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Performance Management

Continuous Performance Management in 2022: What, Why and How

Wouldn’t you agree that the unleashing of the pandemic coupled with the dynamism and uncertainty is pushing businesses to rethink all aspects of their scalability, including performance management?

Invariably, there is a sentiment to move away from the traditional methods focused on annual interventions to invest into something more continuous and regular. 

In this article, we will explore the rise of continuous performance management, what it means, its merits, and how you can leverage its unique capabilities. 

Table of content

What is continuous performance management

The shift from annual to continuous performance management

Elements of continuous PM

Benefits of continuous performance management

The myth about continuous PM

How to implement continuous PM in your organization

Best practices in continuous performance management

What is continuous performance management?

Continuous performance management entails focusing on different performance management processes at regular intervals throughout the year, on an ongoing basis. The central focus here is to highlight the importance of a holistic performance management approach, marked by regular check-ins and frequent feedback to facilitate better business results. 

Contrary to the traditional performance management approach, which solely focuses on annual interventions and check-ins, continuous performance management advocates the need to connect more frequently to foster a sense of belongingness, engagement, and an enriching experience. 

Why are organizations shifting from annual to  continuous PM?

You need to adopt continuous performance management to keep pace with the new employee expectations, changing nature of the businesses, and customer experiences to enable organizations to not only survive but thrive. Organizations today no longer operate in a stable environment. Invariably, goals, timelines, expectations, cannot be set a year in advance and be left to annual interventions as advocated by traditional performance management systems. 

The market dynamics, cut-throat competition, and agile business conditions are pushing organizations to constantly reinvent and innovate to ensure business continuity. Therefore, performance management, monitoring, evaluation and realignment, once a year can no longer suffice the changing requirements.

Moreover, continuous performance management, by the virtue of facilitating regular connections, has the potential to foster greater communication and collaboration, which can enable businesses to thrive in a connected world. On the other hand, the traditional annual appraisal approach promotes silos in working, preventing engagement and creation of shared value. 

Elements of continuous performance management

elements of continuous performance management

With a firm understanding of the what and the why, let’s understand the key elements that make continuous performance management stand apart. The following four elements ensure that businesses are not stuck with rigid goals and metrics and give them the room to innovate and create value:

1. Dynamic goal setting

In a continuous performance management system, focus on dynamic goal setting with more importance towards near and short term goals. The objective here is to ensure flexibility and continuously reinvent the goals based on business needs and market circumstances. Dynamic goal setting ensures that the goals are regularly validated and updated to create maximum organizational impact.

2. Frequent feedback

The next element for continuous performance management is frequent and two-way feedback. There are two facets at play here. 

  • First, feedback and performance corrective measures should be shared regularly and in real time to ensure implementation and performance improvement. 
  • Second, the feedback should flow in both directions. 

While the traditional approach focuses on a top to bottom feedback, the continuous performance management advocates a bottom up feedback mechanism as well. Thus, the objective is to have a holistic and regular approach to feedback.

3. Regular check-ins

While frequent feedback is a more formal intervention, regular check-ins are an integral part of continuous performance management. Regular check-ins seek to address challenges and realign expectations during the course of a task or a project. 

Instead of waiting till the end, as advocated by annual performance management, the continuous approach believes that regular check-ins between employees and their managers, amongst co-workers and across the organization lead to better collaboration, greater alignment and collective responsibility.  

4. Self evaluation   

Continuous performance management requires organizations to introduce the element of self evaluation. Under the traditional approach, the leadership and managers are solely responsible for evaluating the performance of employees. 

However, the continuous performance management approach encourages employees to evaluate their performance on a regular basis. The objective is to identify for oneself the challenges as well as the opportunities to contribute to one’s own professional development, and, thereby, further organizational growth.   

5. Constant recognition 

The final element of the continuous performance approach for our discussion today is constant recognition and appreciation. Continuous performance management provides the opportunity to regularly monitor employee productivity and value creation, and, consequently, reward the top performers. 

The idea is to appreciate efforts and good performance in real time — even for smaller wins —  rather than wait till the end of the year. This has the potential to act as an incentive for the recipients to feel acknowledged and valued for their contribution as well as for others to improve and get rewarded the next time. 

Top seven benefits of continuous performance management 

There are several benefits that organizations that have adopted continuous performance management claim to have reaped. Here are the top seven which make the most sense for organizations as well as individuals:

1. Greater engagement

Regular check-ins, frequent feedback, and interventions lead to greater avenues for employees and managers to connect and collaborate. Employees are often more happy and satisfied as opposed to traditional performance management. 

