Effective performance management is essential for not only developing employees, but for improving accountability, enabling continuous feedback, and strengthening manager-employee relationships.
When we talk about effective performance management though, we’re not talking about annual reviews. Sure, they’ve been used by organizations for decades, and no doubt served a purpose during this time. But they no longer work. At least not in isolation.
Well, to start with, employees want more frequent performance-related discussions with their managers. Only bringing up their performance once (or twice) a year no longer cuts it. In fact, by doing so you risk a negative impact on their professional growth, an increase in anxiety and mistrust, not to mention poor employee retention.
So, what’s the alternative to annual performance reviews?
Continuous performance management.
Throughout this article, we’ll cover what continuous performance management is, the benefits of using it compared to annual performance appraisals, and guidance and best practices for implementing it within your own organization.
- What is continuous performance management?
- Continuous performance management vs annual performance reviews
- The benefits of continuous performance management
- Continuous performance management best practices
- Final thoughts
What is continuous performance management?
Continuous performance management can be defined as being a modern approach to evaluating and improving employee performance, through the use of regular feedback discussions between a manager and their direct reports.
Unlike the more traditional performance appraisals that often happen on an annual basis, continuous performance management is exactly what it says; continuous. In fact, these continuous feedback conversations typically occur as often as once a week and often take place in a one-to-one meeting.
Continuous performance management vs annual performance reviews
Feedback plays a fundamental role in an employee’s development, which is why it’s not enough for companies to limit this feedback to yearly, six-monthly, or even quarterly performance reviews.
That’s not to say there isn’t a place for more formal, infrequent performance discussions though. They just shouldn’t be relied on in isolation. Before we dive into the benefits of having more frequent feedback conversations, let’s look at the problem with not having them.
The problem with traditional performance reviews
The first thing to point out here is that 96% employees want more regular feedback. In fact, not only do they want it, but by getting it they stand to become more engaged and productive.
Relying on traditional performance appraisals alone not only prevents you from building a more engaged and productive workforce, but it can actually be detrimental to the engagement and productivity of your employees.
Well to start with, more than half of all employees feel that annual reviews are inaccurate. They simply don’t believe that a once-a-year review can accurately capture their performance. What’s more, 74% of millennials – a generation that makes up a significant amount of your workforce – claim to be left feeling “in the dark” about their work performance and how they can improve.
Then there’s the fact that 59% feel their managers don’t come adequately prepared for their performance review, which often leads to feelings of anxiety and mistrust.
Finally, 50% of employees claim to have been surprised by the outcome of these reviews, the vast majority of which being negatively surprised, which ultimately resulted in a 23% drop in engagement.
Still not convinced?
Research suggests that, when compared with annual performance reviews, organizations that implemented continuous performance management saw significant improvements in:
- Productivity across the company (66% vs 35%)
- Employee motivation across the company (65% vs 35%)
- Employee performance (58% vs 35%)
- The company’s ability to meet its goals (64% vs 39%)
- Enterprise agility (47% vs 27%)
- The ability to retain high performing talent (63% vs 41%)
- The ability to identify high performing talent (55% vs 36%)
So, if you’re still on the fence about moving towards a continuous performance management approach, the numbers really do speak for themselves.
Ultimately, organizations that make use of continuous performance management experience an increase in productivity, employee engagement, business performance, and employee retention.
The benefits of continuous performance management
Impact on bottom line
So, if you’re looking for a reason to adopt continuous performance management, there you have it; regular employee feedback contributes to an increase in business profits.
Ability to retain talent
Employee retention is a concern for companies at the best of times, but throw in a global talent crisis, not to mention the Great Resignation, and it’s a major challenge.
Continuous performance discussions between a manager and employee can help tackle this challenge in a number of ways.
Firstly, and as we’ve already mentioned, employees want more regular performance-related feedback, and by failing to provide them with it puts you at risk of them leaving for a company that does.
Secondly, continuous performance management conversations can enable organizations to close skills gaps internally.
By keeping their fingers on the pulse of employee’s strengths, weaknesses, and career development goals. In fact, by ensuring that managers are regularly having these conversations with their direct reports, HR can be better equipped to identify and tackle skill-gaps straight away.
Better employee-manager relationships
By having more regular one-to-ones, managers can begin to strengthen their working relationships with their direct reports.
This not only helps empower employees to raise issues or concerns, but it also gives managers the opportunity to recognize great work in real-time, which can boost morale, confidence, and productivity.
Ultimately, regular performance-based discussions can contribute to a more supportive working culture.
Greater levels of productivity
When employees feel that their work is both recognized and valued, they’re more likely to work harder. 4.6x harder, in fact.
Continuous feedback is therefore crucial for productivity and engagement.
Better performance outcomes
With greater productivity often comes greater performance outcomes.
And with greater performance outcomes comes increased profitability.
According to research from Gallup, companies with a highly engaged workforce are 21% more profitable than those without. Just as a side note, low levels of employee engagement costs organizations $450-500 every year.
Improved ability to identify and resolve issues
One of the main advantages to having regular feedback discussions is that problems can be identified and resolved in real-time.
Implementing continuous performance management
Establishing a continuous performance management process within your organization won’t happen overnight. After all, it requires managers and employees alike to adopt a coaching culture.
So, what are the steps you need to take to roll out a continuous performance management process across your organization?
Below, we’ve outlined some key things to consider actioning:
Build up to a continuous performance management process with regular one-to-ones
If they’re not already doing so, managers should start by having regular one-to-ones with their direct reports. Not only does it help create a good foundation for having continuous performance discussions, but they can also strengthen working relationships between both parties, contributing to an increase in psychological safety, employee engagement, and performance.
