What is Performance Management Software? The 2024 Guide

As your company grows, tracking employee performance manually becomes increasingly unsustainable. 

Tasks get missed, goals get forgotten, and employees receive feedback months later, rather than in the moment when it matters most.

The result? Stagnant performance, misaligned goals, wasted efforts, and low company morale. 

These issues worsen when managers and employees become disconnected due to infrequent, ineffective feedback conversations.

Performance management software can alleviate these issues and automate your processes, but only if it takes a modern approach—one that supports continuous feedback, collaborative goal setting, and real-time performance tracking.

This is called performance enablement and it keeps your whole team engaged and working at their best, even as your company scales.

Read on to learn more about continuous, real-time performance management facilitated by dedicated software, and how you can implement it effectively.

In this article:

• What should a good performance management software do for You?
• The case for continuous performance management software
• How to implement performance management software: Best practices
• Common challenges and how to overcome them 
• Performance management software - FAQs

What should a good performance management software do for you?

Performance management software automates continuous feedback, goal-setting, and reviews,  making it easier for HR teams and managers to evaluate and improve employee performance.

You can say goodbye to outdated spreadsheets and cumbersome manual workflows for good, because your performance management software will help:

• Employees set and track goals
• Facilitate real-time feedback conversations between managers and employees
• Organize data into useful insights

This approach helps align individual and company goals while keeping your employees motivated and your managers informed.

But not all performance management software and systems are created equal. 

In fact, in a recent Gallup poll, 98% of CHROs admitted that their performance management system doesn’t work. 

Another Gallup poll showed the biggest weaknesses in these systems are:

• Providing meaningful, regular feedback for each team member
• Delivering recognition in a way that motivates outstanding performance
• Effectively coaching and mentoring employees 

At Mesh.ai, we believe performance management only works if it’s continuous and two-way. 

In fact, we call this performance enablement—because it’s not just about “managing” performance but proactively enabling high performers.

This looks like:

1. Co-creation of goals and core competencies needed to excel in a particular role between the employee and the manager ‍
2. Development plans led by employees and supported by managers
3. Continuous feedback exactly when and where employees need it
4. Regular 1:1 coaching conversations with each team member held at least once a month
5. 360-degree feedback compiled from peers, line managers, and senior leaders informing performance reviews

And we aren’t the only ones who believe continuous feedback and real-time performance tracking is the future. 

In a 2023 Reddit thread, HR professionals emphasized that performance management should be an ongoing discussion, with regular check-ins and goal adjustments throughout the year. This ensures that performance reviews are comprehensive and that employees aren’t surprised by any feedback they receive.

A good performance management software can help your organization make this transition from periodic performance reviews to ongoing, real-time performance feedback. 

For example, our all-in-one performance enablement software, Mesh.ai, gives your HR and management teams the tools they need for ongoing performance discussions and employee development. These include:

• Continuous feedback systems. Provide real-time employee feedback to address performance issues immediately and promote continuous improvement.
• Collaborative goal-setting tools. Allow managers and employees to set goals together. This ensures individual and organizational objectives are aligned—and that employees are motivated to achieve them.
• Frequent performance check-ins (1:1s). Facilitate regular check-ins between managers and employees to keep everyone on the same page and proactively address concerns.
• Employee development goals: Create personalized development plans, supporting career growth and skill building that align with capabilities the organization values and needs.
• 360 review mechanisms: Collect feedback from peers, managers, and direct reports for a well-rounded view of employee performance, taken periodically throughout the year.

Ready to invest in a performance management solution? We’ve done the research to find and evaluate the 4 best continuous performance management software of 2024.

The case for continuous performance management software

Continuous performance management software can transform your organization’s approach to employee development.

Here are the success stories of three companies that overhauled their annual performance reviews and shifted to continuous performance management solutions.

General Electric’s internal continuous performance management app boosted employee motivation and engagement

General Electric (GE) struggled with a rigid and outdated performance management system that relied heavily on annual reviews and forced rankings, known as the brutal "rank and yank" system. 

This system resulted in a demotivating environment since employees were knowingly judged against their peers (even worse, the bottom 10% were fired each year). It also led to an excessive focus on past performance, rather than looking to improve for the future.

In 2015, GE abandoned formal annual reviews and replaced them with a more flexible continuous feedback system. The company developed an internal app called "PD@GE" (Performance Development at GE) to facilitate frequent check-ins and real-time feedback. Managers and employees use the app to set short-term goals, engage in regular "touchpoints," and request or provide feedback at any time.

