Why Performance Management Systems are Critically Important to Business Results

performance management systems

Why Performance Management Systems are Critically Important to Business Results

Today’s performance management should not consist of a single, static activity performed once a year by management or HR. Instead, it must be an ongoing, fluid system that improves business results by engaging employees. And, you should make employee engagement a top priority for your company if it isn’t already, since only 32.5% of the U.S. workforce is currently engaged, according to Gallup.

But why, exactly, is engagement so critical, and what can performance management systems do to improve it? Let’s take a look.

How Employee Engagement Impacts Results

Forbes contributor Kevin Kruse refers to employee engagement as the employee’s commitment to your company and its goals. Your employees’ commitment to your organization and its goals is understandably important to driving performance, but to put into quantitative terms, Kruse also notes that organizations with an engaged workforce have:

  • 6% higher net profit margins, and
  • Five times higher shareholder returns during a five-year period

Those are certainly some motivators for focusing on ways to improve employee engagement.

Where Performance Management Systems Come In

Now that we’ve discussed why you must engage your employees, let’s go over ways in which you can use performance management tactics to do so.

According to Bersin by Deloitte, performance management is a series of ongoing activities that encompasses:

  • Goal setting and revising
  • Managing employees through coaching
  • Development planning
  • Rewarding/recognizing employees


Each of these pillars of performance management contributes to employee engagement, because employees who are engaged feel recognized and properly rewarded, encouraged to perform their best through ongoing coaching, and have a clear path for development within the company. They also know what’s expected of them through clear, specific goals. These factors, when combined, allow employees to develop a deep commitment to their organization and its top-level goals.

Ultimately, effective performance management systems are the strongest tools available for supporting employee engagement, and thus, strong business results.

Ongoing performance management sounds complex, especially when you consider the fact that all four components listed above must be addressed on an ongoing basis. Yet, performance management can be simplified tremendously with the help of performance management software.

HRsoft has an automated software solution that can mesh with your organization’s performance review system to support your policies, boost performance, and save managers and employees time, allowing them to focus on driving better business results. Learn more about PERFORMview software here.


HRsoft is a leading provider of strategic talent management software that improves manager effectiveness and business results. Our full suite of cloud-based HR software solutions includes applicant tracking software, compensation planning software, total rewards software, stay interview software, performance management software, and content management software. To learn more about our Performance Management Software, PERFORMview, click the button below!

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