How to Use Employee Performance Management Tools
Written by:
Appalachian State University
• Apr 21, 2026
Just 31% of employees reported being actively engaged at work, according to a 2024 Gallup survey. The top three reasons respondents gave were a lack of clarity in expectations, a lack of care for them as people and a lack of support for their development. Employee performance management tools can help address all these issues.
These kinds of tools are most effective when used by managers who are well trained in leadership, data literacy and communication skills — the skills that students develop in organizational leadership degree programs.
What Are Employee Performance Management Tools?
Employee performance management tools are collaborative platforms that allow employees and managers to work together to set and achieve specific goals. The systems track employee performance, compare metrics to goals and monitor whether employees are contributing to the overall strategic objectives of the organization while also reaching personal professional benchmarks.
These tools typically have three primary aims:
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Goal setting: Employers and managers collaborate to set meaningful goals that align with the organization’s overall business objectives and priorities.
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Performance monitoring: Managers oversee employees’ day-to-day performance, which allows for prompt feedback and guidance and helps employees learn on the job in real time.
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Performance reviews: Using data collected by the employee performance management tool, managers can create comprehensive quarterly or annual reviews using the tool’s reporting features to support employees’ long-term growth.
Features of Employee Performance Management Tools
Performance management tools don’t all offer the same features, but they do share some common elements that are vital to improving employee performance. These features aid in identifying goals; sharing performance reviews; and providing actionable, real-time feedback.
Performance Analytics and Goal Tracking
Using employee performance management tools, employees and managers can see real-time metrics, such as projects completed or quarterly sales. Some tools also provide insights driven by artificial intelligence (AI) that offer further feedback.
With goal tracking, employees can see how their metrics compare with their established goals.
Automated Workflows and Reporting
A common feature of employee performance management tools in the age of AI is automated workflows and reports. Automated workflows help employees track goal progress and streamline performance management tasks. These workflows complete simple tasks that managers would otherwise have to do manually and notify employees about next steps in their growth plans, such as upcoming performance reviews.
Some tools also automatically generate reports on employee performance, while others offer ways for managers to create custom reports.
Professional Development and Training
Many employee performance management tools help managers provide tailored, continuous training, which benefits both employees and organizations. Employees have the opportunity to advance in their roles by upskilling or reskilling. In turn, organizations benefit from more engaged, highly skilled professionals as employees.
Performance management tools help managers identify employees’ strengths and weaknesses, highlighting areas for further training.
Why Use Employee Performance Management Tools?
The manager-employee relationship is one of the most important in the workplace. In many ways, managers are employees’ primary contact point with an organization — the people who ensure that employees’ skills are being used effectively and recognized.
When managers recognize employees’ work and become engaged mentors in their growth, employees feel more connected to their work. According to Gallup’s latest workplace review, doubling the percentage of employees who strongly connect to their job can reduce absenteeism by 34% and improve work quality by 19%.
A 2025 study published in Cogent Business & Management also found that performance management systems had a significantly positive effect on employee attitudes, as well as improved organizational outcomes.
Best Practices for Using Employee Performance Management Tools
Employee performance management tools can be a helpful resource for managers, giving them real-time data on employee performance without manual tracking. However, managers’ professional leadership skills are what allow them to effectively use such tools. Best practices for using these tools include the following:
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Offer continuous feedback. Rather than relying on annual performance reviews to inform employees whether they’re meeting goals, provide prompt feedback. This allows managers to help employees develop throughout the year, so they learn on the job rather than only during annual reviews.
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Emphasize the positive. While pointing out areas for improvement can help employees develop, it’s equally important to celebrate their successes — calling attention to their strong performance can help them feel more confident in their roles.
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Keep conversations relaxed and open. Managers should develop strong leadership and communication skills to ensure that employees feel comfortable and confident when receiving feedback and performance reviews. Employees should feel like active collaborators in their education, comfortable asking clarifying questions and sharing their input.
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Ensure that employees have access to their metrics. Employee performance management tools may be a helpful way for managers to monitor employee performance, but they also contribute to learning. Employees should have access to their personal dashboards so they can monitor their metrics and make decisions that improve their performance.
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Ensure that other key stakeholders have access to tools. Some employee performance management tools include all stages of employees’ time with a company, including onboarding. Make sure that everyone involved in training and development, such as human resources (HR) professionals, has access.
Become a Better Leader With App State Online
Employee performance management tools help managers develop collaborative growth plans with employees. However, leadership tools require managers who understand the data, communicate effective feedback and help employees feel confident about their future with the organization.
App State Online’s Bachelor of Science (BS) in Organizational Leadership and Learning teaches in-demand leadership skills, including project management, data literacy, professional development and human resource management, all skills that make effective leaders. This fully online bachelor’s degree program offers multiple eight-week start times, allowing students to work at their own pace while learning from highly trained, professional leaders.
Find out how App State Online can make you a more effective leader.
Recommended Readings
5 Organizational Leadership Careers for Graduates
How to Leverage AI in Leadership
Sources:
Gallup, “U.S. Employee Engagement Sinks to 10-Year Low”
Gallup, What Is the Employee Experience, and How Do You Improve It?
Personio, 12 Smart Performance Management Tools to Level Up Your Team