What is Continuous Performance Management?
Continuous performance management is defined as performance management processes that take place throughout the year on an ongoing basis, as opposed to those based on traditional annual appraisals. These processes include near-term objective setting, regular one-to-ones or ‘check-ins’ and real-time feedback.
Why Continuous Performance Management?
Management thought leaders such as the CEB have long been advocating that performance management should be part of managers’ everyday role and that once or twice a year appraisals are not an effective use of time. But it’s no longer just academics who think this. 95% of managers are not satisfied with their organisation’s annual performance process and 75% of employees see it as unfair. Another study has found that only 8% of companies believe that their traditional performance management process drives business value.
In contrast to this, research has found that over 50% of companies where goals are reviewed each month are in the top quartile in terms of financial performance, whereas only 24% of companies where goals are reviewed once a year made it into the same bracket. Similarly frequent feedback is now being labelled the ‘killer app’, having 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 3 times as likely to be engaged.
Who has adopted Continuous Performance Management?
Adobe were the first well-known organisation to adopt continuous performance management when they ditched their annual appraisal process 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.
US food producer and distributor, Cargill, also transformed their outdated performance management process in 2012, launching ‘everyday performance management’ instead. They 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. For more detail on these case studies and to look at the how performance management is continuing to evolve, read our article on the 2017 trends and our latest five performance management trends in 2018.
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 performance reviews. Our view is that they are simply not necessary and 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 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 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.
Other organisations have decided that they no longer wish to directly link pay to performance, in which case it makes no sense for their staff to engage in a formal performance review at the end of the year when they are already having periodic performance check-ins during the year. This article provides a useful summary of the options for managing reward without performance ratings.
What is the role of software in Continuous Performance Management?
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:
- feedback to be given ‘in-the-moment’ rather than waiting until the next one-to-one
- action points from check-ins to be captured and followed up on, rather than being noted down in a book and forgotten about
- objectives to be set collaboratively, aligned with organisational goals and regularly updated
- progress and obstacles to be captured as they happen
- reminders to be sent automatically to those who have not had a check-in or given feedback recently
- HR to have visibility of how often check-ins are taking place across the organisation and how frequently feedback is being given
- HR to collate performance and talent data without having to carry out formal appraisals