Performance Appraisal Software – 5 Essential Features

In today’s fast-paced and increasingly digital workplace, performance appraisal software has become a crucial tool for organisations looking to maximise employee performance and improve employee engagement. Traditional paper-based reviews are no longer viable options for companies that aim for efficiency, transparency, and accuracy within their performance review process. Human resources professionals are increasingly turning to performance appraisal software to automate and optimise their performance processes.

However, with numerous performance review software solutions available on the market, it is important to understand the key features that make a performance management system effective. Whether a business is a small start-up or a large multinational corporation, investing in the right performance management software can significantly impact productivity, employee satisfaction, and overall company growth.

Lets explore five essential features of great performance appraisal software that you should consider when selecting the right solution for your performance review process.

1. Customisable Performance Review Templates

Every organisation is unique and needs a performance appraisal process that is appropriate to it’s industry, company culture, and strategic goals. Therefore, a ‘one size fits all’ approach does not work when it comes to employee performance management software. Look for HR Software that offers configurable employee performance reviews that allows businesses to tailor appraisal conversations to meet their specific needs.

Why It Matters:

• Enables HR teams to define role-specific performance metrics, encouraging employee growth.
• Allows managers to adapt review forms based on different levels of seniority and job functions which supports succession planning and keeps employees engaged.
• Provides flexibility in integrating company values and key performance indicators (KPIs) into evaluations.

For example, a marketing team might need employee objectives that focus on creativity, campaign success rates, and audience engagement, while a sales department may need to prioritise sales targets, lead conversions, and customer retention. The best performance appraisal software will allow HR teams to create distinct templates for different departments and employee roles.

Key Functionality:

• Flexible performance appraisal tools such as drag-and-drop template builders.
• Customisable rating scales to support compensation management, if desired
• Flexibility of field options from open ended text boxes to configurable drop downs

2. Goal Setting and Performance Tracking

Defining clear objectives or goals is a critical component of any effective performance management process. It is an essential to help managers and employees set clear, measurable goals and track progress over time. Setting objectives at the beginning of an evaluation period ensures that employees understand their expectations and responsibilities, ultimately driving productivity and engagement. Look for performance management software that encourages continuous feedback throughout the year as this has been shown to be key to encouraging high performance

Why It Matters:

• Helps align employee goals with organisational objectives.
• Is a great way to monitor employee performance and keep it on track.
• Encourages real time feedback throughout the year reducing surprises during the review process

Many modern performance appraisal systems like Actus integrate SMART goal-setting (Specific, Measurable, Achievable, Relevant, and Time-bound) to ensure that objectives are realistic and structured.

Key Functionality:

• Flexible goal setting functionality allowing employee self assessment
• Milestones and comments that encourage timely feedback
• Automated progress tracking and visual dashboards.

Choose a transparent performance management tool that encourages the employee to manage their own performance and allows managers to track performance and provide timely support when necessary.

3. One-to-One Check-Ins for Continuous Conversations

Following on from our last point, traditional performance reviews, typically conducted annually or bi-annually, are no longer sufficient in today’s fast-paced work environment. Employees and managers benefit from continuous feedback loops that allow for real-time discussions on their team’s performance, challenges, and progress. The best performance review software should include structured one-to-one functionality that facilitates ongoing conversations between employees and their managers.

Why It Matters:

• Encourages continuous performance management rather than limiting employee feedback to performance reviews.
• Helps managers address concerns early before they escalate into performance issues.
• Enhances employee engagement by providing a platform for regular recognition and guidance.

Key Functionality:

• Scheduling of one-to-one meetings with automated reminders and agenda-setting tools.
• Real-time feedback tracking, allowing employees and managers to record progress on goals between formal reviews.
• Conversational history logs, so past discussions and commitments are easily referenced in future check-ins.

For example, if an employee is struggling with a specific task, a structured monthly check-in can help address issues in real time, rather than waiting for the annual review to flag concerns. This agile approach to performance management promotes collaboration, faster problem-solving, and a culture of continuous improvement.

4. Development and Training Integration

Performance appraisals should not only evaluate past achievements but also identify future development opportunities. Effective performance review software should include training and development planning tools to promote employee growth and ensure that individuals receive the necessary resources to grow their skills and progress in their careers.

