Performance management software is the analytics layer on top of the organization that allows HR and the executive team to have a strategic understanding of the people side of the business, along with metrics and information to help individuals understand how they fit in and how they can improve their employee performance.  This software can tell you what the organization is working on (international expansion, increased margins, etc), what a team is working on (partnerships in Asia, lower costs, etc), all the way down to what an individual person is working on (meeting with head of BD at Samsung, implementing inventory management software, etc), and even what methodology they're using.

This type of architecture allows the board and c-suite to understand what is happening in the organization ensure everyone is paddling in the right direction.  What’s also interesting is that this information allows individual employees to figure out how their efforts are contributing to the success of the business overall.  This can be highly motivating.  It also informs them of what projects will be most impactful to where the business needs to go.

You can imagine how this software is useful for smaller organizations where every person’s effort matters, and there is a lack of formal process.  You can also imagine how this same type of software is interesting to much larger Fortune 1000 companies where the complexity of how each team is intertwined is much higher.

Use Cases for Performance Management Software

Performance management software is useful to an organization in several main ways:

• 1:1’s: Many companies have some form of 1:1 cadence or weekly check-in where managers will sit down with their direct reports to ensure projects are on track, there is no bottled up frustration, feedback is being given/taken in a timely manner, and that career development initiatives are being hit.  A performance management system allows managers and employees to collaboratively create agendas for 1:1s, review notes from past meetings, use pre-built conversation starters, tie 1:1s back to goals/feedback and generally get value out of these interactions.
• OKRs: OKRs stands for objectives and key results, which can be thought of as the goals for an organization/team/individual along with the outcomes of these goals.  Examples may be something related to a key performance indicator (KPI) like decreasing customer churn.  Or, they could be something a lot more “soft” such as focus on team bonding.  Most Performance management software and OKR tools allow the organization/team/individual to list their OKRs, and then record the progress that is being made towards them.  Many times the progress of an individual or team rolls up into a larger part of the organization.  For example, if 5 different sales teams make progress towards hitting quota, then the sales function is also making progress as a whole.
• Performance Reviews: The annual performance review is always so awkward.  As people, we have trouble remembering what happened last week, let alone 6 months ago.  These performance appraisal conversions become check-the-box and lack any substance.  A performance management system allows both managers and employees to leave notes over the course of time about what should be in a review.  They can also tap into notes from their 1:1s (it's always good to have more frequent check-ins), and how OKRs are progressing.  Implementing a performance management system means that you can now have meaningful performance conversations on a more regular basis that results in employees ramping faster and aligning more closely to company goals.
• Employee Performance Management: Importantly, the next generation of performance management systems is so much more than just an annual review. From onboarding to 360-degree feedback and regular check-ins with managers, these systems collect information through each functionality, and then display it in the broader context of the organization. Real-time feedback mixed with advice on what to learn and what to work on can have huge impacts on your Human Resources team's talent management practice.
• People Analytics: One of the best parts of a performance management system is that your team can now deeply understand what’s going on in any part of your organization.  Most of these solutions come with analytics that will give you insights into which teams are using the platform itself, and perhaps which need more education on the value of 1:1s, OKRs, etc.  But, much more interestingly, you’ll be able to zoom in and out on your organization to know what everyone is working on, how they align, and how all of this aligns with your overall business strategy.