organizations to maximize their performance and productivity. They enable organizations to track and measure their performance, assess their progress, and analyze the impact of their strategies. When used correctly, performance management instruments can help organizations foster a culture of success and propel growth.

What are the tools of performance measurement?

While there are many performance measurement tools available, some of the most common tools include employee engagement, employee recognition, employee feedback, as well as HR management tools. 

What are the key components of a performance management tool?

Five key components build up an effective performance management system. These factors are planning, monitoring, developing, rating and rewarding. When it comes to using an all-in-one tool, you should always make sure you get a software application that includes features serving all those purposes.

How do I choose a performance management tool?

If you want to choose the best performance management tool, you should start looking for what works best for you and your company. Each business has its own strengths and weaknesses. Before anything else, you might want to identify what is not to your liking in your company and find a way to remediate the problem. Usually, resolving such issues requires using an effective performance management tool, chosen according to your needs.

What’s Effy software?
Performance review
Easily launch review cycles in your way, track progress.
360 degree feedback
Collect feedback from peers and managers. Identify strength and improvements areas.
Choose templates that are right for you. Start review process in 15 min.
Collaborate effectively with team meeting agenda, action items and meeting notes
Personal development plan
Develop your people by providing them an explicit plan to the next level. Track goals progression.
AI generated insights & Analytics
AI will generate an extended summary for every employee, including top strength, areas to improve and action plan.
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