Chapter 3

The Solution: Continuous Performance Management

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So far in this eBook, we’ve looked at why annu­al appraisals don’t con­tribute to improved employ­ee per­for­mance and engage­ment and we’ve explored five key prin­ci­ples of effec­tive per­for­mance man­age­ment. In this sec­tion, we’ll set out a prac­ti­cal frame­work for embed­ding these prin­ci­ples in your organ­i­sa­tion based on Con­tin­u­ous Per­for­mance Man­age­ment methodology.

Don’t throw the baby out with the bathwater

Before we look at our con­tin­u­ous per­for­mance man­age­ment frame­work, it’s impor­tant to under­stand why hav­ing a defined frame­work is impor­tant. If appraisals are not pro­vid­ing val­ue in terms of improv­ing employ­ee per­for­mance, it may be tempt­ing to sim­ply stop doing them and leave it at that. In fact some organ­i­sa­tions have tried this and have left it up to their man­agers to have infor­mal per­for­mance con­ver­sa­tions with their staff and give them feed­back on an ad-hoc basis.

How­ev­er, stud­ies have found that when you com­plete­ly remove for­mal per­for­mance man­age­ment process­es, man­agers spend less time hav­ing mean­ing­ful per­for­mance con­ver­sa­tions. This, on aver­age, leads to a drop in employ­ee per­for­mance of 10% and a 6% fall in employ­ee engage­ment – clear­ly not a desir­able out­come. So you’ll need a frame­work that sets expec­ta­tions for per­for­mance man­age­ment and pro­vides a struc­ture for objec­tive set­ting, per­for­mance con­ver­sa­tions and feedback.

Our Con­tin­u­ous Per­for­mance Man­age­ment framework

Con­tin­u­ous per­for­mance man­age­ment dif­fers from tra­di­tion­al per­for­mance man­age­ment in that it is an ongo­ing cycle of per­for­mance and devel­op­ment dis­cus­sions and feed­back, as opposed to a process that starts and ends each year. This is sum­marised in the dia­gram below:


Let’s take a clos­er look at the key components:

Near-term’ SMART Objectives

Rather than set­ting a large num­ber of 12 month objec­tives at the start of each year, under the con­tin­u­ous approach, employ­ees start off by agree­ing a small num­ber of near-term’ SMART goals that they are going to be work­ing on over next 1 – 4 months (although longer term objec­tives can still be set where appro­pri­ate). The objec­tives may be relat­ed to per­for­mance, per­son­al devel­op­ment, or a com­bi­na­tion of the two.

These goals are then reviewed peri­od­i­cal­ly at check-in’ meet­ings (see below). When objec­tives are com­plet­ed, new objec­tives are dis­cussed and agreed to ensure there is a sus­tained focus on key pri­or­i­ties. This cycle con­tin­ues on an ongo­ing basis.

There are a num­ber of advan­tages to this approach. First­ly, near-term objec­tives are achieved more quick­ly which improves employ­ee moti­va­tion and builds momen­tum. Sec­ond­ly, the objec­tives are less like­ly to become irrel­e­vant over time as busi­ness needs change, which is a major flaw with annu­al objec­tive set­ting. Third­ly, the oner­ous task of hav­ing to set a large num­ber of objec­tives in one go, cov­er­ing a whole year, is removed.

Set­ting objec­tives and review­ing them reg­u­lar­ly makes sense from a bot­tom-line busi­ness per­spec­tive too. A study found that 50% of com­pa­nies who review their goals each month are in the top quar­tile of finan­cial per­for­mance, where­as only 24% of com­pa­nies where goals are reviewed once a year are in that top bracket.

Reg­u­lar Check-in’ discussions

At the core of our con­tin­u­ous per­for­mance man­age­ment frame­work are reg­u­lar, mean­ing­ful per­for­mance and devel­op­ment con­ver­sa­tions (‘Check-ins’) between employ­ees and their managers.

Unlike annu­al appraisals, the focus of a check-in is the con­ver­sa­tion, rather than com­ple­tion of forms. Check-ins should ide­al­ly be future-focused and action ori­ent­ed, rather than attempt­ing to assess past performance.

