Continuous Performance Management Definition
Continuous performance management or performance development is a real-time, forward looking approach to performance that companies use to align and grow their employees, and truly help them succeed.
Unlike annual reviews, continuous performance management is focused on coaching and developing the whole team instead of seeking out a minority of non-performers - making employees feel happier, retaining them for longer and building performance faster.
Of course, improving employee performance doesn't just happen overnight with a new process, which is why continuous performance management is bigger than a one-off training course or piece of technology. It's a shift in mindset that recognises businesses are now competing on innovation, creativity and collaboration, in a world where we need to quickly adapt and respond to the fastest changing environment we have ever experienced.
With continuous performance management you're not just doing more of the old way, or increasing the number of review cycles. You're helping managers to become inspiring leaders that empower their team members to take ownership of their own performance and ultimately build a culture of collaboration and innovation.
In other words, you're actually working in a human way.
Continuous performance management is the way your employees want to work. Learn how Crewmojo makes it possible here.
Employees Have Spoken
It's time for a reality check:
After seeing the research across thousands of employees, what we've heard loud and clear (and maybe you've felt this too) is that something is broken with the way we manage performance.
Over the past several decades, we've become obsessed with process and efficiency, setting up KPI's, policies, charters, job descriptions and so on.
We've become so focused on things like centralised control, risk management, change gates, that we've lost track of what really matters in today's environment.
At some point, setting up corporate controls started being more important than thinking our employees can add value.
As a result, the employee experience that many companies provide has become cold, robotic and untrusting. For many leadership teams, their employees have become faceless entities that exist only inside of spreadsheets - they aren't treated like actual people.
Not only is this a terrible experience for employees, it's also bad for business.
The way we've been managing our people is broken.
The good news? You already know how to fix it, because the solution has always been there. We need to make our employee relationships human - just like any other relationship.
So that's exactly what we're doing, and the way we're doing it is by putting ongoing, coaching conversations at the center of the employee / manager relationship.
We're replacing once-a-year, backward looking appraisals with forward looking, continuous performance management.
Keep reading to learn more about what continuous performance management is, what kind of results it’s been driving for businesses, and how you can implement continuous performance management at your business.
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Table of Contents
- 5 Distinguishing Best Practices of Continuous Performance Management
- The History of Continuous Performance Management
- OKR Goals, 1-on-1 Meetings, Real-Time Feedback, Manager Sentiment: The continuous Performance Management Strategy & Methodology
- The Benefits of Adopting Continuous Performance Management
- Final Thought: How to Make the Switch to Continuous Performance Management
Instead of forcing people to fill out static performance forms once or twice a year and wait for feedback (that might never come), continuous performance management focuses on engaging employees in real-time, both with 1-on-1 conversations and in-the-moment feedback.
Remember: The aim is to help employees when it's relevant so they can make minor course corrections or understand what good looks like. Building in regular reviews of goals ensures work stays aligned and quickly adapts if business priorities need to be shuffled... which is common occurrence in today's world!
Feedback is tied to specific projects or outcomes making it meaningful and actionable rather than traditional time-based feedback which can often lead to more frustration than improvement. That's just the nature of social expectations these days, where feedback is only one click away. Continuous performance management was born out of this real-time world and is the only leadership approach that's adapted to it.
2) Employee Owned
Back in the days when work was predominantly manual, it made sense to set output-based targets like how many boxes employees could pack per hour. This worked well as management could easily measure the number of boxes packed by the highest performers, and then set targets for others to pack the same number of boxes.
This has led to a deep seated belief that performance is centrally managed & administered, and is something that's done to employees once a year.
Today's work is predominantly knowledge based and needs to be measured by outcomes. It requires a flexible work approach because, unlike manual work, the steps to reach the outcome are unknown at the beginning.
Today's employees need trust and freedom to experiment with different approaches, so they can find the most effective way to reach the agreed outcomes. It's simply not productive to be administered by a centralised management structure.
This is a big change in mindset for all participants and at its core includes the empowerment of employees to take ownership of their performance.
With continuous performance management, employees set their own goals (outcomes) from the ground up, they request 1-on-1 meetings with their manager (and set the agenda for what they need in the moment), they actively request feedback and proactively share their achievements, plans and roadblocks.
Managers are there to clear obstacles and coach their team through the daily challenges of knowledge based work.
Before the rise of knowledge work, success was easily be defined by efficiency and productivity - always aiming for better, cheaper, faster. Like machines it's easy to measure this on a linear scale of output and it made sense to rank people from highest to lowest.
