The ultimate guide to continuous performance management

What is continuous performance management?

If your organization’s performance management process has the word “annual” in front of it, you’re missing out. You want it to start with the word “continuous” instead. It’s a smarter way to encourage performance, and your people, leaders, customers and bottom line will thank you for it.

How does it work?

Continuous performance management (CPM) is an approach to people management that emphasizes regular meaningful interactions over a single annual or bi-annual event. It’s the difference between going to the gym on a (semi) regular basis all year and frantically training for a marathon once a year. The goal might be the same, but the experience is completely different.

Continuous performance management starts with a regular cadence of continuous feedback. Many organizations do this on a monthly basis, though in some industries, weekly works better. However frequently the touchpoints occur, they include three parts:

1. Reflection – taking the time to think about the time since the last touchpoint. This can be encouraged and even automated through a set of prompts or questions, which become a habit over time.

2. Documentation – making a few notes in a safe, consistent place that can be referred back to as needed. This step is important for both the employee and their leader.

3. Conversation – employee and their leader taking a break from the daily business of work to connect. This is a sacred time to reflect on Step 1 as well as the bigger picture, and discuss what actions are needed to stay on course.

It can be good to do this through asynchronous feedback loops coupled with a real-time discussion. Employees reflect and document at their own pace and share the information with their leaders before they meet up to discuss. This is also a more inclusive approach for employees who aren’t at their best talking in the moment and do better with some time to prepare. This includes people with a different native language, your neurodiverse employees (who, according to HBR, can be a source of competitive advantage) and new managers who haven’t had these types of conversations before.

Examples include monthly 1:1 catch-ups for coffee and virtual check-ins. The means through which they happen is less important than that they do happen.

Why does it work? What are the benefits?

Continuous performance management cuts the stress: Regular touchpoints and conversations about how an employee is tracking normalizes the experience of talking about performance, taking it from an isolated (nerve-wracking) once-a-year event, to a part of their everyday role. It moves the leader from a manager dynamic to a coach, working with their people to help them be their best instead of reserving judgment to be shared once or twice a year.

Continuous performance management lets you act early: Put yourself in your employees’ shoes; a year is a long time to wait to be recognized for good work or to get help if you’re not performing as expected. In the current landscape of instability, annual reviews are not enough to keep up with the changing work environment. With good habits of information gathering and regular conversations, you’re ready at any time, with no surprises. Real-time feedback is also much more effective than saving it up to be delivered in a big chunk without context.

Continuous performance management is a more accurate way to discuss performance: As humans, we are prone to recency bias, a tendency to place greater importance on more recent events because we are better able to remember them. Regular check-ins help to record small pieces of feedback while it’s still fresh in the employees’ and managers’ minds. Feedback in the moment, or as close to as possible, is also much more effective in shaping behavior; by the time something is brought to our attention, it may be too late, or at least a more deeply ingrained habit we’ve repeated since then.

Continuous performance management develops more effective managers: For those managing people, performance conversations are not part of the job, they ARE the job, and the more often they practice that skill, the better they’ll be at it (especially if you provide the right support systems). It also saves time; managers who make 1-2 notes about each employee per month can save up to half the time they would normally spend on preparing for annual appraisals or reviews.

Continuous performance management is good for your bottom line: CPM is often billed as “the future” when it comes to managing performance, though in reality, it has been used by many organizations for over a decade to fuel their growth and success. Organizations like Adobe, IBM, and GE, have been using CPM effectively for more than a decade, reducing turnover, increasing employee engagement and saving employees valuable time.

For a real life example of how continuous performance management can be of benefit, check out EMM’s story.

RELATED: Why it’s time to ditch performance reviews and what to do instead

What should it focus on?

Annual performance reviews have survived this long because they do provide some value; they force conversations about key topics that might otherwise not be discussed at all. CPM takes those important topics and makes them part of regular conversation, so they can be an ongoing part of a person’s role, instead of a once-a-year thought.

Effective performance conversations include asking:

• How is the person feeling (sentiment, satisfaction, stress levels)

• How are they tracking towards their big goals?

• What went really well?

• What didn’t go so well or where is support required?

• What else do they need to achieve the results?

Effective performance management is proactive, focuses on reinforcing good work, and encourages improvement with the team member’s ownership. It’s not just about penalising underperformance.

RELATED READING: Performance management: A tool to empower employees and their leaders

How to get started

“The best time to plant a tree is 20 years ago. The next best time is today” – attributed to a Chinese proverb

Implementing CPM sounds like a mammoth task, but just like the reviews you’re replacing, it doesn’t have to be done all at once. You can start small, adding extra performance touchpoints at increasing frequency, so that by the time the annual performance reviews roll around, there’ll be very little to discuss that hasn’t already been covered.

Overcoming key blockers

At intelliHR, we envision a future without annual reviews, and we understand that the process doesn’t happen overnight. We also understand that change needs to be managed. Here are the key blockers we’ve helped our customers overcome in the past: Blocker: Managers don’t want to do it every day

Leaders will be the first to say they don’t have time to do CPM, or that it doesn’t apply to their role. But you can show them that it will save time in the long run and that it does apply. Here’s how. Overcome it:

• Highlight the time savings and benefits for managers and staff.

• Leaders need to set the example. If they do it and drive it, it will happen. Make sure they commit.

• If nothing else, remind them that this is actually part of their job they get paid for and that doing it on a regular basis increases their skill at it.

Blocker: Employees don’t trust these “little questions”

Although employees might be skeptical at the start, they probably will like it much more than the annual reviews and might actually be inspired to improve (in contrast to only 14% who were inspired through yearly performance reviews, according to Gallup.) Overcome it:

• Start small and build trust. Don’t use their responses as opportunities to discipline. They need to know their honest answers won’t be held against them.

