How performance management systems can help your team succeed in 2025

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What if you could turn employee performance into a clear path toward achieving your company’s biggest goals?

Think of it like a GPS for your team—guiding everyone in the right direction, helping them avoid detours, and ensuring they arrive at success together. That’s exactly what a modern performance management system does. It aligns employee goals with company objectives, boosts productivity, and supports employee growth—all seamlessly and efficiently.

But here’s the thing: as workplaces shift to hybrid models, rely more on AI-powered insights, and prioritize employee engagement, old-school performance management approaches fall short. Traditional annual reviews are replaced by real-time feedback, continuous tracking, and data-driven decision-making.

In this guide, we’ll explain the key aspects of performance management systems in 2025—what they are, how they work, the top tools available, and the benefits they offer to employees, teams, and organizations. Whether you’re aiming to simplify processes, boost retention, or help your team reach its full potential, this guide will provide the insights you need to succeed.

Table of contents

• What is a performance management system?
• The performance management process
• Types of performance management systems
• Benefits of a performance management system
• 14 best performance management tools for 2025
• How workforce analytics enhances performance management systems

What is a performance management system?

A performance management system (PMS) is like a roadmap for aligning individual and team efforts with an organization’s larger goals. It creates a structured approach where everyone knows what success looks like and how to get there, often leveraging automation to streamline workflows and processes.  

In fact, according to the Office of Human Resources Management, a performance management system emphasizes clear communication, shared accountability, and ongoing development to create success for both employees and the organization. 

Why is a performance management system important?

Imagine trying to win a race without knowing the track or finish line. That’s what it’s like for employees without a clear system in place. A performance management system provides clarity and direction, helping teams stay focused and aligned with company objectives, which is the cornerstone of effective performance management. It also fosters communication through one-on-one discussions, allowing employees to receive timely feedback and support.

Key components of a performance management system

A modern PMS isn’t just about ticking boxes—it’s about creating meaningful progress. Here are the main components:

• Goal setting: Setting clear, measurable, and time-bound objectives is the first step. Goals must align with both individual aspirations and organizational priorities. For instance, a marketing team might set a goal to increase lead generation by 20% within the quarter.
• Performance reviews: Regularly evaluate employees to understand their progress. These reviews identify strengths, uncover areas for improvement, and pave the way for new opportunities.
• Continuous feedback: Gone are the days of waiting for annual reviews. Today’s systems emphasize real-time feedback, a critical aspect of modern employee management, to keep employees aligned with goals. For example, managers might provide quick feedback after a project or meeting to guide future performance.
• Metrics and dashboards: Performance data drives informed decisions. Dashboards make it easy to visualize progress, track key KPIs, and ensure accountability, which are critical for building high-performing teams.
• Employee development plans: Every individual employee has unique aspirations. A good PMS includes personalized development plans to help individuals enhance their skills, develop critical competencies, and achieve long-term growth.

The performance management process

The performance management process ensures that every aspect of an employee’s journey—from onboarding to career development—is aligned with organizational objectives. 

Here’s a deep dive into each stage:

• Planning
  Set SMART goals (Specific, Measurable, Achievable, Relevant, Time-bound) to align individual and team objectives with organizational strategies. HR teams can develop employee development plans to enhance skills and prepare employees for future roles.
• Monitoring
  Track progress with real-time feedback and regular check-ins. Use performance management software to monitor tasks, milestones, and productivity.
• Reviewing
  Conduct structured evaluations to identify strengths and areas for improvement. Use 360-degree feedback to gather insights from peers, managers, and direct reports, promoting fairness and collaboration.
• Rewarding
  Recognize high performers with bonuses, promotions, or public acknowledgment. Tie rewards to measurable achievements to ensure transparency and motivation.

Types of performance management systems

Different organizations use distinct PMS frameworks based on their needs. Here are the most common types:

Balanced Scorecard (BSC)

Aligns performance goals with strategic objectives across four areas: financial metrics, customer satisfaction, internal processes, and employee growth. For instance, a logistics company might improve delivery times while maintaining customer satisfaction and cutting costs.

Management by Objectives (MBO)

Aligns department and individual goals with organizational objectives through collaborative goal setting and regular reviews. For example, a marketing team may aim to boost brand visibility by 25%, directly supporting revenue growth.

Objectives and Key Results (OKRs)

Focuses on dynamic, measurable goals. Objectives define “what” to achieve, and key results outline “how.” This system is ideal for fast-paced industries like tech startups tracking user adoption and satisfaction.

