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What is Continuous Performance Management?

Metal wheel with the words 'Continuous Process' written on it

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.

Con­tin­u­ous Per­for­mance Management

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
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