• Make sure you keep your promises when you tell them who’ll have access to these responses, and act on feedback you receive.

• Don’t let it be a fad! Keep going, change takes time to embed.

Blocker: “But I NEED those annual ratings for promotion and bonuses”

CPM can be a significant change for organizations, particularly those who rely on annual reviews to budget for pay rises, predict organization performance and pick who to promote. Overcome it:

• Wouldn’t you rather know this information earlier? A year is a long time for a high performer to feel undervalued, and plenty of time for them to look for something new.

• With a continuous approach to performance, you can swap a burst of performance at bonus time for a continuous, well-directed effort throughout the year. Of course, you can still award bonuses and promotions, you just have more flexibility with when.

• Do you really want to base those big decisions on a single data point anyway, given that 77% of HR professionals say performance reviews don’t accurately represent employee performance?

What do I need to get started?

Not much, really! You’ll need:

• Tools to send a reminder to reflect, document and discuss. This could be a calendar reminder or a custom-built form (like intelliHR’s!) that goes out on a schedule as a prompt to employees.

• A place for employees to record their reflections. The goal is to make it easy. Keep it in a single channel, not spread out over chats, emails and “by the way” conversations. To get the full picture, you need all the data in one place.

• A routine for the catch-up meeting. Having an agenda that’s easy to follow each time, takes the cognitive load out of the equation, making it less of a burden and more of a quality conversation. Using the same information provided by the employee is a good starting point, then add some manager questions and you’ve got your conversation scaffolding. For an easy option, check out our manager 1:1 check-in template.

• A commitment to USE the data gathered. When employees take time out of their day to provide this type of information, they must see how it is used or they’ll be less inclined to provide it next time.

Decisions to make:

• What timing will you use? Most customers start with once a month; if that’s too big a change, why not go with quarterly? (It’s not unreasonable to review your performance as often as you change your toothbrush, is it?)

• Will you make the change gradually or all at once? For some organizations, a revolution is appropriate; announcing the death of performance reviews and their replacement with CPM. For most, it’ll be more of an evolution, adding extra touchpoints to gradually render the annual review obsolete.

• What do you want to discuss? Will it be the same thing each time, or will you alternate focuses to keep things fresh?

• What “vibe” do you want? This relates to the language and focus of your communications. It must be consistent and forward-facing and in line with the company culture you want to build.

• Who will be involved? In addition to manager feedback, input from peers and skip-level managers can be helpful. It could be as simple as linking your current recognition process into your CPM cadence, so that it’s discussed as part of the regular check-ins. Or you may prefer to filter it through the manager (this is a good option if your people are not used to giving or receiving constructive feedback across reporting lines).

• Do you need a dedicated tool? While you absolutely can run continuous performance with nothing more than word documents and a calendar, investing in a purpose-built tool will make it much easier to set up and use on a regular basis. Using a people management system like intelliHR also means the data is accessible at an organization level through analytics, so senior leaders and Human Resources can spot trends early. Here are some tips for choosing the right software for your organization (and what not to do).

Continuous improvement

Continuous improvement isn’t about making big, monumental gains, it’s about taking small, incremental steps, which can help to facilitate and reduce some of the barriers around change.

This line of thinking is rooted in the continuous performance improvement model which is usually used by businesses to develop and enhance products, services and processes, but the same principles apply to people!

CPM provides a useful tool to support continuous improvement; if you can get your workforce into the habit of taking time to reflect, document and discuss how they’re going as an individual (and to feel safe doing so), then, as the theory goes, much greater improvement will occur. And, as an added bonus, these skills are easily applied to other aspects of the workplace as well (i.e. projects, product development).

Performance reporting and analytics

If you’re capturing your continuous performance management activities in intelliHR, all of the goals, feedback and achievements will be automatically integrated in a performance summary report, showing a complete history of an employee’s performance.

intelliHR’s one-click performance summaries track an employee’s goals, achievements and feedback over time

But the data you gather from CPM isn’t just beneficial on a 1:1 level, but if you’re smart about how you capture and store your responses, you can also benefit from this as an organization.

With intelliHR analytics, you can view various performance-related reports at a whole-of-organization level, or drill down to see metrics for business units, teams, regions, and more. For example, you can see:

• What goals everyone is working on (and how they’re tracking to them)

intelliHR tracks employee goals in an employee’s profile

• Performance across key indicators including productivity, quality and teamwork

• Happiness and eNPS (once a year is too late!)

• Training investment (make sure your people are growing)

• Sentiment (a leading indicator of turnover)

intelliHR’s sentiment report combines data across all of your employee pulse surveys, feedback and inputs to provide a rating of the overall mood or culture.

What this means, is that instead of having to wait each year for the performance reviews to go through, then everyone to set new goals, run the budgets and get moving on it, CPM means you can see in almost real-time how your workforce is tracking to their goals, professional development, and satisfaction in the role. This way, you’ll know right away whether the target for the end of the year is on track or not. You’ll also have the agility and ability to address issues or act on opportunities as they arise, not after the fact.

Conclusion

Continuous performance management isn’t the future of managing performance; it’s the present, both for employees in the office and working remotely. Successful organizations recognize that performance is too important to discuss once or twice a year (and that nobody really liked how those conversations went anyway).

Making reflection, documentation and discussion of performance a normalized part of the employee-manager relationship saves time and emotional labor. It is a more effective, accurate way to support your people to be their best in a rapidly-changing environment and supports an organizational culture of communication and continuous improvement. It doesn’t take much to get started, and with the right tools you’ll gain insight, not just into individual success journeys, but also to the success of the organization.

After all, performance is more than just one moment in time.