What is performance appraisal software?

Performance appraisal software helps businesses streamline the process of collecting and reviewing employee performance, setting objectives, and creating individual development plans. It helps managers set annual goals and objectives for their team members, as well as identify top performers and underperformers. 

Some performance appraisal software includes 360-degree feedback tools, which allow employees to complete self evaluations and be evaluated by their manager, peers, and direct reports. 

The benefits of performance appraisal software

• Improve performance tracking:  Unlike a traditional performance review system where managers capture feedback only once or twice a year (which can lead to recency bias), performance appraisal software allows users to gather employee and manager feedback throughout the year. This gives a complete and honest picture of the employee's performance throughout the year and helps managers evaluate them more accurately. 
• Boost employee motivation:  Performance appraisal system connects managers and employees on a common platform where they can discuss and set individual goals, objectives, and professional development plans. Employees can view their performance and map their productivity against the assigned goals. 

Typical features of performance appraisal system

• 360-degree feedback:  Enables managers, peers, and direct reports to leave anonymous feedback on employees so that employees can see how others perceive their performance work and quality. 
• Ongoing performance tracking:  Gather and analyze employee and manager feedback in real-time and map employee productivity against set goals and objectives. 
• Objective/goal setting:  Allow managers to configure and set goals and objectives for every individual on their team.
• Appraisal history tracking:  Track term appraisals, increments, and promotional benefits throughout a job tenure. 
• Self-appraisals:  Give individuals the tools to evaluate their own performance.

Considerations when purchasing performance appraisal system

• Integration with other HR systems:  If your business is not using a full-fledged human resource management (HRM) system, we recommend choosing performance appraisal software that integrates with other HR applications such as benefits and administration, payroll, attendance, and learning management systems. Integrations will allow the HR department to transfer data between systems. 
• Data security:  Performance appraisal system deals with highly confidential employee data including personal details, salaries, and benefits. If the software is hosted on the cloud, the vendor should comply with data security standards to safeguard any employee data that is saved on their servers. Businesses should validate vendors' compliance certificates and data security standards before shortlisting software. 

Relevant performance appraisal software trends

• AI will improve the performance review process:  Businesses are shifting from traditional employee performance reviews, which are done once or twice a year, to a continuous ongoing process. Despite this, the integrity of the employee feedback process can still be compromised by human error and manager bias. Performance appraisal solutions backed by artificial intelligence (AI) can help businesses eliminate biases to a great extent. An AI-driven system will capture employee performance details on a real-time basis throughout the year. AI can also recommend training and development programs for employees based on their performance history. Software vendors such as Butterfly.ai and Know Your Day have already added artificial intelligence to their performance tracking software.   
• Cloud adoption continues to rise:  More and more performance appraisal software vendors are taking their products to the cloud. In fact, according to Gartner , cloud adoption increased across all geographies by 26%, which accounted for 51% of all human capital management (HCM) revenue in 2017. This trend primarily benefits small and midsize businesses as they can access HR applications at a low subscription cost and save themselves from having to make heavy infrastructure investments for on-premise tools.