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How to Effectively Implement Continuous Performance Management?

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continuous performance management

Managing employee performance is a fundamental part of any business’s success. Employees need feedback to know where they are succeeding and where they may need to improve.

Proactive managers have known for a while that there is a problem with the annual performance review, which offers too little, too late. Instead, many companies are turning to continuous performance management to keep an open dialogue with employees and encourage growth.

Continuous performance management tracks employees’ progress toward the company’s overall objectives on an ongoing basis.

The aim is to identify areas for improvement and encourage employees to continuously develop their skills. It is a vital tool used by HR departments that can help build a culture of trust as well as improve employee engagement.

In this post, we will look at the differences between continuous and traditional performance management systems. We will explain why continuous management can benefit your company and how you can implement an effective performance management system.

Finally, we’ll help you to design a performance management strategy for the good of your employees and your company as a whole.

Why Performance Management is Important

Effective performance management is essential for businesses. Why?

Because it can unite teams toward common goals, support struggling employees, and reward success.

As Henry Ford said, “Coming together is a beginning; keeping together is progress; working together is a success.”

Having an effective performance strategy is more important than ever. The pandemic has led to record levels of employee burnout, leaving workers feeling unmotivated and disengaged. Managers are tweaking their approaches to performance management to boost morale and keep remote workers on track.

What Is Continuous Performance Management?

Continuous performance management (CPM) is an HR tool for tracking, evaluating, and improving employee performance. It is based on the principles of continuous analysis, agile management, and real-time feedback.

CPM sets standards and expectations for performance and guides employees to help them meet their goals.

Employees are then assessed against their performance standards and goals. This helps companies identify and address any issues before they become too overwhelming.

The most important aspect of CPM is maintaining regular reviews and appraisals. Unlike the typical end-of-year review, CPM creates an opportunity for open dialogue and discussion year-round. This creates a culture of open two-way dialogue (not just top-down evaluation) and encourages employees to take responsibility for their own professional development.

CPM builds trust within the company, creates stronger relationships between managers and employees, and helps employees to reach their true potential for the good of the business.

Companies that implement a CPM strategy find that it increases employee engagement and performance, and improves communication and retention levels.

Traditional Performance Management: A History

Performance management is not a new concept. In fact, early performance management systems can be traced back to the start of the Industrial Revolution in the late 1800s.

During this period, employee output was easy to measure: hours worked, goods produced, etc. The focus was very much on what an employee had produced, rather than what they were capable of.

Our modern perspective on performance began to shift in the 1960s when a more holistic approach was adopted. This new method had a greater focus on self-appraisal and was more concerned with what an employee could achieve in the future with the right support and development.

From this point on, traditional performance management involved self-evaluation, manager evaluation, scoring, and annual appraisals. But appraisals were still very much tied in with bonuses and promotions (such as performance-related pay) rather than individual performance and the impact it had on a company’s goals.

Issues with Traditional Performance Management

Although these performance management systems have been in place for a long time, many companies find them lacking.

For one thing, trying to compress a year’s worth of performance into an annual appraisal is a complicated process. Employees don’t enjoy being left in the dark for 11 months of the year, and employers may struggle to remember points that they wanted to address from previous quarters.

These performance management systems also lead to unnecessary stress and pressure.

With an annual review, employees may feel they only have one opportunity each year to raise any concerns relating to their job, development, and work environment.

The lack of clear goals and expectations and rating inconsistencies will have a negative impact on employee performance.

Many managers have realized that it makes more sense to focus on continuous evaluation throughout the year and assess goal progress on a regular basis. That way, employees can adjust their approach in real-time and managers don’t need to catch employees up on a year’s worth of information in one sitting.

It’s simple: If you want your employees to improve their performance, they need regular feedback.

Benefits of Continuous Performance Management

How can continuous performance management benefit your company? Let’s count:

  • As an employer, you will maintain a clear overview of how each employee in your company is performing. Are they delivering as expected? How could they improve?
  • Continuous performance management doesn’t rely on top-down input like the traditional employee appraisals system. Instead, you can collect feedback from all directions, using 360° reviews. This gives you a fuller picture of how every cog in the company is performing.
  • Continuous performance monitoring establishes open channels of communication and transparent dialogue. This helps to build trust in your company.
  • You get better quality key performance indicator (KPI) data as you are gathering information from numerous sources (conversations, check-ins, progress updates, peer reviews, etc.). You can leverage this data not only to gain insight into your workforce but to reduce discrimination from unconscious bias.
  • When employees are able to participate in an ongoing conversation, they feel that their voice is important. It is important that they know they have a channel to air any concerns or grievances. It improves communication, strengthens employer-employee relations, and boosts engagement and retention.
  • Rather than overloading your HR department with the burden of annual appraisals, you can gather data consistently throughout the year. Not only does this reduce your workload, but it also provides you with real-time data on all your employees. You also have access to more key data for each employee so you know exactly what needs to be discussed when you hold a performance evaluation meeting.

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How to Implement CPM in Your Company

Previous performance management strategy was based on the belief that organizations operate in stable environments.

COVID-19 (as well as general shifts in globalization and technology) has demonstrated that in reality, our environments are anything but stable. As we adapt to changes in the way we work, we will need to rethink how we approach performance reviews and accountability.

Performance management starts with good leadership. Train your senior managers so that they are aware of the benefits of continuously tracking employee performance.

Promote a culture of communication and individual accountability and inspire employees to strive for professional development. Make sure you revisit and adapt goals on a regular basis.

Finally, make sure you have the right tools and technology so that you can get the most from your performance management data. Performance management software can help you track employee performance and appraisals. It can also help you schedule meetings, collect surveys, and gather 360° feedback so that you always have access to real-time data.

What Defines an Effective CPM Strategy?

An effective continuous performance management strategy focuses on leadership, communication, interpersonal relationships, constructive feedback, and teamwork.

You need to base your strategy on a foundation of mutual trust and recognition. You also need to make sure that the policies and procedures you define support the goals of your company. The same goes for the tools and technology you decide to use.

If you are considering implementing a continuous performance management strategy in your company, then there are a number of best practices to keep in mind.

Firstly, you need to ensure you implement processes for managing all four stages of the performance management cycle:

  • PLAN (set and agree goals with an employee)
  • ACT (achieve objectives)
  • MONITOR (measure progress, offer training and feedback)
  • REVIEW (achievements, lessons learnt and next steps)

Factorial’s Performance Management Software

Factorial’s performance management software can help your employees set goals in line with the objectives of your company. The handy performance dashboard provides a comprehensive view of all feedback, annual summaries, regular check-ins, and established goals.

You can also use the software to schedule employee appraisals and collect regular feedback. This will give you access to valuable real-time data when you need it the most.

And with our powerful analytics you can truly understand how each employee is performing and developing and the impact they are having on the success of your business.

Download Factorial’s Free Performance Appraisal Template

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