How to choose the best employee performance management tools for UK SMEs?

With a whole host of different employee performance management tools to choose from here in the UK, it can be tough to identify just the right one for your business. Your employees’ progress and development, not to mention the contributions they bring to the team, depend on having easy-to-use, reliable performance management tools and techniques at your fingertips. 

This article will explore what UK HR teams should research when shopping around for a new performance management tool, as well as a few examples of performance management tools in action.

What is the definition of performance management?

First, let’s touch on the meaning of performance management within the context of business. In simple terms, performance management can be boiled down to the dialogue you continuously have with your employees around their growth and professional development. This development is to the benefit of your long-term organisational goals, since, without great people, companies can only go so far. 

What are performance management tools used for?

With this definition in mind, performance management tools are a type of HR software used to plan, track, develop, rate and reward your people, in a consistent, objective and measurable way, using specific, well-defined key performance indicators, or KPIs. They enable a two-way conversation between manager and employee, with both able to provide feedback on the other, and to self-assess performance at the same time. Many of the tools on the UK market also facilitate cross-departmental reviews and feedback (also known as 360-Degree feedback).

Performance management tools are a step up from the traditional method of conducting appraisals using an Excel spreadsheet, with a list of goals alongside comments and score boxes. Typically, modern examples of performance management systems are cloud-based, meaning a UK manager or employee can access everything via a secure login, from anywhere, at any time.

What features should I look for in performance management software?

Just as with any software investment, there are several ‘need-to-haves’ that a particular performance management tool should possess to justify purchasing it. These are the non-negotiables, the things that every scaling UK business needs in order to help its talent (and those who manage them) grow and prosper. 

The best performance management tools will come equipped with your ‘need-to-haves’ as standard, as well as plenty of ‘nice-to-haves’ too. The key is to weigh up the cost vs. value, and then to decide on what the priorities for the growth of your people are. So let’s dive into it.

How much do performance management tools cost?

Employee performance management tools vary in price, and there are some free (albeit limited) options available on the UK market. It’s important to have tools in place that can scale with your business, and free options don’t do this. 

Of course, the price you pay is a major factor in determining which software you choose. Assess what you can’t do with your current setup, and whether any additional costs will help you be able to do them, or indeed you can live without the extra capabilities. The cost vs. value consideration runs through all of the following characteristics of a prospective performance management tool to look out for as well.

Is the platform user-friendly?

Simplicity is key when it comes to effective performance management tools and techniques. It may sound obvious, but your chosen performance management system should be easy to use for both managers and employees.

Can I customise performance review templates?

As UK businesses scale, additional roles and responsibilities start to take shape. This demands a performance management tool that is flexible enough to meet the needs of all functions within the organisation. For ease of setup, and to save time, it’s also important that your chosen solution offers a range of common performance review templates, for example for 1:1 meetings, quarterly reviews, exit interviews, end-of-probation period reviews, and so on. 

How can I facilitate better feedback dialogues?

Managing employee performance relies on two-way communication between managers and employees. It’s important that feedback is being relayed to the employee so that they can receive recognition for good work, learn from mistakes, course correct if certain areas need attention, and set goals and objectives. The same applies to managers: when they are supported to perform at their best, it translates into great individual and team performance. So it’s important that your performance management tools support open communication.

Does the software support 360-degree feedback?

Sometimes it’s difficult for managers to get the full picture of an employee’s performance, especially in the hectic surroundings of a scaling UK business. With team members working across departments, it’s highly beneficial for any performance management initiatives to get insights from a worker’s peers, their subordinates, and contacts across the organisation. The best performance management tools allow managers to assign different reviewers for each campaign, helping promote feedback between different teams and break down silos, increase collaboration, and streamline processes.

How do I ensure goals are actually achieved?

It’s all well and good providing feedback, setting goals and then assuming it’s all been taken onboard and achieved. But the success of any performance management campaign depends on actions being taken and success being verified. To guide your team effectively, your employee performance management tools should be equipped with invitations, reminders and deadlines. This helps ensure set goals are coupled with demands for the individual to take action towards achieving them, and to fully participate in the review and feedback process.

It may be that your chosen tool allows employees to set an overarching key result, with objectives living under those. This means that in order for them to achieve the result, the objectives have to be met first, compelling the employee to take action via gradual, methodical steps.

Does it integrate with other HR tools?

Workflow automation helps improve employee productivity, as well as their well-being. So it makes sense to ensure that your performance management tools are equipped to sync up or integrate with the rest of your HR tech architecture, or at least offer an all-in-one solution. This helps to minimise the amount of double data entry, and means that participants can access their performance management campaigns in the same place as, for example, annual leave requests, expenses management, and payroll information.

What are some of the best examples of performance management tools?

There are a wealth of performance management tool examples available, but for this piece, we’ll focus on three standout options for small to medium-sized and scaling businesses: Leapsome, Lattice, and PayFit. While Leapsome and Lattice excel at people enablement and culture building, PayFit offers robust support through seamless integration and administrative efficiency. Let's look at the specifics of each.

Why choose Leapsome?

We love Leapsome’s moniker of being a ‘people enablement platform’. Integrating with a wide variety of other HR software platforms (ours included!), Leapsome offers both template-based and customisable campaigns across 360-Degree reviews, employee engagement surveys, and goal setting. The focus with Leapsome is very much on the development of the employees using it, and how this can enable them to become valuable assets not only to themselves but to their team and wider organisation.

Why consider Lattice?

For companies looking to combine performance management with goal setting (via objectives and key results, or OKRs) and employee engagement, Lattice is another strong contender. It helps people leaders build a culture of feedback and recognition, ensuring that every employee understands how their work contributes to the bigger picture. Much like Leapsome, it focuses on the ‘soft’ side of HR, that is, growth and culture, making it a great companion to administrative powerhouses like PayFit.

How can PayFit help?

We’re all about removing the legwork from review campaigns, with performance management software that demands less effort, gives you more control, and is simple to use for all concerned. Managers can create campaigns in a matter of clicks, define who needs to participate, set time-frames, and assign other managers (for example, HR) to review results.

Employees can see performance review campaigns in the same place as their payslips, annual leave requests and expenses, for ease of use. And our 1:1 feature allows managers to set the frequency of catch-ups in order to improve engagement and transparency. Plus, for those already using Leapsome or Lattice for in-depth development, PayFit integrates seamlessly to automatically sync employee data and reduce administrative tasks.

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