According to research, 95% of managers report they are “unhappy” with traditional performance reviews. Therefore, a continuous approach leads to a greater sense of engagement and belongingness. Employees feel a part of a larger vision when they are frequently reminded of the big picture and their contribution to the same. 

2. Better financial results

Continuous performance management seeks to ensure that performance challenges are addressed in real time to augment productivity and impact the bottom line. Statistically speaking, companies adopting continuous performance feedback significantly outperformed competition at a 24% higher rate

Therefore, continuously evaluating performance and focusing on development can lead to better financial results for the organization.

3. Increased retention

When they are constantly engaged, appreciated and included, employees’ commitment and dedication towards the organization increases. Invariably, this reduces the voluntary turnover rate and promotes greater retention. 

Furthermore, when employees stay longer it creates a positive employer branding facilitating attraction of top talent, as well as building a strong succession pipeline.  

4. Greater organizational connectedness

Frequent check-ins and interventions not only augment engagement but also facilitate greater connectedness. Connecting and collaborating to review performance and improve it ensures that employees know more about one another, are able to build authentic relationships, and the workplace dons a more human and impactful cultural fabric. 

5. Real time improvement

Under the traditional performance management system, employees and managers wait till the end of the year to voice their concerns about what’s not working well, which invariably is quite late, especially in the fast paced world today. The team members of managers who provide weekly feedback instead of annual are 5.2 times more likely to strongly agree that they receive meaningful feedback. Continuous performance management enables real time feedback and improvement to ensure that only the most effective and efficient practices and processes are followed. 

6. Promote a high performance culture

Continuous performance management pushes employees to work hard and give in their best all year long and not just on the days closer to the annual review. Globoforce research shows that 51% of employees believe that annual reviews are inaccurate, and 53% say it does not motivate them. Whereas, a continuous approach promotes a sense of responsibility to perform well everyday and each day counts. Invariably, this leads to a culture where high levels of performance becomes a norm. 

7. Greater agility and resilience

Finally, organizations which adopt continuous performance management are agile and resilient. They are capable of reinventing their goals, processes and practices, and adapt to any changing circumstances. This agility and resilience is critical for business continuity and maintaining a competitive edge.

Why do some organizations resist continuous PM?

Despite the remarkable benefits and advantages, organizations are apprehensive and reluctant about adopting a continuous performance management approach. There are three major reasons behind such reluctance, including:

Lack of managerial buy-in

Continuous performance management requires greater efforts and interventions on the part of the managers and leaders. They often see it as an additional burden and shirk away from this responsibility as they are unable to see the immediate merits for themselves as well as for the organization. 

It is important to create the right case and explain to them how in the long run, continuous performance management can create a seamless high performance journey.

Waste of time

It is true that frequent interventions and continuous management requires a greater time commitment than annual reviews. This is, thus, seen as a roadblock where organizations feel it is a waste of time.

However, it is important to undertake a cost benefit analysis to understand how continuous performance management holds the key to various tangible and intangible benefits mentioned above, which would require additional resources and commitment if a continuous approach is not adopted. Using a continuous performance management tool saves 100+ manager hours by automating the entire process.

Lack of right metrics and tools to measure

Finally, many organizations do not have the right tools or are unaware about the right metrics to make sense of the value created by continuous performance. In such a situation, this transformational approach is dismissed as ineffective and not an organizational priority. Here, organizations must partner with the right platforms that can help gauge the results of continuous performance management and translate it into organizational impact. 

How to implement a continuous performance management system?

An understanding of the key elements, benefits and apprehensions of a continuous performance management system leads us straight to comprehending how to facilitate organization-wide implementation for the same. These following six steps can enable organizations to start implementing and reaping benefits of the continuous performance management system:

1. Facilitate employee and leadership buy-in

It is important to start with seeking a buy-in from the leadership as well as the employees. Continuous performance management requires some investment in tools and resources to facilitate regular check-ins and frequent interactions. It also requires a mindset shift and greater effort on the part of managers and employees to connect more frequently and align performance and goals often.

Therefore, the first focus must be on getting everybody in the organization onboard with the idea by illustrating the top benefits both for the organizations (like greater productivity and business continuity) and for the employees and managers (like greater growth and development).

2. Invest in manager training

Manager and executive buy-in must be followed by considerable investment and focus on manager training. This involves investing in training to facilitate behavioural change amongst managers to facilitate competencies for coaching and transforming the way they communicate. 

