Are Performance Management Tools Worth It?

Author: Rian Schmidt

12/26/2024

Performance management is one of those things that everyone knows is important, but it rarely gets the attention (or investment) it truly deserves. It’s perceived as fluff-- time-consuming, expensive, and even biased itself. Yet, done right, it can be transformative—not only for employees but for the bottom line.

That’s where tools like Humanaiz come in, leveraging agentic AI to make performance management consistent, efficient, and impactful.

Research backs this up. For example, studies from Gallup show that engaged employees are 17% more productive and 21% more profitable than their disengaged peers. But engagement doesn’t happen by accident—it’s built on clear feedback, consistent goals, and meaningful conversations. Without the right tools, most organizations fall short.

Humanaiz simplifies and supercharges this process. By integrating AI into performance management, we help employers streamline 1:1s, quarterly reviews, and goal-setting and tracking. And it's flexible enough to accomodate existing processes. Create your own review questions. Set your own rating scales. On-track or not-on-track? Five-point scale? One to one hundred score? Great. Humanaiz lets you decide.

Consistency Eliminates Bias

Bias, whether conscious or unconscious, undermines performance management. A study by Stanford researchers found that unstructured performance reviews often reflect a manager’s personal preferences more than actual performance. This creates inequity and dissatisfaction, leading to higher attrition rates.

Humanaiz ensures consistency by standardizing review processes across teams. Our AI analyzes past reviews, identifies potential biases, and offers neutral, data-driven insights. This not only promotes fairness but also fosters trust among employees.

Imagine reducing attrition by just 5%. For a company of 50 employees with an average salary of $60,000, the total cost of replacing an employee is at least $30,000 (50% of their salary). Cutting attrition from 20% to 15% saves $75,000 annually. Humanaiz costs less than $2500/year for a company of 50. That's a 3000% ROI just reducing attrition. Not to mention the time saved performing these tasks.

Efficiency Through AI

No one looks forward to spending hours crafting reviews or sitting through back-to-back meetings with nothing but small talk or formalities, but performance management doesn’t have to be a chore.

Our agentic AI takes care of the heavy lifting, suggesting conversation topics, summarizing 1:1s, and even analyzing sentiment. By automating repetitive tasks, Humanaiz easily reduces the time spent on reviews by up to 50%. That’s not just good for managers—it’s good for employees, who get more focused and actionable feedback.

For example, if managers spend 2 hours per employee per quarter on reviews, that’s 400 hours annually for a 50-person company. At a conservative average hourly rate of $50, that alone is $20,000 a year. Cutting that time in half saves $10,000, while still delivering better-quality reviews. There's another 400% ROI on simple efficiency, not to mention the resulting improvement in productivity.

Better Records, Better Engagement

Stanford’s Behavioral Lab has shown that clear goals and feedback are critical to employee motivation, but how often do organizations fail to keep accurate records of past conversations or follow through on commitments they've made to employees?

Humanaiz provides an easily accessible source for all of this data. Managers can track goals, follow up on action items, and maintain a transparent history of feedback. This not only improves accountability but also strengthens the employee-manager relationship, which is a key driver of engagement.

Concrete ROI... and More

Here’s a quick calculation to put things into perspective:

• Increased Productivity: Gallup estimates that disengagement costs the U.S. economy $500 billion annually. Improving engagement and productivity by just 5% across your team could boost productivity by $150,000 for a 50-person company with average salaries of $60,000.
• Reduced Attrition: As mentioned earlier, reducing attrition by even 5% could save $75,000 annually in that scenario.
• Time Savings: Simply cutting performance management time in half saves $10,000.

That’s a total of $235,000 in potential savings or increased productivity—from investing in tools that cost less than $2500/year. Now, I know that these estimates can vary widely and won't be achieved by every organization that adopts Humanaiz, but even a fraction of that return pays for the tools many times over.

While I'm focusing on quantifiable savings in this article, I'd argue that the real benefits of adopting good performance management tools are in the improved quality of the work lives of your team and of the work that they deliver as a result. Improved relationships, more sense ownership of their work, and a feeling of being heard all drive employees to want to do their best work for a company that has demonstrated that the employee's well-being matters.

Why Humanaiz?

With Humanaiz, you’re not just investing in software; you’re investing in a smarter, fairer, and more effective way to communicate with your team. You're leveraging the latest in AI technology to provide a helping hand and eliminate the drudgery. Humanaiz does one thing: help create a workplace where employees feel valued, managers feel empowered, and healthy businesses thrive.

If you’re ready to make performance management a strategic advantage for your company, give us a try. With Humanaiz, you can turn what was once a dreaded chore into your organization’s superpower.