HR-Driven Systems

Prioritizes skill development and succession planning. These systems rely on HR-focused methodologies to prepare future leaders and close competency gaps through personalized training and mentorship programs.

Budget-Driven Systems

Integrates performance management with financial planning to maximize ROI by allocating resources effectively. For example, nonprofits might track impact while adhering to donor budgets.

Benefits of a performance management system

Implementing a PMS delivers measurable benefits across employees, teams, and the organization.

For employees

• Clear roles and expectations: Regular employee reviews and feedback help employees understand what is expected of them, reducing confusion and increasing focus.
• Career development opportunities: Employees receive personalized plans to enhance their skills and work toward promotions or new organizational roles.
• Higher job satisfaction: Clear pathways for success and recognition of achievements lead to a sense of accomplishment and motivation.

For teams

• Increased collaboration, alignment with organizational objectives, and greater accountability for their own performance among team members.
• Improved workflows that boost efficiency.
• Reduced attrition due to higher employee engagement.

For organizations

• Data-driven decision-making with actionable insights from performance metrics.
• Achievement of organizational goals through optimized resource allocation.
• Higher retention of top talent, reducing recruitment costs.

Now, let’s discuss the tools to help you achieve these outcomes. The right tools simplify your processes and provide valuable insights to support employee growth and organizational success.

14 best performance management tools for 2025

Here’s a comprehensive list of tools to optimize your performance management strategy:

1. Workday

Workday is a comprehensive HR and performance management platform designed for large organizations. It provides advanced analytics, goal setting, feedback tools, and integrated HR functionalities. Workday enables enterprises to manage talent, track employee performance, and align workforce strategies with organizational goals. Its flexibility and scalability make it a valuable asset for complex HR and performance management needs. However, it may be less ideal for smaller businesses due to its cost and complexity.

Key features

• Goal setting and tracking to align individual and organizational objectives.
• Continuous feedback tools to improve employee engagement and performance.
• Talent and workforce analytics for data-driven decision-making.
• Integrated HR functions, including payroll, benefits, and compliance management.

Pros

• Excellent for large-scale enterprises with complex needs.
• Combines HR and performance management in a single platform.
• Highly customizable to fit organizational requirements.

Cons

• It is expensive for small businesses or startups.
• It can be complex to set up and implement.
• Requires significant training for users unfamiliar with the platform.
• Limited functionality for smaller teams that don’t need comprehensive features.
• Customer support may not always meet the expectations of larger organizations.

Best use for

• Enterprises need a scalable, all-in-one HR and performance solution.

Pricing

• Pricing is available upon request.

2. BambooHR

BambooHR is an easy-to-use HR software tailored for small to medium-sized businesses. It offers performance management features such as goal setting, feedback, and employee self-service capabilities. Designed with simplicity in mind, BambooHR enables companies to manage employee performance effectively while maintaining an affordable key feature point. However, its limited features and basic reporting capabilities may not fully meet the needs of larger enterprises.

Key features

• Customizable performance reviews to fit unique organizational needs.
• Continuous feedback and goal-tracking tools to enhance employee engagement.
• Employee self-service portal for convenient access to personal data and performance records.
• Onboarding tools to simplify the hiring process.
• Mobile app for performance management on the go.

Pros

• Simple and intuitive interface, ideal for small to mid-sized companies.
• Affordable pricing makes it accessible for businesses with limited budgets.
• Easy implementation process with minimal setup time.
• Provides an all-in-one HR solution with payroll, benefits tracking, and more.
• Offers excellent customer support for onboarding and troubleshooting.

Cons

• Limited advanced features for larger enterprises or complex organizational needs.
• Basic reporting capabilities that may not suffice for in-depth analysis.
• Integration options with third-party tools are fewer compared to competitors.

Best use for

• Small and medium-sized businesses seek an affordable, intuitive, easy-to-implement HR solution.

Pricing

• Pricing is available upon request.

3. 15Five

15Five is a performance management tool that emphasizes continuous feedback and employee engagement. It helps organizations align goals, improve team communication, and foster a culture of collaboration. With tools like weekly check-ins and performance reviews, 15Five keeps teams connected and focused on growth. While it’s a great fit for startups and agile teams, it may lack the advanced analytics and features larger enterprises require.

Key features

• Weekly check-ins to maintain open communication between managers and employees.
• Goal tracking to ensure alignment with organizational objectives.
• Peer recognition tools to celebrate achievements and boost morale.
• Performance reviews that are easy to customize and conduct.
• Engagement surveys to measure team satisfaction and identify areas for improvement.

