10 Performance Management Software Challenges and How to Avoid Them

Selecting a performance management system is a high-stakes decision. The right performance management tool empowers employees to drive the business forward and builds trust in performance management processes. 

“When I have that trust, my performance will improve,” says Hari Date, senior director of performance management architecture at Betterworks. “And as I start to improve, my team improves, our organization improves, our productivity improves. It’s just a plus every step of the way. But it all starts with the foundation of trust in the platform.”

The payoff is real: According to our 2024 State of Performance Enablement report, effective performance management software improves employee engagement (by 11%), belonging (by 62%), and employee development (by 96%). 

In contrast, choosing the wrong software undermines that trust. We found that employees in organizations that rely only on their HCM for performance management are less than half as likely to see clear pathways for advancement than their peers in organizations with performance management software. And with 86% of employees ranking career development opportunities as important, that can be a real game-changer for your business.

But selecting the right performance management software to drive strategic talent outcomes can be overwhelming. Learn about the most common performance management software challenges and discover how to choose the right tool for your organization.

Inflexible design

Performance management systems work best when they fit into your company’s daily operations and culture. 

Look for software with a flexible design and interface that you can customize to fit your company’s specific processes and culture. “Configurability, for a platform to be able to scale and meet the needs of the organization, is really critical,” Hari says. 

Look for tools that let you tweak how they work, look, and what they can do to meet your company’s needs. By configuring these tools, they become more engaging and effective, helping your company perform better and succeed.

Hard to track goals

Without a simple way to track their goals, employees can feel lost and unmotivated.

Using software that lets you configure goals in a structured way, such as setting objectives and key results (OKRs) or SMART goals, makes it easy to communicate priorities and track progress. This keeps everyone working toward the same big-picture objectives.

Lack of employee recognition features

Some performance management platforms lack features for timely and meaningful acknowledgment of employee achievements, which can decrease morale and engagement. In its “Unleashing the Human Element at Work: Transforming Workplaces Through Recognition,” Gallup found that when recognition “hits the mark,” employees are:

• 73% less likely to always or often feel burned out
• 56% less likely to be looking or watching for job opportunities
• 5X as likely to feel connected to their culture
• 4X as likely to be engaged
• 5X as likely to see a path to growth in their organization

Look for software that supports real-time feedback and recognition. This allows managers and peers to quickly acknowledge and reward employees’ contributions, creating a positive work environment and encouraging ongoing improvement.

Lack of integrations

Performance management software that doesn’t work well with other tools leads to inefficiencies, broken workflows, and siloed data. 

Choose software that can integrate well with the tools your organization uses every day, such as Slack and Microsoft Teams. “People are going to be on a variety of different platforms, and now you don’t have to go and copy and paste and update,” Hari says. “It’s automatically happening because these systems are integrated.”

Not user-friendly

If the design isn’t simple, employees may struggle to use it daily or simply avoid using it at all. This can lead to frustration, wasted time, and lower productivity.

Allow your end users to demo tools before you buy. This will enhance your adoption rates and effectiveness.

Not designed for continuous performance management

Continuous performance management is becoming the gold standard, but many performance management solutions aren’t adequately designed to support it. This gap can hinder the development and engagement of employees who thrive on regular feedback.

Look for software tools that are designed to encourage regular interactions between managers and employees. “Making sure that the vendor that you’re selecting is able to support that and support those changes is going to be really important,” says Ashley Litzenberger, senior director of product, brand, and content marketing at Betterworks.

Betterworks includes features designed to promote continuous performance management and performance enablement, such as AI tools to improve feedback, and easy-to-use interfaces that support ongoing discussions about performance. 

Limited access to performance data and analyses

HR teams collect a lot of data about their organization’s workforce. But not all performance management systems are built to deliver insights from that data to managers who need it for decision-making.

Choose a performance management system that makes data easy to access and use. The system should have simple tools that HR and managers can use without needing IT help. This way, the right people can use the data to help the company succeed.

Lack of scalability

Not every performance management platform can handle a rapidly growing workforce. As your headcount increases, so will your need for more complex solutions.

If major growth is part of your plan, look for software that can keep up, with scalable architecture, flexible pricing plans, and a proven track record with large organizations.

Ineffective use of AI features

AI is poised to transform many HR functions, including performance management. That innovation comes with a responsibility to deploy this technology ethically to avoid amplifying bias or putting employee data at risk. 

