Best Performance Appraisal Software for Businesses in 2023

What is Performance Appraisal Software?

Performance appraisals include comparisons of the employee’s performance and work behaviour with preset standards, the results of which are provided as feedback for the employee. According to Clutch HR Employee Feedback Survey 2016, 68% of employees who receive accurate & consistent feedback feel fulfilled in their jobs. 

Performance appraisal systems fall under the category of performance management software and these platforms are usually used in conjunction with each other. 

Features of Performance Appraisal Software

The following are the top 5 features that every employee evaluation software worth its salt must have:

• Customizable Performance Review Forms:

  The perfect performance appraisal software offers bespoke & customizable performance review forms instead of following a cookie-cutter approach. 

• Goal Management Tool:

  A well-planned goal management tool runs throughout the performance cycle which helps to maintain strong alignment between employee performance and the company’s goals and targets. 

• Journal Entry/Notes Tool:

  It is an especially useful feature not just for managers but also for their direct reportees as it helps to keep both parties informed and engaged in ongoing communication about goals, action items, areas for improvement, training and developmental matters, etc.

• eSignatures and Automated Notifications:

  These features enhance compliance, facilitate administrative actions and maximize convenience all of which translate into greater software efficiency and usability.

• Performance insights:

  An ideal performance management tool needs to offer an accurate, real-time insight into the performance, skills, and development needs of the workforce.

Benefits of Using Performance Appraisal Software

Performance review software can help to improve the efficiency and accuracy of employee performance reviews within an organization, so this software may be a valuable addition to an existing HRIS (Human Resource Management System) or be of critical consideration while selecting a new HRIS.

• Increased motivation & satisfaction levels:

  It can have a profound effect on the levels of employee motivation and satisfaction. Since both managers and employees can use the tool, it is easier to keep track of overall productivity required for gaining an appraisal. This provides employees willing to go the extra mile with recognition for their hard work and efforts.

• Training & Development:

  The managers can easily access detailed employee information like job history, projects worked, benefits, and salary. By looking at more specific data, like the number of hours spent, the number of projects completed, and types of projects finished, managers and HR personnel can help nurture employees in fields they might be good at. This ensures that your firm recognizes and agrees upon individual training and development needs, which is a key factor for any good employee wanting to make a career in your firm.

• Recruitment & Induction:

  Appraisal data obtained from these performance software applications can be used for monitoring the success of an organization’s induction and recruitment practices. For example, how well are the employees performing who were hired in the past year? This data can also be used for monitoring the effectiveness of different recruitment strategies. 

Types & Cost of Performance Appraisal Software

If you are looking for a ballpark figure of the various performance appraisal software, we can help you out by sharing price models according to software types. 

• Pay-per-user:

  With this model, you’ll be paying a monthly fee for each “user” on the system.  Typically performance appraisal vendors define a user as an employee that is registered on the software, though inactive employees are often not counted.  Many times this model will also include a setup or implementation fee, and training or support can be extra. 

  Price range: $3-$10/user/month, with setup fees in the $800-$1,500 range.

• Pay-Per-Employee:

  The major difference between this model and the pay-per-user model is that here you will pay for an employee whether they are registered in the system or not.  This is usually compensated for by lowered per-unit pricing but these solutions may still have one-time setup fees or extra costs for support and training.

  Price range: $1.50-$5/employee/month, implementation fees can range from $800-$2,000 one time.

• Pay-Per-Appraisal:

  This typically involves paying a one-time for individuals or packs of employee evaluations.  There are rarely any setup fees with this model and, as the number of appraisals purchased increases, the per-unit cost goes down.

  Price range:  $15-$40/appraisal.

Industries Using Performance Review Software

The following industries make use of employee appraisals software:

• IT industry:

  Companies such as Deloitte India, Accenture are focussed on fuelling future performance for which they have incorporated the use of 360-degree feedback software. This offers the staff real-time performance feedback from the team leader and is characterized by speed, agility while following the one size fits one approach. 

• Banking:

  Axis Bank, for instance, is focussed on creating a more inclusive performance culture. Axis has introduced the enhancement program to encourage employees to take on stretch targets to get an upgrade in their rating.

• Pharmaceuticals:

  Pharmaceutical companies such as Sun Pharma believe in achieving long-term professional growth & development. They adopted PRIDE as the new global performance management process, thereby enabling employees to perform, reflect, invest, develop and excel.

Why is Conducting a Performance Appraisal so Difficult for Managers?

Here are some of the reasons that can cause managers to face problems during performance appraisals:

• Not investing enough time to set deliverables:

  One of the most important things to do is laying down deliverables right at the beginning of the review period. Sit down with your team members individually and assign them their key result areas (KRAs) in separate meetings. Pay attention to their strengths and weaknesses and push them to do their best. 

• Being unapproachable:

  Your words of motivation go a long way in determining employee’s performance. However, if you are unapproachable, either because you're always in and out of meetings or traveling a lot, they naturally fear performance appraisals because of the absolute lack of interaction. Since there's no professional rapport, it is but natural for them as well as you to be a little worked up.

• Being afraid of giving negative feedback:

  If you are one of those managers who have trouble giving negative feedback, try focussing on employee’s achievement and then dish out negative feedback. 

• Inadequate preparation to review:

  Try to remain abreast of every team member’s performance, their highs, and their lows. Subsequently, the prospect of reviewing 20 people (more or less) won’t worry you. 

Performance Appraisal Software Related Articles

• Types of Performance Appraisal Systems: A Detailed Guide
• A Guide to Continuous Performance Management Software
• Difference Between Performance Management and Performance Appraisal.
• The Future of Performance Management Besides Appraisals
• 54+ Performance Appraisal Form Samples [Free Download]