Pros

• Encourages regular and open communication across teams.
• Promotes team engagement and alignment through collaborative tools.
• Simple and intuitive interface, making it easy to use for all employees.
• Focuses on fostering a positive company culture.
• Offers tools to track progress toward individual and team goals.

Cons

• Limited advanced analytics for in-depth performance evaluation.
• It may not be sufficient for large enterprises with complex needs.
• Fewer integrations compared to some competitors.

Best use for

• Startups and agile teams prioritize regular feedback, team alignment, and engagement.

Pricing

• $4 Per user per month

4. Lattice

Lattice is a performance management platform designed to promote employee growth and development. It offers tools for goal setting, performance reviews, and development planning, making it ideal for organizations that foster a culture of continuous improvement. While Lattice is highly effective for medium to large organizations, its pricing and features may be less suitable for smaller teams.

Key features

• Goal setting and alignment to connect individual and organizational objectives.
• Performance reviews that are easy to customize and conduct.
• Employee development plans to support long-term growth and career progression.

Pros

• Strong emphasis on growth and development for employees.
• Easy-to-use platform with excellent customer support.
• Seamless integration with various HR tools.

Cons

• Limited features for small organizations with basic needs.
• Higher pricing may not be budget-friendly for smaller teams.

Best use for

• Companies aiming to foster employee growth and continuous improvement.

Pricing

• Starts at $5 seat/mo

5. Culture amp

Culture amp is a platform that blends performance management with employee engagement, providing organizations with tools to boost feedback, collaboration, and team morale. Designed for medium to large companies, it simplifies how teams connect and align around shared goals. However, smaller organizations may find some features less suitable for their scale.

Key features

• 360-degree feedback: Facilitate well-rounded employee evaluations with input from peers, managers, and direct reports.
• Employee engagement surveys: Gain actionable insights to improve workplace satisfaction and productivity.
• Goal setting and alignment: Help teams stay focused by aligning individual and company objectives.

Pros

• Aligns cultural values with performance goals.
• User-friendly setup and interface.
• It is ideal for medium to large organizations seeking advanced engagement solutions.

Cons

• Limited options for smaller teams with fewer needs.
• Pricing might be a consideration for budget-conscious companies.

Best use for

• Organizations that want to prioritize employee engagement while improving performance management.

Pricing

• You can get a quote upon request

6. ADP workforce now

ADP Workforce Now provides a complete HR platform with powerful performance management tools. It serves businesses of all sizes, offering an all-in-one HR, payroll, and talent management solution. Larger organizations often benefit from its wide range of features, but smaller teams might find it expensive and challenging to use without HR expertise.

Key features

• Goal tracking and performance reviews: Simplify employee evaluations and align individual objectives with company goals.
• Talent analytics: Leverage data-driven insights to improve workforce planning and decision-making.
• Integrated HR and payroll functions: Manage HR processes, payroll, and compliance in one seamless platform.

Pros

• Suitable for businesses ranging from small teams to large enterprises.
• Combines HR management, payroll, and performance tools in a single solution.
• Advanced reporting and analytics for deeper workforce insights.

Cons

• Higher costs deter smaller teams with limited budgets.
• A complex interface could be challenging for users without HR backgrounds.

Best use for

• Businesses seeking a unified platform to efficiently manage HR operations, payroll, and performance evaluations.

Pricing

• Pricing is available upon request.

7. Trakstar

Trakstar is a performance management platform that prioritizes flexibility and continuous feedback. It offers customizable tools to enhance performance reviews, goal tracking, and real-time feedback. Ideal for small to mid-sized businesses, Trakstar provides a straightforward solution for teams looking to tailor their performance management processes.

Key features

• Flexible performance reviews: Adapt templates and processes to suit your organization’s needs.
• Goal tracking: Keep teams aligned and focused on achieving their objectives.
• Real-time feedback: Foster a culture of continuous improvement with timely, constructive input.

Pros

• Highly adaptable to different performance management styles.
• User-friendly platform with responsive customer support.
• Well-suited for small to mid-sized organizations.

Cons

• Limited integration options with other tools.
• Lacks advanced analytics for in-depth workforce insights.

Best use for

• Organizations seeking a customizable and straightforward solution for performance reviews and feedback.

Pricing

• Pricing is available upon request.

8. Leapsome

Leapsome is a performance management platform that seamlessly combines OKR tracking with tools for learning and development. It empowers teams to align goals, provide continuous feedback, and foster growth, making it particularly suitable for mid-sized organizations. While the platform enhances employee development, larger enterprises might find its feature set less extensive for their needs.