Continuous performance management requires a greater degree of communication and collaboration between managers and employees, and, therefore, investment in building leadership, mentorship and coaching skills is instrumental. 

3. Set dynamic goals and OKRs

Once everyone is onboard with the right skills and competencies, the natural next step is to set goals and OKRs which are dynamic, agile and flexible. A focus on SMART goals can facilitate continuous performance management. Second, the goals must be agile and flexible. This suggests a move away from the traditional rigid goals which leave no room for transformation. 

The goals should be aspirational, but at the same time must be dynamic enough to change to keep pace with the changing business conditions. Conditions like the pandemic of 2020 cannot be anticipated a year in advance, and business goals must be flexible enough to be reinvented based on the circumstances in hand. 

3. Foster a culture of 1:1 conversations 

Based on the goals and OKRs, the next step for effective implementation of a continuous performance management system is to foster a culture of 1:1 conversations between employees and their managers. These regular conversations must have a structure and cadence to ensure they are not missed out. 

Such conversations can help eliminate roadblocks by discussing challenges and potential solutions. Connecting regularly also helps to build authentic relationships and breed trust. Finally, this can lead to a greater sense of belongingness, improve engagement, and ultimately boost performance. 

4. Collaborate with effective platforms 

Next, organizations must leverage different platforms that help facilitate effective continuous performance management. For instance, SuperBeings enables organizations to measure employee pulse as well as capture the level of performance with daily pulse surveys. Based on the responses, managers can align their outlook and benefit from industry best practices to create a high performance culture. 

The objective is to collaborate with tools which can facilitate the process of capturing and analyzing employee data on a regular basis and translate into meaningful insights to manage and improve performance. 

5. Measure and optimize

Finally, it is important to measure the effectiveness of the continuous performance management system and understand its impact on organizational productivity and bottom line. While some aspects of the process will work well, others will require some work and optimization to achieve the desired goals. 

It is also important to gauge the level of adoption and reasons behind low adoption to address the same. Choosing a platform that integrates in the flow of work requiring zero context switching for employees and managers, thus increasing adoption.

Continuous performance management: 5 best practices

Most fast growing organizations agree that steps for implementation coupled with a few best practices form the secret recipe for successful continuous performance management. Let’s look at the top five practices to ensure maximum impact.

1. Two way goal setting

The goals must be created collectively. This entails involving employees in the goal and OKR setting process to ensure a sense of commitment and ownership. When employees take part in setting the goals they tend to be more accountable. Furthermore, they have a better understanding of their role in achieving them and what is expected out of them.

2. 360 degree feedback

Continuous performance management requires a focus on feedback from different stakeholders. This involves managers, subordinates, co-workers, professionals from other departments as well as self evaluation. The idea is to get a holistic picture of the employee’s performance, not just on technical skills and productivity, but on different ways they are able to create value for the organization. 

3. Transition in frequency

The transition from the traditional annual performance management must be gradual and incremental. Transforming annual reviews to daily reviews in one day will topple the status quo and lead to an overwhelming situation across the organization. Therefore, annual management should be transitioned to quarterly review and interventions and with time, frequency should be increased to make it a continuous effort. 

4. Leverage technology

A focus should be on integrating the available technology tools with existing processes to facilitate greater effectiveness and reduce the cost and time to start from scratch. For instance, leveraging platforms like SuperBeings that integrate with Slack or MS Teams can be instrumental in promoting better and regular communication and collaboration between teams. It also helps gauging team pulse and capturing the level of performance regularly to identify areas and ways to improve. 

5. Shift focus from performance evaluation to development

Finally, continuous performance management requires organizations to shift away from the traditional notion of evaluation, which focuses on measuring productivity and organizational impact. Rather, the focus should be on employee development to facilitate the growth and development of the most important organizational asset and resource, the employees. The idea is to align organizational and employee goals and promote a more collaborative approach which entails impact for businesses as well as those who participate to foster its success. 

Final thoughts

As we draw this discussion to a close, it is evident that continuous performance management is integral for organizations to thrive in the new normal. On one hand, it helps meet the need of the new millennial workforce for most fast growing organizations which expect and demand frequent feedback. On the other hand, it enables businesses to stay agile and resilient to reinvent and innovate and stay relevant with the changing market dynamics. 

If you are starting your journey towards continuous performance management platforms like SuperBeings can facilitate a smooth ride. With capabilities to continuously gauge employee pulse and translate it into meaningful insights for better performance and manager development, To build a high performance culture book a demo below.

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