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4 Benefits of Performance Management Automation in 2024

Effective employee performance management is essential for the success of every business. However, only 10% of managers are satisfied with the results of their performance reviews, even though they spend 210 hours a year on them.1

Businesses can improve the results that they get from performance management, and ensure employee satisfaction, by automating the following subprocesses: 

  • Collecting data on employee performance
  • Analyzing performance data
  • Assessing progress
  • Assigning goals
  • Rewarding achievement

In this article, we’ll explore four ways automation can help businesses improve how they measure and improve employee performance.

1. Enables continuous feedback

Around 75% of employees receive a performance review once a year or less often. But only 15% believe that the reviews inspire them to improve.2 Performance reviews have been regarded3 as outdated for some time, and these statistics indicate that traditional performance management methods can do more harm than good for companies.4

By automating the process of gathering and analyzing employee performance information, HR teams can:

  • Give employees consistent and continuous feedback throughout the year, rather than having formal reviews at set intervals.
  • Provide seamless feedback across departments and reinforce positive behaviors, helping every member of the organization stay on track with key objectives.
  • Keep better track of employees’ individual growth over time and identify areas where an employee may require retraining or guidance.

2. Improves the transparency of performance management

Lack of transparency is one of the main5 problems in today’s performance management practices: Less than 30% of employees believe that their performance reviews are fair, while only around 25% of them think they are accurate.6

By automating the performance management process, companies can enhance transparency and accountability for all stakeholders :

  • Managers and HR departments can collect performance data and track employee progress in real-time.
    • This enables HR professionals to provide each team member with specific feedback based on objective metrics instead of subjective assessments.
  • A performance assessment based on objective, real-time data, rather than periodic reports, can help HR teams foster trust by giving employees a greater sense of ownership over their development.

3. Increases the quality of coaching and training

According to IBM, more than 120 million workers in the world’s 12 largest economies may need to be retrained/reskilled in the next 3 years.7 However, almost 70% of employees say that they are likely to leave their current employer because they aren’t getting the training and development they want.8

Relying on manual systems to keep track of employee progress and to ensure that everyone receives equitable instruction can be time-consuming and inefficient. An automated performance management system can help companies:

  • Leverage real-time performance data to identify the strengths and weaknesses of each employee and department.
  • Set goals for individual employees that guide their development and personalize training and skill transfer plans according to their progress and needs.
  • Track and compare how well various training methods are working.

4. Improves employee engagement

Only 34% of employees report that they feel engaged at work, while 16% say they are actively disengaged in their workplace.9 According to a McKinsey survey, the top reasons why people leave their jobs are:

  • Unsustainable performance expectations,
  • Lack of career development and advancement potential,
  • Lack of meaningful work.

Automating the performance management processes can help companies address all these problems:

  • Assessing employee performance in a data-driven way can prevent unrealistic performance expectations,
  • Training programs tailored to individual employees can improve employee experience and satisfaction,
  • 98% of HR professionals feel burnt out.

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Access Cem's 2 decades of B2B tech experience as a tech consultant, enterprise leader, startup entrepreneur & industry analyst. Leverage insights informing top Fortune 500 every month.
Cem Dilmegani
Principal Analyst
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Cem Dilmegani
Principal Analyst

Cem has been the principal analyst at AIMultiple since 2017. AIMultiple informs hundreds of thousands of businesses (as per similarWeb) including 60% of Fortune 500 every month.

Cem's work has been cited by leading global publications including Business Insider, Forbes, Washington Post, global firms like Deloitte, HPE, NGOs like World Economic Forum and supranational organizations like European Commission. You can see more reputable companies and media that referenced AIMultiple.

Throughout his career, Cem served as a tech consultant, tech buyer and tech entrepreneur. He advised businesses on their enterprise software, automation, cloud, AI / ML and other technology related decisions at McKinsey & Company and Altman Solon for more than a decade. He also published a McKinsey report on digitalization.

He led technology strategy and procurement of a telco while reporting to the CEO. He has also led commercial growth of deep tech company Hypatos that reached a 7 digit annual recurring revenue and a 9 digit valuation from 0 within 2 years. Cem's work in Hypatos was covered by leading technology publications like TechCrunch and Business Insider.

Cem regularly speaks at international technology conferences. He graduated from Bogazici University as a computer engineer and holds an MBA from Columbia Business School.

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