Why It Matters:

• Bridges skill gaps by recommending personalised development initiatives.
• Improves employee retention by demonstrating an investment in career development.
• Aligns individual growth with organisational talent management strategies.

Key Functionality:

• Training recommendations based on performance feedback, ensuring employees receive relevant courses or mentorship opportunities.
• Learning Management System (LMS) integration, allowing employees to access development materials directly from the performance management system.
• Talent management tools that provide visibility of high performing employees and effective workforce management

For example, if a junior manager receives feedback indicating a need for stronger leadership skills, the system can automatically recommend management training courses or mentorship sessions with senior leaders. This proactive approach to development has a positive impact on employee morale and ensures that people are continuously learning and adapting to new challenges.

5. Automated Performance Reports and Analytics

One of the most time-consuming aspects of performance reviews is chasing people for completion as well as consolidating data and generating reports. Traditionally, HR departments and managers would manually capture this performance data, which often led to inefficiencies, errors, and a lack of real-time insights. Effective performance management software should offer in depth analytics, automated report generation and make it easy to encourage users to complete their employee performance reviews or mandatory training.

Why It Matters:

• Saves time and reduces human errors in data analysis.
• Helps HR professionals make data-driven decisions regarding promotions, training, and succession planning.
• Identifies performance trends across teams, departments, and the organisation as a whole.

Key Functionality:

• Interactive performance data and easy to use reports
• Customisable reports with graphical data representations, including heatmaps, trend lines, and comparative analysis.
• Integrated email functionality that makes it easy to chase respondents from within the system

For instance, if an HR manager wants to analyse whether a sales team is meeting its quarterly performance targets, they can quickly generate a performance heatmap showing employees who are excelling and those who may need additional support or training.

Bonus Functionality

The above 5 features are essential in any effective performance management software and many of the cloud based hr software platforms will offer these. However, there are additional ‘Bonus’ features that are worth looking out for and are predominantly found in purpose built performance management software like Actus.

User friendly Interface

Today’s performance management tools need to be intuitive and easy to use. They need to support employee self service and make it easy to conduct performance appraisal, define employee goals and track progress or seek immediate feedback, encouraging continuous performance management

More than employee performance reviews

It is tremendously helpful if your performance review software can provide additional functionality to just performance reviews. For example, can you use it to manage probationary reviews or performance improvement plans? These aligned processes are equally time consuming and are very much linked to managing performance so it is helpful if you can manage them using your performance review software.

360 degree feedback

This is a slightly contentious point as some performance management software incorporates 360 degree feedback into the appraisal process. At Actus, we don’t actually recommend this for a number of reasons that we outline in our white paper “The Pros and Cons of 360 Appraisal”. However, that isn’t to say that we don’t think that 360 degree feedback is valuable, in fact we think it is incredibly powerful. Our view is that 360 degree feedback is best used in support of people’s development as opposed to performance evaluation.

It is a great tool to gain feedback on behaviours or the extent to which someone is demonstrating company values. However, because 360 degree feedback is so powerful, we feel it should be managed carefully, to ensure objectivity of peer feedback and is best supported by a human resources coach or facilitator as opposed to delivered by the line manager. Actus offers a 360 degree feedback module that can stand alone or be incorporated into the performance management process.

Hopefully this article has given you a good idea of which performance management software features are essential and which differentiate the basic platforms from the more sophisticated purpose built systems like Actus. If you would like to take a look at how Actus can help you to streamline and modernise your performance review process, please do get in touch here:

Request A Free Software Demo

More useful resources

Subscribe to the Actus YouTube channel for educational HR videos, including  a 40 second explainer video about ‘How Actus Performance Management Software reporting works?’.

Read more blogs by Lucinda Carney see here.

Listen to ‘The HR Uprising Podcast’ hosted by Lucinda Carney, which has a variety of informative topics in business and HR. Visit the HR Uprising website or download wherever you get your podcasts from (YouTube, Spotify, Apple etc). Listen to episode 206 ‘Rethinking Appraisals’

HR Uprising Podcast episodes on Performance Management

For monthly updates on all things Actus Software and the HR Uprising Podcast… Follow our monthly newsletter ‘Actus Uprising’ on LinkedIn.