Transparency builds trust and ensures AI supports your performance goals. Choose vendors who allow you to adjust security features to fit your needs and who are transparent about how their AI works and helps manage performance. 

Failure to support transformation

Performance management shouldn’t be a static process. The most effective programs require continuous improvement as the workplace evolves. But that means your performance management software must evolve to create long-term value, too. 

“Often, when you implement software, you’re looking at engaging in a relationship with that vendor for at least three years — probably five,” Ashley says. “You need to choose something that’s going to evolve with you.”

Look for a system that’s configurable and scalable, meaning it can grow and adjust as your business scales performance enablement in the modern workplace. It should also integrate well with other tools you use, making everything work smoothly together. Lastly, having a strong relationship with the system provider will ensure you have support and expert advice long after you buy the system.

7 best practices for choosing the right performance management software

Choosing the right performance management software is key to achieving long-term success. By carefully selecting software that fits your company’s needs and goals, you can get the best return on your investment.

Follow these best practices to choose the right performance management software for your business.

Identify key features and needs

To find the right performance management software, start by evaluating your current performance management practices. Look at how well your current methods meet your goals and identify any gaps or areas for improvement.

This assessment will help you understand what features and functions you need in your software.

Involve stakeholders

Your choice of performance management software impacts everyone in the company, so gather input from employees at all levels as you review your options.

Consider the needs of each stakeholder group. “For your management, you want dashboards, reports, and insights on how my team is doing. Who’s performing well, who’s not, who needs some coaching and guidance?” Hari says. “From an HR standpoint, you’re going to want to see analytics on, are we moving the needle? Are we seeing an improvement in engagement? Are we seeing an improvement in culture?”

By involving everyone in the decision, you can select software that better supports all employees, from the CEO to entry-level workers.

Prioritize user experience

When evaluating performance management software, focus on the user experience. Understand the needs and challenges of all users, from employees to managers, and ensure the software is easy to use. Test the software with demos and trials to see how well it meets these needs and fits into daily work.

Consider integration capabilities

When selecting performance management software, look for integration features that allow it to easily connect with your existing tools and systems — especially the ones where performance conversations happen every day, like Slack or Teams. This ensures smooth data sharing, reduces manual work, and improves overall efficiency. Make sure the software can sync with your HR, payroll, and other business applications to create a seamless workflow.

Assess configurability and scalability

To assess performance management software, start by checking how configurable it is. See if you can easily change settings like review frequency and feedback methods without needing technical support. It’s important to be able to make these adjustments yourself as an admin and to enable user configurability.

Next, see if the software can grow with your company. It should support more employees and complex needs as your business expands. Also, check if it can keep up with new trends and integrate new technologies like AI. Good customer support is also crucial, as they should help you with setup and adjustments as your company’s needs evolve.

Evaluate AI capabilities

AI should serve as a co-pilot to simplify, speed, and enhance human decision-making, particularly for managers, but for employees as well. It should reduce, not amplify, bias.  

You’ll also want to ask about data security and retention policies to protect sensitive information and build trust.

By focusing on these aspects, you can see how well the AI in the performance management software meets your needs, including your culture. 

Look for a partnership with your solution provider

Choose a partner dedicated to your long-term success, who listens to your needs, and continually improves their products and services. This keeps the team engaged and informed throughout your collaboration, not just at the sales stage.

Select a provider who offers implementation support, and ongoing support and training after the sale to ensure continuous improvement. This fosters a relationship based on trust, transparency, and collaboration, which are key for enhancing performance and achieving goals. Avoid vendors who disengage after the deal, as this can lead to poor support, software issues, and challenges in customization and integration, ultimately affecting the system’s effectiveness and employee engagement. 

Optimize performance management with the right software

Good software helps manage employee performance, aligns individual goals with company objectives, and boosts motivation with clear feedback and recognition. It should integrate smoothly with your systems and be user-friendly to increase adoption. Ultimately, the right software creates a transparent, collaborative, and high-performing workplace.

Betterworks is recognized as a top choice in the market for performance management software, thanks to its robust features that tackle common performance management challenges. Additionally, Betterworks integrates smoothly with popular tools such as Slack and Microsoft Teams, ensuring it fits seamlessly into existing workflows. The platform is designed to foster trust, collaboration, and transparency within teams. 

Betterworks is committed to a strong partnership approach, with a support team that remains proactive and supportive beyond implementation to guarantee your long-term success and satisfaction.

Want to learn more? Find out what Betterworks intelligent performance management solutions can do for you.