While the cadence of these meetings will often be decided by the manager’s themselves, ideally, they should be aiming to have weekly, if not fortnightly check-ins with their employees.
Not sure what they should be covering in these one-to-ones? Take a look at these ten one-to-one meeting agenda templates for inspiration.
Train managers as coaches
If you want to build a productive, engaged, and high-performing workforce, one of the best things you can do is train your managers to coach their teams.
Well to start with, managers that can coach can help their direct reports leverage their strengths, improve on their weaknesses, and develop new skills, each of which empowers and motivates these employees to do their best work, ultimately contributing to business success.
Then there’s the fact that more engaged and motivated employees are more likely to stay and grow with the company. In other words, by creating a coaching culture, you stand to not only retain talented employees and keep employee turnover to a minimum, but you also are in a stronger position to develop the next generation of leaders, something that has been identified as a major business challenge.
The question, therefore, is how do you go about training managers as coaches?
The first step is to train them to have coaching conversations.
While we’ve put together a comprehensive guide on how you can do this here, one of the most important skills they will need to develop is active listening.
Active listening specifically involves:
- Giving individuals their full attention
- Avoiding judgment
- Reflecting on what’s been said and paraphrasing key points
- Probing the employee to reflect themselves using clarifying questions
- Summarizing key themes
Trial continuous performance management in a single department
Rolling out a new approach to performance management company-wide is no easy feat, but it can help to trial it with a single department. In fact, if successful, it can help you build the business case to launch it across the wider organization.
Continuous performance management best practices
Ensure managers are having the right conversations around goals
To drive both accountability and alignment in their teams, it’s important that managers are regularly discussing progress towards goals with their team members, both individually and collectively.
While it will be down to the manager to decide on the best meeting cadence for these conversations, we would recommend that they:
- Ask direct reports if there are any blockers towards them achieving their goals in their one-to-one catch ups.
- Hold a separate meeting to discuss priorities and blockers in more detail, in order to evaluate whether the employee is spending their time where it matters most. This conversation may be part of a regular cadence or only used if the manager suspects the employee may be struggling.
- Have a quarterly meeting to review the employee’s previous goals, and set new ones.
You can view the agenda templates for each of these meetings and more here.
Train managers to provide constructive feedback
One of the most effective skills that the managers in your organization can possess is the ability to provide constructive feedback. The problem, however, is that not all managers have the confidence to provide their teams with this feedback, particularly when it’s not positive. Which in turn negatively impacts employee engagement, motivation, and ultimately performance.
The thing to point out here is that 82% of employees appreciate feedback, even when it’s negative.
What’s more, 43% of highly engaged employees were found to receive feedback at least once per week, further highlighting the importance of having frequent performance discussions.
So, if you’re not already providing your managers with the training, knowledge, and support to be able to give their direct reports constructive feedback, you need to be.
Here are four steps managers can take to develop this skill:
1. Use one-to-ones as an opportunity to have feedback discussions
Impromptu conversations around poor performance can cause anxiety amongst employees and even put them on the defensive. Moreover, it can also make the conversation a bigger deal than it needs to be.
This is yet another reason why regular one-to-ones are so important. They allow managers to have informal conversations with their employees around their performance, while providing ongoing support in the form of a development plan.
We’ve put together some guidance on how managers can lead more open and honest one-to-ones here.
2. Use the right tone
Both the tone and the delivery of constructive feedback is crucial for keeping employees engaged and motivated.
Ideally, managers should start the conversation on a positive note, drawing on something that the employee is already doing well. By doing this, they can set expectations of what ‘good’ looks like and make it clear that they want to support them in continuing to develop certain skills.
It is, however, important that they are clearly explaining the problem. Where possible, they should provide actionable feedback and specific examples. They should also let the employee know that they’re drawing attention to certain areas because they believe it will ultimately help them to improve their overall performance.
3. Avoid overwhelming employees with feedback
While there may unfortunately be times where an employee is needing to improve in multiple areas, we’d recommend that managers avoid overwhelming them by keeping the conversation focused on just one or two areas of improvement at a time.
4. Managers should find a solution with the employee
Performance-related conversations shouldn’t be one-sided, and managers should give their team members the opportunity to respond to any comments. Not only does this give managers the opportunity to see it from their perspective and ask them what they think they can do to improve, but it can also help the employee to feel like their opinion is valued.
From here, managers should work together with the employee to create a plan and outline steps that can be taken to adjust their performance.
This is another reason why it can pay to train your managers as coaches.
Equip managers with the right tools to provide feedback
Knowing how to provide feedback is only the first step, and your managers will need access to the right tools and support to facilitate these conversations.
At Saberr, we not only provide managers with meeting agenda templates so that they can have more structured and effective meetings with their direct reports, but our machine learning capabilities enable us to deliver contextually relevant tips and resources in the flow of their work.
This in turn will not only give them the confidence to provide better and more constructive feedback, but it will also develop their ability to successfully coach their team to success.
Final thoughts on implementing continuous performance management
In today’s era, relying on annual performance reviews alone can be damaging to both your employees and your business as a whole. After all, employees want more regular feedback, good and bad, and failing to provide it to them can lead to a drop in productivity, engagement, and performance, or even to them leaving the company altogether.
Regular feedback between a manager and employee shouldn’t just be a tick-box exercise though. Instead, it should be part of a regular discussion around performance.
This ultimately relies on your managers developing the right habits, such as having regular one-to-ones with members of their team.
At Saberr, we help both managers and the teams they lead to develop the habits that drive better performance. You can see for yourself how we do this here.