This structure creates a competitive environment where employees are pitted against each other to win a top spot in the ranks. The trouble is, with knowledge-based work, success is defined by innovation, creativity and collaboration.
A recent study by EY said 90% of companies say the problems they are trying to solve are so complex they can only be solved by teams (not individuals). So if we're looking for teamwork and collaboration we need a performance system that's not setting up a win/lose competitive environment.
Continuous performance management is all about the ongoing development of all team members, except perhaps for a minority that are not an organisational fit through misaligned values. By creating an environment for growth, employees are empowered to work collaboratively in cross-functional teams, where performance is measured by the business impact of the outcomes achieved.
Building on our previous thoughts, when a competitive performance model is applied to knowledge work... Employees are inadvertently incentivised to keep their work secret - to reduce the chance of a co-worker benefiting and taking a top spot. Quite the opposite of collaborative!
With continuous performance management, goals are transparent and publicly shared for everyone to see - right up to the CEO. We see the benefits of transparent goals showing up on many fronts. Naturally there are increased opportunities for collaboration as a team member with a particular expertise might see a project where she could bring her strengths to bare.
Transparent goals also help us humans to stop making up stories! Stories that we tell ourselves about other people when we don't know what they are doing - if we don't know what they're working on we tend to assume they are doing nothing!
When our goals are visible for everyone to see, not only does it create a sense of accountability, it also helps others on the team to recognise the priorities we are currently working with and can act as a framework to politely say no to new requests that might not be aligned with current priorities.
5) Data Driven
Under the old performance model, data for performance is created at the end of the year to support the assessment process. In fact most of the time spent is on creating, sorting and normalising data to backup remuneration decisions. And if you operate the same way as many companies we speak with, senior leaders and HR teams innately feel the data is inaccurate and performance decisions are then made on opinion and gut feel.
To be clear, using a competency scorecard or rating system to support performance and remuneration decisions is not being data driven.
Continuous performance management fundamentally changes the process of creating data at the end of the year to a process of gathering data constantly throughout the year. The data collected is a mix of qualitative and quantitative from multiple sources. It includes feedback, 1-on-1 conversations, outcomes achieved, roadblocks faced, manager sentiment and peer experience.
This genuinely data-driven approach provides a far more accurate and objective assessment process that ultimately creates a sense of fairness with employees - further increasing employee retention and engagement.
The terms "continuous performance management" or "continuous performance development" have only recently started being used in a corporate environment, but the good news is, people have been practicing the concept for centuries. That's because continuous coaching and development have been integral to high performance teams since the beginning of sporting competitions.
There have been two mega trends in the last 2 decades which have given rise to the corporate shift. First as we've already discussed most jobs are now knowledge-based; and secondly the pace of change in business models and technology is occurring exponentially faster than we have ever experienced.
As a result, not only do we need to empower our employees, but also change our business posture from slow-moving, risk-averse, bureaucratic entities into idea driven, agile and adaptable organisations that can respond to our rapidly changing environment.
It's taken some pioneering organisations to work out the new way over recent years. Google has been working with a quarterly goal process since 2000 ensuring employee's work stays aligned to business needs.
Adobe threw out annual reviews in 2012, but the really interesting part of their journey was how they brought in regular 1-on-1 meetings (or check-ins as they call them) allowing a more continuous and informal performance discussion. Many others followed suit with 11% of Fortune 1000 companies getting rid of the annual process by 2015.
At this time Deloitte calculated they were spending 2 million hours a year filling out paperwork, in meetings, and creating rankings.
As we studied how those hours were spent, we realised that many of them were eaten up by leaders' discussions behind closed doors about the outcome of the process. We wondered if we could somehow shift our investment of time from talking to ourselves about ratings to talking to our people about their performance and careers. - Alec Bashinsky
Deloitte kept ratings, BUT in a very different form. They developed 4 questions that managers would use to record their sentiment towards team members at least once a quarter. These questions however were not rating their staff against competencies, or nine box grids, instead they were rating manager's own experience of their team. Here are the four questions:
- Given what I know of this person’s performance, I would always want him or her on my team. (Rating 1-5)
- Given what I know of this person’s performance, and if it were my money, I would award this person the highest possible compensation increase and bonus. (Rating 1-5)
- This person is ready for promotion today. (Yes/No)
- This person is at risk for low performance. (Yes/No)
In 2016 GE scrapped their annual process and introduce an app called PD@GE (Performance Development at GE), with a key feature of what they call 'Insights' where any team member could provide feedback to another team member. This was quite a defining moment in the evolution of continuous performance management as we consider GE were famous for their previous rank and yank approach to performance.
