Let’s address the elephant in the room – managers and employees are generally dissatisfied with performance management.
We all agree it is needed to ensure organizations can align organizational goals and individual employee efforts, career goals, challenges, and accomplishments. And for those of us responsible for designing, implementing, and ensuring the execution of performance management, there is no doubt it is a necessary tool in the organization’s talent strategy toolbox. To address dissatisfaction, many organizations focus on improving the process to make it less cumbersome or time consuming. However, future-focused organizations know that the issue goes beyond the nuts and bolts of the process. HR professionals in these companies are asking a different question, ‘Is the process effective?’ and the resounding answer is “No.”
Enter the need to implement continuous performance management, a performance management philosophy evolved from decades of performance management experiments and the pressure on companies to continuously innovate to survive. Traditional performance management typically relies on one or two appraisals – commonly, a mid-year and an annual review. The annual review is a look back to a defined review period and produces an important metric used throughout the organization: An annual review rating. This rating has powerful implications and is used to inform important decisions and processes, such as:
- Employee compensation and rewards
- Promotions, lateral moves, demotions, terminations
- Individual Development Plans (IDPs)
- Organizational talent reviews and analytics
The convenience of the annual review rating as a ‘catch all’ for many processes makes it difficult to imagine a performance management process without it. If this sounds like your organization, you are not alone. While dramatic overhauls freeing an organization of an annual review process may make for an interesting headline, a thoughtful approach to implementing continuous performance management is more simple, realistic, and impactful to employees and managers.
Here are 4 ways to start implementing a continuous performance management process:
1. Establish a 1:1 performance meeting and communicate the schedule to all employees and managers.
Managers and employees are likely meeting frequently, but all employees should be aware of a minimum performance meeting frequency. For example, communicate to managers and employees that they should conduct a 1:1 performance meeting at least monthly. Clearly communicating this expectation to not only managers but also individual contributors increases accountability and awareness throughout the organization.
2. Create a 1:1 performance meeting template and train managers and employees to use the template.
Managers and employees may meet frequently but may not discuss important performance topics such as company goals, employee goals, objectives, professional development, and career development. By creating and sharing a 1:1 performance meeting template, HR can remove the burden of managers to research best practices independently. By training both managers and employees, HR is setting an expectation that employees have ownership of important performance-related conversations, their career, and their contributions to the organization.
3. Provide the tools to capture 1:1 conversations in a performance management system.
Most talent management systems should be able to capture conversations. By centralizing where managers and employees document these conversations, HR creates an expectation that these 1:1 performance meeting notes can be, and should be, referenced throughout the employee’s tenure, as well as during the annual performance cycle.
4. Train managers to reference the regular 1:1 performance meetings while writing the annual review.
A known issue with annual performance reviews is recency bias, where the focus of the annual review is on what is most recent, not necessarily a holistic view of the entire performance period. By training managers and employees to reference 1:1 performance meetings, HR creates an expectation that the whole review period is weighted equally and that a performance review reflects an entire year of accomplishments and opportunities.
In summary, for organizations not yet ready to ditch the annual review, implementing continuous performance management will improve the consistency and quality of performance discussions, performance reviews, and engagement. Employees will feel more empowered, informed, and aligned to the organization’s goals.
