To many managers, the idea of annual or biannual performance reviews is as dated as the notion of lifetime employment. Just as most workers can no longer expect to receive a golden watch for decades of loyal service, the concept of relying on yearly performance reviews isn’t just an anachronism from a bygone era––it’s a liability that can stunt the growth of companies and employees alike.
Continuous performance management is transforming how managers evaluate their direct reports, as well as how companies are navigating an increasingly competitive business landscape. It allows managers to gain greater insights into how their employees work, offers more opportunities to recognize and reward hard work and ingenuity, and gives workers a more transparent framework in which to identify and work toward broader career goals.
Yet, despite the many benefits of continuous performance management, some companies have yet to implement such programs.
In this post, we’ll be exploring continuous performance management and why organizations that have yet to implement it should consider doing so. We’ll be examining what continuous performance management is, the factors that make it such an effective evaluative tool, and how you can implement it in your organization.
What is Continuous Performance Management?
As its name suggests, continuous performance management is the process of continually evaluating how individual employees are performing according to the expectations of their role.
The idea behind this concept is surfacing real-time feedback that can and should be used to inform virtually every aspect of a person’s professional development. This feedback should include individual performance management, such as identifying and cultivating new skills to help workers do their jobs more effectively, as well as managing team-based and even organizational key performance indicators (KPIs) and objectives and key results (OKRs).
The definition of “continuous” varies from one organization to another––and from one department to another in some companies––but the core concept behind continuous performance management is frequent evaluations at regular intervals.
Although continuous performance management looks slightly different from one company to another, you can think of the process as a cyclical loop. The process alternates between regular one-on-one check-ins between managers and their reports and intervals in which employees work toward objectives identified in those check-ins using real-time feedback as a guide.
What makes Continuous Performance Management effective?
Continuous performance management is a powerful tool for managers that offers many advantages over yearly or biannual evaluation structures. Some benefit employees themselves, while others benefit their managers and the organization as a whole.
Greater Employee Engagement
Regardless of what business your organization is in, your team is your single most valuable asset.
Regular check-ins are vital not only to ensuring that goals are being met, but that your team is happy and engaged. Think about how much hard work can be overlooked during the course of a year or what it would feel like for day-to-day problems or legitimate grievances to go unaddressed for prolonged periods of time.
Employee disengagement can and frequently does lead to increased turnover. A recent study estimated that 75% of employees who quit their jobs do so because of their managers, not the demands of their roles. Besides the obvious costs of hiring and onboarding replacements––which can be as high as between 30-50% of an entry-level employee’s annual salary, and up to 150% of the annual salary for mid-level workers––employee disengagement is already a major problem for many employers. Disengaged employees cost businesses between $450 billion and $550 billion every single year due to increased rates of absenteeism and reduced output.
One of the most immediate and powerful benefits of continuous performance management is heightened employee engagement.
Workers who feel seen and heard by their managers are much more likely to work harder, which directly translates to a company’s success.
A landmark study published in 2009 found that engaged employees are twice as likely to be top performers than their less-engaged counterparts, miss 20% fewer days of work, and contribute as much as 26% in additional productivity.
Forcing employees to wait months––if not an entire year––for the opportunity to meet with their manager and discuss their progress isn’t just impractical from a management and business perspective; it’s also deeply unfair to the employee.
More Efficient Employee Evaluations
Imagine asking your accounting team to complete an entire year’s worth of bookkeeping in a single month. This might sound comical, but it’s exactly what managers are doing if their organizations are still relying on an annual review structure. This considerable amount of work makes doing any other task impractical or impossible for managers. It also increases the likelihood that performance reviews will be hasty, incomplete, or inaccurate.
Even biannual review structures can leave significant gaps in key data that People Ops managers need to make strategic business decisions. For example, if a sales representative’s average deal volume dropped significantly from one month to the next, but that rep’s manager had to wait five months until that employee’s next review, the sales team might potentially have to sustain five months of missed targets before the problem could even be identified, let alone addressed.
In most businesses today, this kind of glacial pace simply won’t cut it.
Continuous performance management makes for a more efficient, streamlined evaluation process. It gives managers uninterrupted insight into how employees are working. Frequent, ongoing evaluations also enable People Ops managers to think proactively instead of reactively and identify problems much faster.
In the hypothetical case of our troubled sales representative, continuous performance management could help determine whether the rep’s problem is skills- or knowledge-based, such as struggling to understand a new market or vertical, or whether our rep needs greater support with an ongoing personal issue outside the workplace. In either case, continuous performance management allows our rep’s manager to act much faster, reducing lost revenue and helping the sales rep feel seen, heard, and valued.
Better Performance Data
The regular, cyclical nature of continuous performance management structures doesn’t just mean more data. It also means better data.
Continuous performance management involves data gathering from a range of sources to provide People Ops managers with a broad, holistic view of an individual employee’s performance over time. This means drawing upon qualitative data, such as detailed feedback from one-on-one evaluations, as well as quantitative data, such as revenue targets or production output. Depending on the nature of an employee’s role, peer reviews can also provide valuable additional context, provided that employee privacy is respected.
The more data you gather from a range of sources, the more complete the picture of that employee’s performance will be.
With more information at hand, it’s much easier to identify and close genuine skill gaps in teams and across entire organizations, especially in fast-moving, rapid-growth sectors, such as software development.