Today, nobody thinks of performance management as a “welcome guest.” And that’s a result of the impersonal approach we’ve been taking for so long — an approach that values process, form filling and forced ratings over trusting and empowering our employees.
Continuous performance management is how we fix things. It’s a combination of how we get back to basics, unbore work and create a human experience.
3. OKR Goals, 1-on-1 Meetings, Real-Time Feedback, Manager Sentiment: The continuous Performance Management Strategy & Methodology
Look, we get it: Continuous performance management can sound great in theory, but when it comes to actually doing it, the details can become fuzzy.
That’s why we created a methodology that shows you — step by step — how to adopt continuous performance management to align and grow your employees, and truly help them succeed; making your employees happier, retaining them longer and building performance faster.
Step 1: Set Near-Term OKR Goals
For decades, leadership teams have been pouring tons of time and energy into annual off-site strategy retreats where company goals are set and cascaded down the organisation... only for employees to work on something completely different.
It's not that employees are doing this deliberately. It's usually because the goals they've been given quickly become misaligned with what the business actually needs. A symptom of how fast today's environment is constantly changing!
With continuous performance management, goals are employee owned and set, using an agile goal framework like OKRs (Objectives and Key Results). Leadership teams communicate company objectives and employees are empowered from the ground up to come up with goals they can work on that will have the greatest impact on the company objectives.
Employees review their OKRs with their manager each quarter, with an option to archive the goal if enough progress has been made or roll it over and keep working on it if is still the highest priority. The process allows for goals to be changed if a new higher priority comes up - which happens all the time in today's environment.
If you're just getting started, we recommend only adding Objectives (and not adding Key Results) for your first quarter, allowing team members to get comfortable with the new process and cadence.
Once objectives have been captured, Crewmojo can help with prompts and reminders for when to review and if it's time to roll over and set new objectives.
Best of all, with an integrated system you can easily include objectives as an agenda item in 1-on-1 meetings so managers can seek out ways to help ensure successful achievement.
Not only are these type of goals a more natural way to work, but research from Bersin by Deloitte tells us that companies who set near term objectives, as opposed to annual goals, are 3.5 times more likely to be in the top quartile for financial performance.
Step 2: 1-on-1 Meetings
According to research by Gallup, regular 1-on-1 meetings between manager and employees will lead to staff being 3 times more engaged and 21% more productive. With the traditional approach to performance, employees may only get a couple of 1-on-1 meetings with their manager each year.
Often 1-on-1s are left to manager discretion, both in terms of the cadence, and the quality of the meeting. Even when 1-on-1s are happening , we often find managers simply asking for a status update which turns the conversation into a backwards looking reporting exercise.
With continuous performance management and the right tools to support the process, 1-on-1s are employee owned, forward looking and managers take on a coaching and developmental role. Research tells us that 1-on-1s should be happening at least monthly.
Of course, it can be easy for these meetings to become meaningless with a repetitive agenda covering the same ground - that's why it's a good idea to avoid static paper based agendas. Instead it should be about team member's choosing the agenda, based on what is needed at that time. It could be a quick coffee catch up, goals discussion, career, or learning & development. This is where technology can help ensure a well rounded conversation is taking place over the course of the year.
With a quality 1-on-1 discussion you'll be covering many innate human needs for your team members... recognition, being cared for, growth and learning, being part of a bigger picture, understanding their impact. The foundations of all amazing relationships.
Step 3: Real-Time Feedback
For most of us, the words "I've got some feedback for you..." are enough to send a cold shudder right through our body, our brain starts to respond with fight or flight decisions, shutting down our ability to respond rationally and objectively... actually making it difficult to even recall the discussion after it's passed.
But at the same time, when we speak with customers that have run engagement surveys, we're often told that employees have overwhelmingly requested more feedback. At first it sounds odd, like a complete contradiction, but there is a subtle difference.
When we request feedback we are opening ourselves up and receptive to the conversation. It also makes it easier for the person giving the feedback because it's invited, so I don't have to poop myself about what their reaction will be!
We get it, it might be hard to get started but it's worth the effort with research showing in-the-moment feedback delivering up to 39% better performance.
We've found success by making it 'not-a-thing' and focusing on the positive, to build comfort, habit and trust that feedback can be a part of our everyday.
In an article quoting Dean Carter, Chief HR Officer at Patagonia, who are cited for their modern approach to culture and performance...
“The very first piece of feedback you get is all smileys: ‘You’re awesome,’ ” says Carter. “The second piece is, ‘You’re pretty good’ and the third is, ‘Here’s a way you could get better.’ ”
We see the same journey with our customers. The gentle nudges for positive feedback get the juices flowing in a non-threatening way. Building trust in each other and that feedback is a really valuable tool for personal growth.