Today, GE employees receive timely feedback and can address performance issues promptly. This focus on growth rather than grading has also increased employee engagement and motivation.

Adobe replaced annual reviews with continuous feedback and reduced employee turnover

Adobe’s old annual performance review system was time-consuming and ineffective. Employees felt demotivated and less inspired after reviews, leading to increased turnover rates. 

The system had become a "soul-crushing exercise" that failed to foster genuine development or motivation.

In 2012, Adobe eliminated these annual reviews in favor of more frequent informal check-ins. These conversations between managers and employees were designed to provide targeted coaching, feedback, and development support without the rigid structure of annual reviews. 

Managers were given more discretion over compensation decisions and were trained in giving and receiving feedback through lessons and role-playing scenarios.

This transition yielded significant positive outcomes, including greater employee satisfaction and engagement. This was reflected in the impressive 30% drop in voluntary turnover and 50% drop in involuntary terminations.

Adobe’s updated performance management system also encouraged a stronger sense of ownership and accountability since individual performance could now be aligned with organizational goals more effectively.

Deloitte transformed its performance management to enhance engagement and efficiency

Deloitte’s former performance management system, which involved annual goal setting and year-end ratings, consumed nearly 2 million hours annually. Internal surveys revealed that 58% of executives believed the current system neither drove employee engagement nor performance, and the data collected was often inconsistent and biased.

Deloitte overhauled its performance management system in 2015, shifting its focus to agility and continuous learning. 

The new approach involved an employee self-assessment tool and regular check-ins, where team leaders responded to four future-focused statements about each team member. These statements and responses measured overall performance, teamwork, risk of low performance, and promotion readiness.

Since implementing this new software, Deloitte has reduced the time spent on performance management, allowing leaders to focus more on development and less on administrative tasks. 

The emphasis on continuous improvement has also led to a more positive and collaborative culture, where employees feel more supported and are encouraged to do their best work every day.

How to implement performance management software: Best practices

If you want to emulate the success General Electric, Adobe, and Deloitte have all had with continuous performance management, you’ll need to make sure it aligns with organizational goals and integrates easily into your existing processes. 

Here are some best practices to guide you through a successful implementation:

1. Secure buy-in from leadership and employees

Successful, lasting software adoption requires buy-in from both leadership and employees. 

According to Tomas Chamorro-Premuzic and Ben Waber in their Harvard Business Review article, reliable and fair performance metrics are essential for meritocracy and organizational success. To persuade leaders, highlight the benefits of the software, such as how increased transparency, real-time feedback, and alignment with company goals will lead to quarterly business growth.

For employees, emphasize how the software will make performance reviews more fair and continuous feedback more accessible. Ask for their input on what features they find most useful. This inclusion increases the likelihood they’ll commit to using the software effectively.

2. Teach employees how to use the software

Training your team is a critical step in ensuring successful software adoption. In your training sessions, you’ll want to focus on how to use the software's key features, such as goal setting, continuous feedback, and 360-degree reviews.

And record these sessions into bite-size clips so that they can be reviewed at moments of need.

You should also incorporate practical, hands-on exercises to help your team implement the software in their daily work. Tutorials, help guides, and ongoing support can also help address any questions or challenges that come up along the way.

We recommend having all this information kept in one central location like a company Notion page. 

3. Integrate the software with existing HR systems

Choose a performance management software that integrates smoothly with your existing HR systems. This will minimize disruptions and give you a more complete view of employee data. 

Your software should easily connect with tools like your HRIS (Human Resource Information System) and communication platforms like Slack or MS Teams to improve its functionality and ease of use.

Once everything is set up, use your new performance management software to streamline and automate existing processes. This saves time and reduces the administrative burden on HR, so you can focus more on strategy and less on manual data entry.

Mesh integrates with your Slack or MS Teams so that employees can give continuous feedback, update goals, and join 1:1s in the flow of work. 

We’ve seen firsthand how this increases adoption of the tool and embeds continuous performance management into your culture. 
Check out our full list of integrations here. 

4. Define and track key performance indicators (KPIs)

Establish clear, relevant KPIs to measure the effectiveness of the performance management software. These KPIs should align with your organization’s strategic objectives and track both individual and team performance. 

You can even set and track these goals in your performance management system of choice.

