Top 10 Benefits of Continuous Performance Management
Nobody enjoys performance reviews. They are an annual event that costs everyone in your business time and money while generating little to no lasting improvements. Most companies know they’re incredibly ineffective for evaluating performance, but don’t believe there are any valid alternatives.
Thankfully, this is not the case.
Recently, there has been a lot of buzz around major corporations like Adobe, GE, Deloitte and Goldman Sachs for scrapping the traditional annual employee reviews in favor of a different approach called continuous performance management.
Because the focus of continuous performance management is establishing a culture of ongoing, real-time feedback and discussion, it eliminates the headache of reviews and improves employee performance. Consequently, the results published by every one of these companies have been overwhelmingly positive: They announced better engagement levels, less turnover and an uptick in productivity.
Armed with this knowledge, let’s examine 10 reasons why you should transform your process as well.
1. Employees always know where they stand
Studies show that fewer than half of the employees know where they stand concerning their performance, and how can we expect employees to be at their best if they don’t know where they stand?
Ongoing, real-time feedback will provide them with the guidance they need to develop and accomplish your company’s goals continuously.
2. Timely and Actionable Feedback
Giving feedback once a year almost guarantees that it will be vague and largely irrelevant by the time your staff hears it. Saving up a year’s worth of critiques is also detrimental to morale and often hurts engagement and productivity.
To perform at their best, employees need feedback immediately after a situation. Whether it’s encouragement or coaching, delivering a timely response helps to improve engagement levels and growth.
3. Constant Opportunities for Development
Imagine if a sports coach waited until the end of the season to provide feedback to his team. The very idea is absurd, right? How can he expect his athletes to develop their skills if he only gives them an opportunity for growth once a year?
Leading your team is no different.
Yes, yearly reviews are “the way it has always been done”, but that doesn’t mean it’s an idea that should persist. Let’s drop this habit right here, right now. Employees that receive feedback consistently have a chance to improve consistently. It’s that simple.
4. Forward Focus
You’ve probably noticed that annual performance reviews can get tense. This is because it’s a natural, human response to become defensive when we’re subjected to a stream of critiques. It feels more like a judgment and less like a conversation.
The beauty of continuous performance management is that it shifts the focus from past mistakes to future opportunities. Rather than a year-end judgment, you’re now engaging in a year-long conversation. Feedback is focused on minor adjustments instead of overwhelming course corrections, which leads to better outcomes.
5. Managers Enjoy A Richer Picture of Employee Performance
According to the research firm CEB, roughly 90 percent of HR managers believe that the traditional review process doesn’t paint an accurate picture of an employee’s performance.
In a continuous performance management process, 360-degree feedback data is collected and accessible throughout the year. Consequently, managers enjoy a much more comprehensive picture of an employee’s actual performance.
6. More Meaningful Interactions
Every leader knows just how stressful it is to go through all of the administrative work that comes with annual reviews. The extra paperwork and planning can make it difficult to focus on having a substantive conversation, which is supposed to be the whole point of this exercise.
When feedback is collected and exchanged throughout the year, the review is essentially already over with by the time the two sit down. This allows managers to focus their attention on helping employees grow and work towards their goals.
7. Reduced Recency Bias
A glaring flaw in the traditional review process is the tendency to place too much weight on recent events. This “recency bias,” whether the events were good or bad, can render the reviews ineffective and, more often than not, demotivating.
When feedback is exchanged throughout the year as the situations arise, the risk of recency bias is more or less nonexistent. This way, employees enjoy a model that is more transparent and fair to them. Translating into happier workers that are more engaged and productive.
8. Improved Ability to Close Skill Gaps
According to Deloitte’s Human Capital Trends, executives view shortages of skill as one of the most critical roadblocks to executing business strategies. Moreover, they realize that they cannot always just recruit the ideal talent they need for the job but must develop talent internally. Hence, identifying and closing those skill gaps is a pressing priority.
In a continuous performance management process, feedback flows freely throughout the year, and the corresponding data is always available. This means employees, managers, and organizations have a real-time cockpit throughout the year to spot and tackle skill-gaps immediately.
9. Corporate Values Come Alive
Every company creates a set of values that they hope will establish the kind of culture that drives engagement and performance. However, these same companies are fighting a constant, uphill battle to transform these vague ideals on a poster into actionable behaviors that can be measured objectively on a daily basis.
Continuous feedback allows corporations to make those values come alive in a way that will create the company culture they strive for.
10. Getting What You Pay For
CEB estimates that a company with 10,000 employees will spend upwards of $35 million annually on traditional performance reviews. It’s an astounding investment into a process that produces no results.
In contrast, businesses that have adopted an ongoing process have reported a 30 percent reduction in employee turnover, record-breaking engagement levels, and increased productivity.
Continuous performance management is a highly effective, cost-efficient way to boost morale, increase productivity and create a team that will lead your company to success for years to come.
If you’re interested in learning more about how your company can apply this approach in practice, feel free to contact us. QuercusApp is a cloud-based application enabling continuous performance management for the future. We’re a lightweight solution focusing on ongoing, real-time feedback among employees and frequent conversations between managers and employees. The result is a powerful process that engages, empowers and aligns employees to deliver on your organization’s top priorities.