Armed with trust, the next step is to make it easy and interactive for anyone to request feedback from anyone else in the team.
Traditionally, feedback has only been in one direction - down the tree. But in a world of knowledge work, hierarchy doesn't contribute at all to improvement, trust or respect. Being a genuine team player, where each person recognises they all play an important role, does.
Remember... we can all improve, and senior team members opening themselves up and being vulnerable will inspire broader teams really quickly.
Step 4: Manager Sentiment
So far, we've seen that near-term goals, 1-on-1 meetings and real-time feedback do a lot to engage, retain and develop our team in a continuous, coaching approach. But for the final stage, it's all about having better data for remuneration decisions at the end of the year.
It feels crazy that the old way was largely focused on creating data at the end of the year to support performance and pay decisions.
Thanks to continuous performance management, it's now possible to effortlessly collect data throughout the year as a byproduct of doing our normal work.
And if we compliment this data with a little nudge to managers, asking for a quick sentiment check each quarter, we can start to paint a much fairer and accurate picture of performance in our business.
When it comes time to assess remuneration, the data can be turned into a performance story at the click of a button.
The end result is objectictive and transparent decisions based on achievement, impact, team advancement, values alignment and more. And no longer relying on flawed ratings, gut feel and favourites.
You create a more human employee experience.
With the old approach your workplace was like a factory, where employees would show up and get by... just for attending. No one asked for their views or shared feedback. Instead, anyone who was interested in personal growth had to wait until the end of the year to discuss career opportunities and hear how they've performed.
In contrast, with continuous performance management, you have inspiring managers in regular contact with each of their team members. Letting them know they are there to coach and develop them, challenge them with stretch goals and do their very best to see each team member succeed.
With continuous performance management, you actually trust and empower your employees to own their performance. Allowing them to make decisions on their work and seek out real-time feedback in a safe environment.
True, continuous performance management is focused on developing all employees, but it's not a miracle worker if a team member is simply not a good fit. Instead, it will keep a record of repeated coaching discussions around non-performance, or behaviours that contradict company values. It will help managers to have the right conversations, with the right team member, at the right time.
You retain your employees for longer.
The old way is good for reviewing straight up efficiency like widgets per hour, but what it's not good at is developing people... What type of work motivates team members the most? What areas of learning gets employees excited? Has someone made a huge contribution to another team? What's the biggest stress on the team right now?
Sure, you can ask these questions in an annual review, but by then it's too late to do anything about it. The moment is gone, it's too late to bring help or recognize awesome achievements.
Continuous performance management turns all this on its head and allows you to leverage these moments to build stronger connections, demonstrate you care and ultimately hold on to your people longer.
You increase collaboration across your teams.
Transparent goals, frequent feedback, coaching conversations... all mean quality conversations. More often.
And these types of conversations lead to serendipitous moments where team members bounce off each other to reach new highs, compress time to achievement and avoid mistakes already learned by others.
You get organisation agility.
New technologies, market disruptors and different business models have become the new normal. The pace of change in the environment around us is happening at a speed like never before. But, with the old approach business planning is locked down to annual cycles at best.
Continuous performance management is agile and adaptable, allowing employees to change tactics, without being penalised for deviating from annual plans. With a workforce that's been empowered to be adaptable and responsive to outside events - you get a nimble organisation that can innovate and leverage new technologies to respond to competitive threats.
You improve your business performance.
The traditional approach worked well for manufacturing plants competing on "better, cheaper, faster". But the rules of the game have changed with most businesses in today's world delivering services.
And if they're not delivering services, they are striving to deliver an amazing customer experience around the consumption of their product.
Continuous performance management is all about building strength for the new rules, where the winners compete on innovation, creativity and collaboration.
It might seem like a massive undertaking to make the switch to continuous performance management, especially if you already have a well-oiled annual appraisal process up and running.
But here's the thing: You don't need to take an all or nothing approach.
While some of our customers have made the decision to scrap the annual process entirely, that doesn't mean you have to. In order to get started with continuous performance management, you can keep everything exactly the same, and simply add continuous performance management to the mix.
You can think of it as 'performance development', only this is real-time, and is powered by informal, everyday conversations.
At Crewmojo we've developed a step-by-step maturity model from speaking with hundreds of companies looking to make the shift.
With a parallel implementation, you're complimenting current processes by adding better data (at the click of a button) to give fairer, more accurate and more objective performance decisions.
You're also separating performance improvement from assessment... giving your employees an environment for growth and allowing your business to grow through their success.
And that's what continuous performance management is all about.