Workforce Management

Outperforming Performance Management

Organizations with a continuous feedback process are experiencing five major benefits.

By Diane Strohfus

A company’s performance management process helps address several business priorities, including nurturing an aligned workforce, attracting and retaining top talent, and helping managers better guide their employees. Betterworks’ State of Continuous Performance Management Survey revealed that companies with continuous performance management processes were significantly more effective at many important measures, including:

  • increasing productivity throughout the company;
  • motivating the entire workforce; and
  • identifying and retaining high-performing talent.

Overall, the research found that HR teams that implemented a continuous performance process reported being nearly 50 percent more satisfied with their performance management program and 24 percent more likely to recommend this methodology compared to companies that still rely on annual reviews.

Here are the top five ways enterprises with continuous performance management processes are differentiating themselves from those with a traditional annual approach.

1. They outperform the competition. Overwhelmingly, respondents who worked for organizations that have adopted continuous performance practices saw significantly better results for their businesses. In fact, they reported outperforming or significantly outperforming their competition at a 24 percent higher rate.

This finding is supported by independent research from Deloitte, which found that organizations with effective performance management systems perform 92 times better financially than those with ineffective, often annual, reviews.

2. They achieve the goals and priorities of the organization. Executives want to feel confident that their workforce is focused on the right things: the activities and objectives that matter most to the organization’s sustained success. According to the study, companies with continuous performance programs in place outperformed or significantly outperformed their established goals at a 50 percent higher rate than companies without a continuous program.

In a rapidly changing business environment, a continuous performance review process ensures that the entire workforce stays aligned with changing priorities and maintains the transparency needed to ensure the company progresses towards its goals.

The research also found that companies that adopt a continuous performance process are 42 percent more effective at holding employees accountable and 34 percent more effective at holding teams accountable.

3. They create a more aligned workforce. Employees today want to know that their work contributes to something larger than themselves. This sense of purpose comes from effectively communicating the company’s mission and aligning everyone’s work to top company goals.

Companies with continuous performance review processes are 26 percent more effective at communicating company goals overall and 23 percent more effective at aligning their workforce to top priorities.

Employees want frequent feedback to ensure that they’re headed in the right direction, and more frequent, ongoing check-ins between employees and managers are a good solution. Companies with a continuous process in place are 71 percent more likely than those without to require their managers to check in with their reports on goal achievement at least three times or more throughout the year.

This pays huge dividends in terms of organizational transparency and improved communication throughout the organization, with companies that leverage this approach reporting a 32 percent increase in their ability to communicate progress towards top objectives across the organization.

4. They attract and retain top talent. Today’s job market is highly competitive. Unemployment is at its lowest rate in 50 years and new hires are demanding the highest average salaries in a decade, according to CNBC. This situation creates very real costs that can account for as much as 70 percent of a company’s total expenses, finds Paycor. The tough hiring environment makes retaining, developing, and motivating the workforce mission critical.

When companies have a continuous performance program in place, they are 39 percent better at attracting top talent and 44 percent better at retaining that talent. Job candidates and existing employees recognize that the company actively supports each employee’s growth and development.

It is important to provide employees with the training and development they need to achieve their current goals and address tomorrow’s business needs. Organizations with a continuous process in place are 40 percent more effective at developing their workforce at every level and are nearly 25 percent more likely to rank themselves as effective or very effective at communicating to their employees that they are valued.

5. They help managers become better at guiding their direct reports. Managers play a very important role in improving employee performance.

“People managers don’t always feel fully supported and often, the performance and talent management practices get in the way rather than help them,” said Josh Bersin, global industry analyst, dean of the Josh Bersin Academy, and member of the Betterworks board of directors. “The way a company sets up performance reviews, succession planning, and practices for promotion and career development can either be a great help or a big burden.”

Managers who are supported with training and technology are more effective in their roles. The managers in organizations that have adopted a continuous performance process report significantly higher satisfaction in several key areas, including:

  • feeling supported to become a better manager (44 percent);
  • being supported to develop their team’s skills (48 percent);
  • feeling supported by HR in managing the performance of their team (50 percent);
  • being supported to develop their own individual skills (45 percent); and
  • being equipped with HR tech that is easy to use correctly (35 percent).

Today’s business challenges demand a new approach to aligning, managing, and developing every organization’s greatest asset: its people. Adopting a continuous performance management process addresses these survival-critical challenges, with McKinsey reporting that organizations are three times more likely to outperform the competition when they have an effective performance management system in place.

Importantly, it’s not enough that the performance management technology solely benefits HR; it also has to be valuable to managers and employees. The best way to introduce this strategy seamlessly is to build the elements of a continuous performance process into the natural flow of the company’s work.


Diane Strohfus is chief human resources officer for Betterworks.

Tags: Workforce Management

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