Many organ­i­sa­tions already encour­age their staff to have infor­mal one-to-one meet­ings. How­ev­er, these one-to-ones tend to con­cen­trate on day-to-day work. The pur­pose of a check-in is to step back from what is urgent and dis­cuss what is impor­tant from a per­for­mance and devel­op­ment per­spec­tive. Exact­ly what is defined as impor­tant will vary from organ­i­sa­tion to organ­i­sa­tion but the most com­mon things dis­cussed at check-ins are:

  • Progress against objectives
  • Forth­com­ing priorities
  • Strengths and achievements
  • Per­son­al devel­op­ment and career goals
  • Val­ues and behaviours
  • Issues or con­cerns from either party
  • Actions points to com­plete before the next check-in

Done right, check-ins are far less time con­sum­ing than annu­al appraisals so they can be con­duct­ed more fre­quent­ly – typ­i­cal­ly every 1 – 3 months.

Real-time feed­back

In sec­tion 2 we looked at how hav­ing reg­u­lar feed­back can dra­mat­i­cal­ly improve employ­ees’ per­for­mance. Yet research has found that employ­ees, on aver­age, don’t receive any­where near enough feed­back and in many cas­es, they only time they receive feed­back is at their annu­al appraisal meeting.

There is noth­ing more demo­ti­vat­ing than being told at an appraisal that you did some­thing wrong sev­er­al months ago! Even pos­i­tive feed­back los­es its val­ue if it is giv­en a long time after the event.

So a key com­po­nent of con­tin­u­ous per­for­mance man­age­ment is to encour­age your staff to give and request feed­back in-the-moment, as events occur. When done this way, man­agers can avoid the dread­ed feed­back sand­wich’ where they wrap neg­a­tive feed­back behind a façade of pos­i­tive feed­back (which employ­ees all too often see right through). If employ­ees receive reg­u­lar pos­i­tive feed­back, then they will be more recep­tive to receiv­ing con­struc­tive feed­back in an open and hon­est way when it needs to be given.

This kind of real-time feed­back is much eas­i­er to achieve if you have a dig­i­tal tool (such as our Clear Review soft­ware) which enables employ­ees to give or request feed­back instant­ly from their desk­tops or mobile phones. We’ll be look­ing at soft­ware in Part 6 of this eBook.

Mea­sur­ing performance

The pur­pose of hav­ing reg­u­lar Check-in meet­ings and get­ting fre­quent feed­back should be to improve and devel­op per­for­mance, rather than mea­sur­ing it. This is because per­for­mance devel­op­ment and per­for­mance mea­sure­ment do not sit well togeth­er. Employ­ees are less like­ly to engage in hon­est con­ver­sa­tions if they know that the out­come of that con­ver­sa­tion might affect their pay, bonus or oppor­tu­ni­ties for promotion.

The need to sep­a­rate out devel­op­men­tal dis­cus­sions from pay and pro­mo­tion deci­sions was reit­er­at­ed by the Char­tered Insti­tute of Per­son­nel and Devel­op­ment (CIPD) in their recent Per­for­mance Man­age­ment research report:

We rec­om­mend that any sin­gle process or meet­ing focus­es on one or the oth­er of these, but not both. Intro­duc­ing some clear water between assess­ments that inform pay and pro­mo­tions and those that help employ­ees improve should make per­for­mance man­age­ment a far smoother, more pro­duc­tive and less fraught process.

In our Con­tin­u­ous Per­for­mance Man­age­ment frame­work, we rec­om­mend hav­ing a sep­a­rate process for mea­sur­ing per­for­mance for pay and/​or pro­mo­tion pur­pos­es, that sits out­side of reg­u­lar Check-ins and feed­back. We call this process View­points (although it can renamed in our soft­ware) and it involves ask­ing man­agers to answer a small num­ber of ques­tions and/​or per­for­mance rat­ings about each of their team mem­bers, typ­i­cal­ly once a year, although some organ­i­sa­tions do it more frequently.

Our Clear Review soft­ware then com­piles the answers and the organ­i­sa­tion can then run reports to analyse the data to feed into pay, pro­mo­tion or tal­ent man­age­ment decisions.

A sim­i­lar approach is used by organ­i­sa­tions such as Microsoft and Gen­er­al Elec­tric who were among the fore­run­ners of Con­tin­u­ous Per­for­mance Management.

Sum­ma­ry

In this third part of our eBook, we have explored the three key prin­ci­ples of Con­tin­u­ous Per­for­mance Man­age­ment – Near-term’ Objec­tives, Reg­u­lar Check-ins and Real-Time Feed­back – and estab­lished that per­for­mance mea­sure­ment, where this is need­ed, should be a sep­a­rate process. In Part 4, we’ll be pro­vid­ing answers to the three most com­mon ques­tions and con­cerns relat­ing to Con­tin­u­ous Per­for­mance Man­age­ment: Rat­ings, Pay and employee/​manager adoption.