What Is Continuous Performance Management?
Continuous performance management has undergone a revolution with the COVID-19 pandemic. More than ever, businesses are reevaluating their performance reviews, performance discussions, attitudes towards objectives and key results (OKRs), and the effects of the annual appraisal process on employee engagement and corporate culture.
Agile businesses worldwide have realised that the traditional annual appraisal process is no longer practical in the modern world due to its numerous inherent problems. Instead, they are turning to continuous performance management, often referred to as agile performance management by some, which is a growing field in human capital management.
We'll go over continuous performance management, the reasons for companies over-analyzing their performance evaluations, and how continuous feedback may actually improve your bottom line in the sections that follow. We will also examine the many solutions available for continuous performance management that can facilitate a seamless transition.
What Is Continuous Performance Management — Explained
In the context of human resource (HR) management, continuous performance management refers to performance management procedures that are carried out continuously throughout the year. Unlike traditional annual appraisals, which are based on a single, one-time event, this one is a continuous and holistic process.
A positive, trustworthy, and authentic working relationship between the manager and the employee becomes innate when feedback is given more frequently.
Among these processes are real-time feedback, frequent one-on-ones (also known as "check-ins"), and setting short-term objectives and goals.
Why Is Now the Time for Continuous Performance Management?
Leaders in management, including the CEB, have long argued that performance management ought to be a daily responsibility of managers and that doing appraisals just once or twice a year is insufficient to be a productive use of their time.
However, this is no longer the opinion of only academics. An annual performance management procedure used by 95% of managers is unsatisfactory, and 75% of employees think yearly reviews are unfair. According to a different study, only 8% of businesses think that their traditional performance management method adds value to their company.
Continuous performance management is a solution that complements and supports the speed of modern company when searching for an alternative to annual appraisals.
The best time to transition to a more continuous process is now, for a variety of reasons, one of which is the fact that an increasing number of businesses are turned off by the limitations and inefficiencies of their traditional performance management procedures.
Modern businesses are fast-paced, and with the COVID-19 pandemic coming into the mix, companies face unexpected pressures and obstacles daily, and they need a performance management system that accommodates this reality. Businesses need to be agile to thrive and compete. They need employees who are empowered, connected and able to take ownership over their work. Continuous performance management encourages this by providing instant communication, strengthening relationships through transparent dialogue and giving employees autonomy and independence — something that greatly appeals to the modern Millennial workforce.
Businesses today operate in a fast-paced environment, and with the COVID-19 pandemic added, they must adapt their performance management system to the unexpected pressures and obstacles they experience on a daily basis. For businesses to succeed and compete, they must be flexible. They require workers who can take ownership of their work, are empowered, connected, and capable of doing so. This is encouraged by continuous performance management, which offers quick communication, strengthens relationships through transparent dialogue, and gives employees autonomy and independence—all of which are highly appealing to the modern, multicultural workforce.
Who Has Adopted Continuous Performance Management?
There are a number of notable companies who have decided to adjust their performance review process to get the most out of their workforce. Below is a small selection of continuous performance management case studies that have successfully made the transition.
Adobe Inc
Adobe Inc was the first well-known organisation to adopt continuous performance management when they ditched their annual appraisal process back in 2012 in favour of“check-ins” and frequent feedback. Adobe worked hard to embed this new approach into their culture, and that work has paid off with voluntary turnover decreasing by 30% since they introduced check-ins.
Cargill Inc
US food producer and distributor Cargill also transformed their outdated performance management process in 2012, launching”everyday performance management” instead.
The company got rid of their annual review forms and performance ratings and instead encouraged managers to have regular, on-the-job conversations and give frequent, constructive feedback. They too have seen remarkable results with 70% of their employees now indicating they feel valued due to their ongoing performance discussions with their manager — a massive improvement.
More recently a number of leading, global organisations have implemented continuous performance management, including Deloitte, Microsoft, IBM, Accenture and most famously, General Electric, who had previously pioneered annual appraisals and rankings.
