Performance management solutions, when done appropriately, connect the individual’s productivity with organizational objectives. Performance management solutions provide guidance for creating and sustaining an atmosphere of engagement and productivity.

When you have an effective performance management software solution, it makes measuring and managing employee performance easier for administrators and others. Employees are more engaged in the process, and management deals with less friction in the workforce.

What Is A Performance Management Solution?

Performance management solutions are tools for tracking employee performance and instituting coaching methods. The systems help leaders point their talent toward a point of optimal performance. They also keep employees working toward stated organizational goals.

A performance management solution’s features allow leaders to track performance. The information they gain regarding performance helps them motivate and engage employees. Engagement and motivation reduce turnover, which in turn maximizes positive business outcomes.

Performance Management Solutions

Why Do You Need A Performance Management Solution?

Modern businesses face different challenges than businesses of the past. Environments are fast-paced and complex. Output and production are essential metrics in a successful business, and that’s what many managers choose to focus on. However, communication, adaptability, and innovation are keys to success.

An annual performance review approach is no longer an effective performance management method. Organizations find a continuous approach to performance management more helpful than the old methods. A continuous approach prioritizes ongoing conversations and captures real-time data.

Approximately 75% of companies have adopted a more continuous performance management model. It’s become clear that modern workplaces require a performance management solution that helps to drive, adapt, and improve performance. Simply evaluating performance isn’t working anymore.

The top reasons to invest in a performance management solution are to do the following:

  • Accurately measure performance
  • Use effective coaching to close employee’s skill gaps
  • Discuss professional and personal goals with employees
  • Reduce turnover and increase employee morale
  • Display adequate appreciation for employee’s work
  • Establish a basis for trust between management and workers
  • Pave the path to success for each employee
  • Facilitate company-wide alignment of objectives
  • Drive outcomes regardless of industry

What Are the Elements of A Performance Management Solution?

If you’re looking for a performance management solution, you should consider how you currently handle performance management. The ideal solution will make each stage of your performance management process easier.


An essential component in a performance management solution is the planning process. This component will help you and your employees set goals and align individual goals with corporate ones. Employees, teams, and leaders can use the planning component to outline their plans for meeting their goals.


Tracking key metrics is an important component of performance management. Monitoring is critical for appropriate employee motivation. You need the ability to monitor progress so you know if and when employees and teams reach their goals.


As a leader, you need a method to review employee performance and outcomes efficiently. When you’ve found the appropriate performance management solution, it will make it easier to provide feedback and have conversations with employees. You can also use it to help you understand goals and progress from the employee’s perspective. Also, this kind of system facilitates the creation of future performance plans.


Employees thrive on feeling appreciated. Adequate recognition motivates employees who then pursue more optimal performance at work. With this in mind, you should choose a performance management solution that provides tools for rewarding your employees.

Types of Performance Management Solutions

If you are wondering how to choose a performance management solution, you should consider your goals for using it. There are two main divisions of performance management solutions, and each division has multiple types of performance management tools.

Organizational Performance Management Solutions

Organizational performance management solutions are sometimes referred to as corporate performance management. Organizational performance management describe the methods and processes you use to define your performance management strategy.

These systems also help you measure performance and achieve your goals. There are three most often-used forms of organizational performance management.

The Balanced Scorecard

One of the best kinds of organizational performance management solutions is the Balanced Scorecard (BSC). Approximately 88% of BCS users report that this framework has helped them achieve their goals.

BCS systems combine four business perspectives to assist businesses with understanding and achieving their goals. The combination of views in a Balanced Scorecard system includes financial, customer, people, and internal processes.

Management by Objectives

Peter Drucker created Management by Objectives (MBO) systems. Basically, the system works by creating a set of up to six organizational objectives. Those objectives are then used as models for creating individual objectives for employees. MBO has several variations.

A way to recognize this type of system is to look at the strategic plan. The plan may include a set of goals and a set of objectives. Then, you will find activities or actions that the company is using together to improve goals and objectives.

Budget-driven Business Plans

Sometimes the budget is more important than strategy when it comes to the performance management process. You link your work plans to your organizational budget with a budget-driven business plan. Then, the programs and projects that achieve results will receive the spending capital. This style is less common than the others we mentioned, but it is appropriate for some companies.

Personnel Performance Management Solutions

Personnel performance management solutions are also known as human resource performance systems. These systems are designed to guide you in evaluating your employee’s performance. You can also use them to link individual performance goals with your department or company goals. The two different kinds of personnel performance management are Objectives and Key Results (OKR) and HR review-driven systems.

Objectives and Key Results (OKR)

OKR is currently the most popular style of personnel performance management solution. You can set and track goals as well as measure progress toward reaching those goals.

An OKR system is a simple model that will lead to excellent results if you use it in a structured setting. This type of system also incorporates specific responsibilities for employees. Everyone knows their role and goals, and they can set a consistently quick pace to reach those goals.

HR Review-Driven Systems

The HR Review-Driven model of performance management solution isn’t necessarily considered an alternative to the OKR model. Instead, it’s an additional method of measuring employee performance from an HR perspective. OKR models tend to be more strategy-driven. They focus on factors that affect the employee’s achievement of their objectives.

HR Review-driven solutions look at aspects of performance that aren’t related to objectives. For example, these solutions might measure whether the individual has developed a specific skill or if their talents will fit the team’s goals. These kinds of evaluations are kept separate from an OKR system, but they are essential metrics for the HR department to have.

How Do You Know What Performance Management Solutions to Use?

Now that you have an idea of the various performance management solutions available, you may still wonder which type of solution is best for you. The best way to choose is based on your company’s thoughts and practices regarding strategy.

  • A strategy-driven organization with an active strategy office: Look at a Balanced Scorecard method of performance management. The BSC advantage is a comprehensive view of your strategy. This makes strategy management easier across the organization.
  • Strategy is made of goals for individual departments: You might benefit from Management by Objective. MOB systems don’t align goals organization-wide. Instead, they use clear departmental goals.
  • Finance-driven strategy: If this is your company, you’ll want a budget-driven style of performance management. Strategy isn’t a factor with this kind of system. Instead, these systems are budget driven.

Different organizational parts also drive personnel performance management.

Organizations driven by strategy will likely benefit from an OKR solution. A nurturing HR department that wants to develop and identify talent would likely benefit from regular HR performance reviews through a performance management system. This system acts like a personal scorecard to help drive performance.

Remember, organizational and individual performance management work optimally when you combine them. Ideally, employees should be working for more than achieving organizational goals. They should also be striving toward improving their own skill sets. The focus should be on achieving their personal goals while working for the future good of the organization as a whole.

Another thing to remember is that you will struggle to get results if you let HR dictate strategy or finance deal with promotions and raises. Instead, the departments should collaborate and use a combined approach to performance management solutions. As long as roles are clearly defined, departments can successfully work together to implement a performance management solution.

The Takeaway

A performance management solution is your way to set, track, and evaluate individual goals and organizational objectives. The two main types of performance management solutions are organizational performance management and personnel performance management. The two can be used together to provide a more comprehensive way of measuring employee and company performance metrics.