Gathering data from multiple sources also increases the likelihood that performance data will be more accurate, as relying solely on a single source of performance data increases the risk of making decisions based on biased or incomplete information. This approach can also help reduce recency bias, in which actions taken around the time of an evaluation are given disproportionate weight during evaluations.
How to implement a Continuous Performance Management program
Moving away from biannual or yearly performance evaluations toward continuous performance management practices is about much more than rolling out new feedback forms or simply meeting with members of your team more frequently.
Continuous performance management is a mindset and a cultural value that should be cultivated at an organizational level, rather than a rubric or framework to be adopted.
Continuous performance management isn’t about micromanaging employees or wringing even more productivity out of your team. It’s about creating an environment of accountability, transparency, and––perhaps most importantly––meaningful, sustainable growth.
That said, there are a few things you’ll have to do if you want to create that kind of environment within your own organization.
Establish a standardized process for one-on-ones
The first step toward continuous performance management is establishing a regular cadence for one-on-one meetings between managers and their direct reports. Ideally, this should be on a weekly basis. If that’s not possible, aim for monthly one-on-ones.
In addition to setting firm expectations about how often managers will meet with their reports, it’s also crucial to define what’s expected of everybody attending these meetings. Managers should be prepared with a complete agenda, including quantifiable objectives for what everyone should get out of the meeting. Similarly, employees should be ready to provide documented evidence of the progress they’ve made since their last one-on-one.
This is a sample of our weekly one on one questionnaires at ChartHop.
But what does that progress look like?
Be as Specific as Possible About Quantifying Goals and Progress
It’s virtually impossible for employees to meet or exceed expectations if they don’t know what’s actually expected of them. Data from Gallup suggests that approximately half of workers have no idea what goals they should be working toward, and many managers are failing to help them by not providing clear, measurable objectives for success.
This doesn’t just result in lost productivity––it’s also a major contributor to employee disengagement.
When implementing a continuous performance management structure, it’s vital that employees understand exactly what’s expected of them, how they can improve, and how that improvement will be measured. Regardless of their role or responsibilities, employees should have a clear, quantifiable roadmap for how their growth will be evaluated. That roadmap should also be as objective as possible and should include measurable OKRs that can––and should––be tracked over time.
That’s not to say that subjective judgment shouldn’t play a role in the evaluation process; not every aspect of an employee’s performance can be quantified objectively. However, these judgments shouldn’t form the basis or majority of an employee’s evaluation. Subjective assessments can be used to provide valuable context, but it’s important to be able to objectively quantify and demonstrate an employee’s performance to decrease bias, especially when making decisions regarding compensation or promotions.
Implement a System to Gather and Analyze Performance Data
To assess employee data effectively, you’ll need the tools to do so.
Regardless of which type of tool you choose to use––whether a traditional employee relationship management (ERM) solution, a human resource information system (HRIS), or a hybrid tool like ChartHop––it should allow you to centralize the data you gather in a way that makes it easy for other team members to access. Ideally, this should include access permissions controls that allow you to adjust the visibility of certain types of data from one user to another to ensure employee privacy is preserved and applicable legal guidelines are followed.
Another consideration when choosing tools to assist with your continuous performance management initiatives is integrations with other tools. You should be able to draw upon data in a wide range of systems, from payroll and applicant tracking systems to feedback management platforms and HR management software. The more easily data can be shared from one system to another, the better equipped you’ll be to make informed, strategic decisions about hiring and employee development. A wider range of data also makes it easier to discover and correct implicit biases that may be more difficult to identify with limited information.
ChartHop can help you gain greater insights from your People Analytics data and track employee performance in real time. Access permissions can be easily adjusted at the individual and team level, and ChartHop offers integrations with leading tools, including BambooHR, Greenhouse, Justworks, Lever, Ultimate Software and Workday.
Be Genuinely Radical About Transparency
“Radical transparency” has become one of the hottest business buzzwords of the past decade. However, for all the talk about the value of transparency in the workplace, many companies still don’t get it.
Transparency doesn’t just mean making everyone’s salary data publicly available. It means committing to actively developing a culture of accountability in a highly visible way.
Continuous performance management is a critical part of that effort. It means acknowledging failures as well as successes and being held to account in a way that many managers (and even more executives) simply aren’t used to. It means leading by example, even when those examples are cautionary tales rather than overnight success stories. But too many companies equate acknowledging failure with assigning blame. It’s important that managers––especially folks in People Ops––see continuous performance management as an extension of an organization’s cultural values. Presenting it as such can be an effective way of securing buy-in from relevant stakeholders.
The Future of Employee Development
We said it earlier, but it bears repeating: the people in your organization are your single most valuable asset. Continuous performance management isn’t just about increasing your company’s bottom line or maximizing individual productivity––though those benefits can and should go along with it. Rather, it’s about helping your people be the very best versions of themselves they can possibly be.
The most productive employees are often the happiest employees. Investing in the growth of your team is a direct investment in the future success of your company.
Continuous performance management isn’t just another fad or yet another initialism. It’s a fundamentally different approach to employee growth and what this means for the future of your company.
At ChartHop, we believe more data means more possibilities––for your employees and your organization. Our platform offers People Ops managers unprecedented, real-time insights into the relationships between employees and the work they do every day, employees and their managers, and their team and other departments.
To see how ChartHop can help your organization, request a free, no-obligation demonstration of the ChartHop platform.