6 Reasons continuous performance management increases employee engagement

The death of the annual performance review

6 Reasons continuous performance management increases employee engagement

6 Reasons continuous performance management increases employee engagement

The death of the annual performance review

Although it’s widely accepted that engaged employees perform better, the relationship between performance management and employee engagement is often overlooked. And we’re not talking about a once-a-year performance review, because research shows that those. Do. Not. Work. We’re talking about continuous performance management.

What is continuous performance management?

Continuous performance management is an approach to appraising, improving, and empowering employee performance that emphasises regular, meaningful interactions over a single annual or bi-annual event. It’s the difference between keeping up to date with your study load throughout the semester, and cramming at the end; the end goal might be the same, but the journey (and often the results) are completely different. It consists of a cycle of:

  1. The employee reflecting on their progress towards goals, achievements, role satisfaction, and any blockers they’re facing or support they need
  2. The employee and leader documenting notes on #1
  3. The employee and leader connecting to have a conversation on #1 and #3, map out the next actions, plan and set new goals.

Benefits of continuous performance management

  1. Trust
  2. Timely and accurate feedback
  3. Issues can be identified (and rectified) earlier
  4. Opportunities to stretch and grow
  5. Recognition
  6. Workload and stress

Continuous performance management is characterised by frequent, ongoing touch points with team members, to check in on goals, projects, workload, challenges, and professional development, as well as general satisfaction and wellbeing. It’s also an opportunity for the employee to give valuable, continuous feedback.

When you’re caught up in the day-to-day of getting stuff done, taking the time out to send messages to all of your team or have one-to-ones can seem like unnecessary busywork – a time-suck with little impact.

But with research from Gallup suggesting that employees who meet regularly with their managers are almost three times as likely to be engaged, continuous performance management is simply worth the investment of time. Here’s why.

1. Trust

Regular conversations and interactions between an employee and manager help to build a stronger relationship based on trust, transparency, and reciprocity. There’s a caveat to this, though: trust can only grow if the employee feels validated and supported. If the touchpoints are more negative than positive, if they feel vulnerable and threatened, or if they give feedback to a manager and it just disappears into the ether, then this will do more harm than good for the relationship.

Don’t forget to always provide positive feedback about what the employee is doing well, as well as points for improvement. If an employee has a strong, trusting relationship with their manager, they are more likely to be engaged and want to do good work for them. In fact, managers and their leadership styles account for 70% of the variance in employee engagement, according to Gallup.

2. Timely and accurate feedback

Sometimes I struggle to remember what I had for dinner last Monday, let alone what my team was doing a week ago! Extrapolate that back three-six-nine months and we have a problem.

In traditional performance reviews, our forgetfulness about the past leads to a reliance on more recent activity that we can remember, a phenomenon known as recency bias.

In comparison, regular performance check-ins help to capture thoughts and feedback while it’s still fresh in employees’ and managers’ minds. And when these thoughts are shared as close as possible to the event or activity they relate to, it’ll be much more effective in engaging employees and more likely to lead to action as it gives employees accountability. Leave it too long and it’s either no longer relevant or you’ll be facing a more deeply ingrained habit.

3. Issues can be identified (and rectified) earlier

In a similar vein, if you have an employee who is facing a barrier or challenge – whether they’re underperforming or high performing – and you wait until annual performance review time to address it, one of two things is likely to happen.

1) The problem will have escalated, and you’ll have a much bigger job trying to fix it, or

2) the problem won’t be there anymore, either because it’s (hopefully) sorted itself out, or because the employee isn’t there anymore either.

With the average cost of replacing top talent in Australia amounting to 2-3 times the outgoing worker’s salary, it’s much more cost-effective to identify issues early and provide coaching, training, and support to help them improve, rather than rehire. Plus, employees will appreciate the open, honest, and constructive feedback that gives them the opportunity to grow and develop.

4. Opportunities to stretch and grow

All too often, your high-performing employees don’t get the attention they deserve. Managers are typically caught up in fixing problems and putting out fires elsewhere. The danger with this is that they might feel under-utilised, bored, or under-appreciated. If you’re having frequent performance conversations, you’ll be able to provide the recognition top performers need and give them the opportunity to stretch, grow, develop, which of course will lead to increased engagement.

5. Recognition

Different employees are motivated by different things. Some are motivated by the work itself, some by the relationships and human interaction, and others by rewards and recognition.

If you’re in the latter category, a year is a long time to be recognised for this work, whether it’s through a pay rise, public recognition, or your boss simply saying “thank you, you’ve done a great job”. Continuous performance management helps to ensure the wins aren’t missed and to recognise and reward achievements and great performance in real-time.

(Side note, it’s worth figuring out what personally motivates each of your team so that you can ensure you’re motivated and providing them with what speaks to them).

6. Workload and stress

Lack of clarity, unclear expectations, or unmanageable workloads can lead to increased stress, which, left unaddressed can lead to burnout and disengagement. That’s why checking in regularly through continuous performance conversations is so important, so that you can pick up on potential stressors before they become exacerbated, and help prioritise or reshuffle work. Involvement in this way has a huge effect on engagement, with Gallup reporting that employees are seventeen times more likely to be engaged when managers know what they’re working on and help them set performance goals.

Why continuous performance management isn’t just for the employee

When I worked in a job where performance was only reviewed annually, in the months leading up to the performance review, I would start making notes of any important points, ideas, or issues I wanted to raise. I essentially saved it all up until that one day. This meant that not only was around 6-9 months of feedback missed, it also meant that my company only had the opportunity to act on my feedback once a year. Imagine how much the company could have improved if they were aware of all the issues and opportunities as they happened?

Take for example, team members who are unhappy about an unrealistic workload. If the company is made aware of this, they can fix it by adjusting deadlines, re-allocating work or increasing resources. This not only has a direct effect on the team, in terms of addressing their workload problem, but when they feel heard, and that the organisation cares about them and is working to solve their problems, then they will feel more valued, committed and engaged. And that in itself flows back into the business in the form of increased productivity and performance!

building out performance report

What next?

In today’s workplace, annual reviews simply aren’t enough to keep up with the rapidly changing and uncertain environment, both internally and externally, and, they don’t have that much of an impact on performance. Continuous performance management is a smarter way to encourage performance and enhance engagement. Your people, leaders, customers and bottom line will all thank you for it.

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