The Continuous Evolution of Performance Management

To maintain a well-functioning, efficient and productive organization, it is essential that we keep up-to-date and mindful of current management trends. Every process and system within the company should be readdressed and re-evaluated from time to time, ensuring that we remain competitive and relevant. Performance management in particular is an area that requires a high degree of attention; it is a system that needs to be fluid, adaptable and modern.

Regardless of whether you operate a small business or a larger company, there is a lot to be learned from leading conglomerates who are willing to introduce and test cutting-edge methods and technologies for the betterment of their organizations. Recently we have seen a clear and distinct shift from traditional performance management to what is now known as ‘continuous performance management’.

What is continuous performance management?

Companies have increasingly been disregarding annual performance reviews as outdated and ineffective, with the overwhelming belief being that such an integral aspect of the performance management process shouldn’t be limited to a yearly event. 95% of managers stated that they were not satisfied with the annual performance process and as many as 45% of HR leaders claim that they don’t believe that yearly reviews give a true reflection of an employee’s performance. It isn’t only managers who were frustrated by the traditional review process: 75% of employees see them as unfair and unpleasant. Such limited interaction between manager and employee creates a significant divide that is hard to overcome and hinders vital communication.

Due to the obvious drawbacks that the traditional performance management model presented, companies around the globe have accepted the many benefits of continuous performance management. With this method, performance management processes occur throughout the year on an ongoing basis, where regular one-to-ones take place, frequent and valuable feedback is provided, and employees and managers are able to reassess goals and objectives whenever necessary. It also provides an opportunity to recognize and reward employees for their efforts and achievements.

Top companies supportive of continuous performance management

The CEB has long supported the concept of continuous performance management, claiming that performance management processes should be a regular and important part of every manager’s day; with once, or even twice-a-year appraisals, being an ineffective use of time. A third of organizations have now accepted more continuous feedback and interactions are necessary; some are even incorporating the use of apps and software to ensure a smoother and more reliable process.

One of the pioneers for continuous performance management was Adobe, who in 2012 turned their backs on their annual performance process. Instead they opted for frequent check-ins and regular feedback. The positive results of this change are demonstrated by the fact that voluntary turnover decreased by an impressive 30%. Cargill also overhauled their performance management in 2012, introducing what they termed ‘everyday performance management‘. Their valuable, constructive and regular feedback sessions had an overwhelmingly positive result. 70% of their employees claimed to feel more valued due to frequent discussions with their manager.

Other companies that have seen the importance of more regular feedback are IBM, Deloitte, Microsoft, General Electric, and Accenture, who revamped their performance management system in 2015.

The benefits of continuous performance management

The pros of continually reviewing performance are obvious: over half of companies whose goals were continually revisited and adjusted are in the top quartile of financial performance. In terms of frequent feedback, it has been suggested that it can improve employee performance by as much as 39%. This is no surprise, given that more regular feedback results in more communication, and communication has a significant bearing on engagement. It is generally accepted that highly engaged employees perform better, and are far more productive, than employees who feel superfluous and detached from the organization as a whole. This can result in 22% higher productivity for an organization.

When managers and employees are able to catch up on a regular basis, they are able to discuss aims and objectives, as well as any potential problems. This means that employees will feel empowered and motivated, as they are increasingly aware of the value that their role plays in the success of the company as a whole. These are the employees who will want to constantly strive to improve their own performance. They feel part of a team, and are interested in feedback that might make them perform above standard, which ultimately benefits the organization itself.

How performance management tools and software play an important role

The concept of continuous performance management undeniably has its appeal, but without the requisite software to facilitate the constant communication and feedback, companies might struggle. In this modern age, feedback needs to take place in real-time. This is where apps and software come in.

Using appropriate software, feedback and interaction can be given in the moment. Action points can be generated and follow-up tasks assigned, with alerts to remind employees and managers to stay on track. Software gives employees the opportunity to voice any pressing concerns that might be holding up their projects, and the instant nature of the software means that other employees and management itself can step in with advice and assistance. On top of this, the software affords the HR department heightened visibility; they can see how often check-ins are occurring throughout the company and observe the frequency of the feedback being given.

Various tools are being utilized to achieve these goals. IBM introduced Checkpoint, an app-based performance review system. With Checkpoint, employees can collaborate with managers to set short-term goals, and managers can check-in and provide feedback whenever necessary. Deloitte utilizes Snapshot, which they can use to schedule weekly check-ins with their managers. All of these efforts serve to increase productivity, increase company satisfaction, and ultimately decrease employee turnover.

Author: Stuart Hearn heads up Clear Review, a company that designs innovative performance management software. He has been working in the HR sector for over 20 years, previously working for Sony Music Publishing and co-founding PlusHR.