How to Shift to Continuous Performance Management
Let’s address the elephant in the room: Managers and employees are generally dissatisfied with performance management. For those of us responsible for designing, implementing, and ensuring the execution of performance management, there is no doubt it is a necessary tool in the organization’s talent strategy toolbox. Performance management is needed to ensure organizations can align organizational goals and individual employee efforts, career goals, challenges, and accomplishments. Beyond dissatisfaction with the process, is the process effective? Many HR professionals are answering, “No.” Enter continuous performance management, a performance management process evolved from decades of talent management experiments and the pressure on companies to continuously innovate to survive.
Traditional performance management typically relies on one or two appraisals – normally, the annual review. The annual review is a look back to a certain period and produces an important metric used throughout the organization: An annual review rating. This rating has powerful implications and is used to inform important decisions and processes, such as:
- Employee compensation and rewards
- Promotions, demotions, terminations
- Individual Development Plans
- Organizational talent analysis
The convenience of the annual review rating as a ‘catch all’ for many processes makes it difficult to imagine a performance management process without it. If this sounds like your organization, you are not alone. While dramatic overhauls ridding an organization of an annual review process may make for interesting headlines, a gradual shift towards continuous performance management is much easier, more realistic, and more impactful to employees and managers.
Here are 4 changes to start the shift to a continuous performance management process:
1.) Establish a 1:1 performance meeting and communicate the schedule to all employees and managers.
Managers and employees are likely meeting frequently, but all employees should be aware of a minimum performance meeting frequency. For example, communicate to managers and employees that they should conduct a 1:1 performance meeting at least quarterly.
2.) Create a 1:1 performance meeting template and train managers and employees to use the template.
Managers and employees may meet frequently but may not discuss important performance topics such as company goals, employee goals, objectives, development, and career development. By creating and sharing a 1:1 performance meeting template, HR can alleviate managers of the burden to research best practices. By communicating to both managers and employees, HR is setting an expectation that employees have ownership of their career and their place in the organization.
3.) Provide the tools to capture the conversation in a performance management system.
Most talent management systems should be able to capture conversations. By centralizing where managers and employees document these conversations, HR creates an expectation that these 1:1 performance meeting notes can be and should be referenced throughout the employee’s tenure, as well as in in the annual performance cycle.
4.) Train managers to reference the regular 1:1 performance meetings while writing the annual review.
A known issue with the performance review is recency bias, where the focus of the annual review is on what is most recent, not necessarily a holistic view of the entire performance period. By training managers to reference 1:1 performance meetings, HR creates an expectation that the whole review period is weighted equally.
For organizations not yet ready to ditch the annual review, making small but impactful shifts towards continuous performance management will improve the consistency and quality of performance discussions. Employees will feel more empowered, informed, and aligned to the organization’s goals.