As writer Brian O'Connell noted in an SHRM article, a blend of quantitative targets and qualitative assessments can provide the most comprehensive view of performance.

You’ll then want to continuously monitor these KPIs to assess how well the software is performing and where improvements might be needed. Don’t forget to regularly review the data and use it to make informed decisions about training needs and process adjustments.

5. Maintain the momentum by building a culture of continuous improvement

Now that your software is up and running, keep the momentum going by taking every opportunity to promote continuous feedback. 

Encourage managers to have regular check-ins with direct reports, and for employees to share feedback as well. This practice improves performance and increases employee engagement and satisfaction.

Here’s what it looks like in the Mesh.ai platform:

You should be prepared to adjust your processes based on feedback from managers and employees. 

Common challenges of performance management software and how to overcome them 

Like any major organizational shift, transitioning to continuous performance enablement comes with some challenges. 

Here’s how to overcome the most common obstacles your company may face as you implement a new performance management solution.

1. Resistance to change

Employees and managers may resist adopting new software due to unfamiliarity or fear of change. To lessen this resistance, highlight the positive outcomes the new software and processes can create for employees, managers, and the organization as a whole. 

Engaging employees early in the implementation process and addressing their concerns can also ease the transition.

2. Poor integration with existing systems

Adding any new software to your existing systems can be technically challenging. Choose a software solution (like Mesh) that’s easy to set up and comes with built-in integrations to connect your existing communication platforms like Slack or MS Teams. 

Conduct thorough testing before full deployment to identify and address any integration issues.

3. Data overload and quality

Organizations often struggle with managing large volumes of data (and more importantly, ensuring that data is both accurate and relevant). This is why you need to define clear, relevant KPIs to focus on the most important metrics.

Use your software’s analytics tools to filter and interpret data, so it can provide actionable insights rather than overwhelm your team with information. Regularly review and clean data to maintain accuracy, and involve key stakeholders in defining what data is essential for performance enablement.

And make sure to choose a tool that keeps the data clean and simple while providing insights on what to do with it. Here’s an example from Mesh’s performance analytics dashboard, which shows where an employee falls on the performance grid. 

4. Waning use over time

Initial enthusiasm for any new software or process can wane, leading to inconsistent use over time. Encourage managers and employees to use the software regularly by embedding it into their daily workflows.

Features like Mesh’s automatic nudges can help with this by prompting timely actions, like checking in with an employee or providing feedback to a colleague. Regularly track your team’s usage and provide additional training or support where necessary to maintain engagement.

Performance management software - FAQs

Have more questions about performance management software? We answered them here:

1. What are the benefits of performance management software?

Performance management software increases transparency, ensures continuous feedback, aligns individual goals with company objectives, and provides data-driven insights for better decision-making. Collectively, these lead to increased productivity, higher employee engagement, and more effective employee management.

2. What are the best performance management software in 2024?

We’ve done extensive research on the best performance management software and think these four options are the top options for different HR needs:

• Mesh: Best for enabling manager and employee performance. Mesh is an all-in-one solution that offers features like goal setting, continuous feedback, 1:1 check-ins, and detailed analytics that help improve daily performance. These performance enablement features help everyone across the organization incorporate feedback into their workflows and stay motivated to reach their goals.
• Lattice: Best for culture and engagement surveys. Lattice is great for conducting employee surveys and linking compensation strategies to performance, which increases transparency and motivation.
• Reflektive: Best for values-based recognition. Reflektive focuses on meaningful recognition tied to company values, which can boost motivation and reinforce positive behaviors.
• 15Five: Best for performance coaching. 15Five combines performance management with management training and coaching, with extensive resources for continuous improvement.

3. How do I choose the right performance management software for my company?

Our People Science Leader, Gaurav Chaubey, recommends looking for these four factors in your performance management software:

• Continuous feedback and employee development. Look for tools that integrate continuous feedback into daily workflows and support ongoing employee development.
• Effective and unbiased reviews. Your software should have built-in features to conduct fair, unbiased, 360-degree performance reviews, giving you the data you need for well-rounded evaluations.
• Goal alignment. Opt for platforms that make it easy to set, update, and track employee goals and align them with business objectives.
• Data and insights. Choose software with in-depth, granular analytics tools to provide actionable insights for HR and managers.

By focusing on these factors, you can find a performance management software that drives productivity, engagement, and overall organizational effectiveness.

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