Key features

• OKR management: Simplify objective tracking and ensure alignment across teams.
• Continuous feedback and reviews: Create a culture of ongoing improvement with regular evaluations.
• Learning and growth modules: Support employee development with personalized learning paths.

Pros

• Strong focus on individual and team growth.
• Easy-to-use platform with a clean and intuitive design.
• Well-suited for mid-sized businesses aiming to drive OKR success and employee development.

Cons

• Feature sets may not fully meet the needs of large enterprises.
• Teams might require some initial training to maximize their capabilities.

Best use for

• Mid-sized companies that want to integrate OKR tracking with employee learning and development initiatives.

Pricing

• Pricing is available upon request.

9. HiBob

HiBob integrates a modern approach to performance management with comprehensive HR tools. It supports smooth workflows for hybrid teams and is tailored for today’s flexible workplaces. While small to mid-sized companies gain the most from its features, larger enterprises may find its capabilities less suited to their scale.

Key features

• Performance reviews and feedback: Facilitate structured evaluations and ongoing feedback to promote growth.
• Goal setting and alignment: Help teams focus by connecting individual objectives with organizational priorities.
• Employee engagement tools: Measure and improve workplace morale with actionable insights.

Pros

• Tailored for dynamic, hybrid work environments.
• Intuitive and user-friendly platform.
• Excellent for small and mid-sized organizations adapting to modern work styles.

Cons

• Feature sets might not meet the demands of large enterprises.
• Reporting capabilities are relatively basic compared to other platforms.

Best use for

• Small to mid-sized businesses with hybrid or flexible workforces seek an all-in-one performance and HR solution.

Pricing

• Pricing is available upon request.

10. Paycor

Paycor provides an all-in-one solution by integrating payroll and performance management tools. It is tailored for small businesses and simplifies goal setting, performance tracking, and HR functions. While its affordability and user-friendly design make it an excellent choice for smaller teams, its features may not scale well for larger organizations.

Key features

• Goal setting and reviews: Simplify employee evaluations and align individual objectives with company goals.
• Performance tracking: Monitor and manage employee progress to drive productivity.
• Integrated HR functions: Centralize payroll, benefits, and HR processes in one platform.

Pros

• Combines payroll and HR management for a seamless experience.
• Designed to be simple and effective for small businesses.
• Competitive pricing makes it budget-friendly for smaller teams.

Cons

• Limited scalability for growing organizations.
• Basic analytics may not meet advanced reporting needs.

Best use for

• Small businesses looking for an integrated platform to manage payroll and performance efficiently.

Pricing

• Pricing is available upon request.

11. PerformYard

PerformYard offers a highly flexible performance management solution that adapts to the unique needs of different organizations. It simplifies employee evaluations, goal tracking, and feedback processes while providing extensive customization options. Ideal for teams seeking a tailored approach, it supports various review formats and integrates seamlessly with existing HR systems.

Key features

• Customizable performance review cycles: Design review processes that align with your organization’s goals.
• Goal setting and tracking: Keep employees aligned with organizational objectives.
• Continuous feedback mechanisms: Foster a culture of regular feedback and improvement.
• 360-degree feedback collection: Gather comprehensive insights from peers, managers, and direct reports.
• Detailed reporting and analytics: Gain actionable insights to drive better decision-making.

Pros

• Adaptable to diverse organizational needs with extensive customization options.
• Intuitive interface that simplifies setup and navigation.
• Supports various review formats, including 360-degree feedback.
• Integrates with existing HR tools for efficient processes.
• Provides deep performance insights with advanced reporting features.

Cons

• Limited integration options with third-party applications.
• Initial setup may take time to customize fully.

Best use for

• Organizations seeking a performance management platform that can be tailored to their unique processes and workflows.

Pricing

• $5-10 per person/month

12. Engagedly

Engagedly is an AI-powered platform that combines performance management with employee engagement tools, making it an ideal choice for hybrid and remote teams. It emphasizes continuous feedback, employee development, and social collaboration, helping organizations build a culture of recognition and growth. While it offers a comprehensive suite of tools, some features may require additional setup, and the interface may take time to master.

Key features

• Performance appraisals: Simplify evaluation processes to align with organizational objectives.
• Goal setting and OKRs: Ensure teams stay focused and aligned through clear, measurable goals.
• Real-time feedback: Promote a culture of improvement with ongoing, constructive feedback.
• Employee recognition: Motivate and engage employees with effective recognition programs.
• Learning and development modules: Support career growth with personalized learning paths.
• Social collaboration tools: Enhance teamwork and communication, especially for remote setups.