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What Are the Tangible Business Benefits and Outcomes of Regular Check-Ins?
There are many statistics and case studies to back up the efficiency of continuous feedback and its impact on employee performance, employee development and retention.
Research has found that over 50% of companies that review goals each month are in the top quartile in terms of financial performance, whereas only 24% of companies that re-evaluate goals once a year made it into the same bracket. It has also been shown that companies who manage objectives quarterly generate 30% higher returns than organisations who address them annually.
Frequent feedback is now being labelled the“killer app” and has been shown to boost performance by up to 39%. A study by Gallup has also found that employees whose managers hold regular one-to-ones with them are almost three times as likely to be engaged. Furthermore, as mentioned previously, after transitioning to agile performance management, Adobe saw a remarkable 30% drop in voluntary turnover.
Importantly, more continuous performance reviews can actually save your company time and money. Annual reviews take a substantial investment when it comes to management hours and form-filling. Because they try to accomplish too much in one sitting and because they are so dreaded by everyone involved, they end up being unproductive and, ultimately, a waste of time.
What Is Stopping Companies From Using Continuous Performance Management?
Given all the clear benefits of continuous performance management, why haven’t all companies made the transition? Why are some companies still holding onto their annual appraisals?
At Clear Review, we ran a poll to find out.
We discovered 60% of our participants were holding back from continuous reviews because they were worried about encouraging managers to have more meaningful conversations. This is an understandable concern — the last thing you want is to have more meaningless meetings wasting time in your organisation. This is why we recommend giving managers appropriate training and guidance, so they know how to conduct one-on-ones effectively. Managers can also be given a one-on-one meeting template to ensure a productive coaching and feedback session.
Is There Still a Place for Annual Performance Reviews?
Most organisations that we speak to embrace the concept of continuous performance management, but many question whether they should still be doing annual performance reviews. Our view is that annual reviews are, in most cases, an unnecessary bureaucracy.
Performance management is ultimately about supporting employees to perform to their highest potential, and this cannot be achieved through an annual performance review. Having regular, future-focused check-ins and giving frequent feedback are proven to be the best way of improving an employee’s performance.
For some organisations, this may leave the question of how they can collate the performance and talent data they need to make decisions about pay and promotions. Organisations like Deloitte have addressed this by periodically asking managers a small number of performance and talent-related questions about each of their team members. If managers are having regular check-ins with their staff and seeing feedback about them throughout the year, then they can answer these questions without the need for a lengthy appraisal discussion. We have adopted this same process for our own Clear Review Performance Management Software.
How to Implement Continuous Performance Management into Your Company
If you’re looking for practical tips on how to transition to continuous performance management, we can help you with this organisational change. It all starts with getting your leadership and management team on the same page — they will need to understand and buy into the benefits offered by agile performance management. The appropriate training is also a necessity — managers need to know how to give effective, motivational feedback during employee on-to-ones.
For a more in-depth, step-by-step process, we have a guide on how to implement continuous performance management.
What Is the Role of Continuous Performance Management Software?
To be effective, continuous performance management needs to be collaborative, frequent and take place in real-time rather than retrospectively. It also needs to be monitored to ensure it is being carried out effectively. Continuous performance management software aids this by enabling:
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feedback to be given “in-the-moment” rather than delaying this until the next one-to-one
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action points from check-ins to be captured and followed up, rather than being noted down in a book and forgotten about
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objectives to be set collaboratively. They also need to align with organisational goals and be regularly updated
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progress and obstacles to be captured as they happen
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reminders to be sent automatically to those who have not had a check-in or given feedback recently
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HR to have visibility of how often check-ins are taking place across the organisation and how frequently feedback is being given
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HR to collate performance and talent data without having to carry out formal performance appraisals.
Business is always changing, and technology is always evolving … but when was the last time you made a significant change to your performance management system? Organisational change might not be quick and simple, but it is certainly necessary to keep your business thriving long into the future.
Take your first step today with Clear Review and book a free performance management software demo with us today.
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