Pros

• Comprehensive set of tools for performance and engagement.
• AI-driven insights help leaders make informed decisions.
• Fosters continuous feedback and recognition for a positive workplace culture.
• Tailored for remote and hybrid teams.
• Customizable features to suit specific organizational needs.

Cons

• User interface may require time for teams to adjust.
• Some features need additional configuration to meet specific requirements.

Best use for

• Hybrid and remote teams aiming to boost employee engagement while managing performance effectively.

Pricing

• Pricing is customized based on organizational needs; contact Engagedly for a quote.

13. Betterworks

Betterworks is a performance management platform that enhances productivity and engagement by focusing on continuous performance management and goal alignment. It supports organizations in aligning individual objectives with company goals while fostering ongoing performance discussions and feedback. Although highly effective for medium to large organizations, smaller teams with simpler needs may find it overly complex.

Key features

• OKR (Objectives and Key Results) management: Align team and individual goals with organizational priorities.
• Continuous performance conversations: Encourage regular discussions to track progress and address challenges.
• Real-time feedback and recognition: Build a culture of improvement and motivation.
• Employee development planning: Create personalized plans to support career growth.
• Analytics and reporting dashboards: Gain insights to improve decision-making and performance outcomes.

Pros

• Helps align individual goals with overall company objectives.
• Promotes a culture of continuous performance improvement.
• Intuitive platform with a user-friendly interface.
• Delivers actionable insights through advanced analytics.
• Integrates with a variety of HR and productivity tools for seamless workflows.

Cons

• Complexity may be a challenge for smaller organizations with basic needs.
• Implementation requires time and resources to customize effectively.

Best use for

• Medium to large organizations looking to implement continuous performance management and maintain alignment across teams.

Pricing

• Pricing information is available upon request from Betterworks.

14. Reviewsnap

Reviewsnap is a performance management system that offers an all-in-one solution for performance reviews, goal tracking, and 360-degree feedback. Its affordable annual pricing and customizable features make it an excellent choice for small to medium-sized businesses seeking a comprehensive solution. While the platform supports unlimited review cycles, it may require some time to configure fully and has limited integration options.

Key features

• Automated and customizable appraisal forms: Create tailored reviews that fit your organizational needs.
• Goal setting and tracking: Help teams stay focused on achieving key objectives.
• 360-degree feedback: Gather insights from peers, managers, and direct reports for a well-rounded evaluation.
• E-signatures and secure archiving: Ensure safe and efficient performance documentation.
• Automated reminders and notifications: Keep the review process on track with timely alerts.

Pros

• Intuitive and user-friendly interface.
• Affordable pricing plans designed for small to medium-sized businesses.
• Comprehensive performance management features bundled into one platform.
• Flexible and customizable review processes to suit diverse needs.
• Supports unlimited review cycles for continuous feedback.

Cons

• Limited options for integration with other tools.
• Initial setup may require some time and effort.

Best use for

• Small to medium-sized businesses looking for an affordable, feature-rich performance management solution that supports continuous feedback and evaluations.

Pricing

• Pricing information is available upon request.

How workforce analytics enhances performance management systems

Many organizations are turning to tools that provide deeper insights into how their teams work to get the most out of performance management systems. These tools don’t replace performance management systems but work alongside them to enhance their effectiveness.

One such tool is Time Doctor, a workforce analytics platform designed to track time, monitor workflows, and provide detailed insights into team performance. Time Doctor helps managers understand how employees spend their time, identify productivity bottlenecks, and address inefficiencies. By delivering transparent data, it empowers managers to offer more informed feedback, improve accountability, and support employee well-being by preventing burnout.

Time Doctor is particularly valuable for hybrid and remote teams, ensuring employees stay connected and productive regardless of location. By aligning with performance management goals, it helps organizations enhance team performance, increase productivity, and achieve better outcomes.

Conclusion

A performance management system is more than just a process—it’s the key to helping your team stay focused, grow, and achieve your company’s goals. Without one, it’s easy for expectations to become unclear and goals to get off track. Modern PMS tools bring structure, clear communication, and valuable feedback to help employees improve their current performance and work toward the same objectives.

Tools like Time Doctor can make these systems even better. By providing real-time insights into how your team works, Time Doctor helps managers address inefficiencies, give better feedback, and support remote or hybrid teams. It’s a simple way to keep everyone productive and aligned.

What steps can you take today to improve your performance management system? See how Time Doctor can help your team work smarter and achieve more.

Take your performance management system (PMS) to the next level with actionable insights and productivity tracking. See how Time Doctor can help your team stay aligned, productive, and efficient.

View a Demo Today and discover the difference Time Doctor can make for your PMS!