It’s that time of year again, when organizations review and evaluate the year gone by both in terms of company performance and individual employee performance. Some organizations treat performance management as an annual exercise to be done as quickly as possible so they can award raises and bonuses and move on.

The performance management process involves setting goals and expectations, assessing progress, providing feedback, and improving each employee’s knowledge, skills and ability to perform.

It’s hard to do all that during a 15-30 minute meeting once a year.

That’s why leading companies are adopting a more agile performance management process that focuses more on continuous feedback and coaching rather than a formal annual review. Organization are also adopting software solutions to help them establish an efficient framework for ongoing employee-manager communications without creating additional administrative overhead.

The Continuous Cycle of Performance Management

Continuous performance management is cyclical process that happens over and over again throughout the year. The cycle involves planning (setting goals and expectations), checking in (through open communication and coaching), and review (transparent and frequent feedback). When seen as an ongoing process that occurs throughout the year, performance management becomes less onerous and more effective in achieving its intended purpose.

Let’s take a closer look.

Performance Management Planning

Like so many processes, effective performance management starts with planning. Setting goals and expectations is half the battle to achieving the desired results. In a continuous performance management process, planning is a collaborative process between manager and employee. It is the manager’s responsibility to make sure employees understand how their job fits in to the overall objectives of the company, and how their individual performance contributes to achieving company goals. Once this groundwork has been laid, employee and manager can set performance goals that align with organizational goals.

Setting Performance Management

Goal setting establishes objectives to be achieved by the employee over a period of time. It is against these goals that employee performance will be measured and evaluated. Instead of setting goals for the entire year, continuous performance management focuses on shorter periods of time, making the goals more achievable and more flexible. Should unexpected events require a change in company plans, it will be easier to shift focus and adjust.

Goal setting typically starts with the job description. When people are hired to do a job, they sign on to a set of job duties that are defined in the job description. Job description goals help to establish a mutual expectation of how job duties should be performed, at what rate, at what frequency, etc. Having clear goals and specific targets assures that employees focus on the important KPIs without getting sidetracked by distractions. Job description goals may comprise measureable KPIs as well as expectations in behavior that are harder to measure. For example, a salesperson’s goals may be to achieve an individual quarterly sales quota and to operate as a team-player to assure regional quotas are also met.

Other types of goals include:

Project goals are based on the objectives of a specific project and what needs to be accomplished. With continuous project management, long-term project goals are broken into shorter-term objectives, which allows for more effective control and helps to keep the project on track. Each time a short-term objective is met, employees get the satisfaction of a job well done. Moreover, the goals can be reevaluated and adjusted if needed.

Behavior goals instill company culture and let employees know how they are expected to act as they go about accomplishing their measureable tasks. Perhaps a “perfectionist” employee takes too much time to complete tasks and will benefit from specific time-management goals. Or perhaps a stellar performer who tends to work solo would be of much greater value if he/she were more involved with the team and sharing his/her methods.

Development goals aim to increase the knowledge, skills and abilities of employees. Usually, employees welcome development goals as an opportunity to expand their professional expertise, specialize, cross-train, etc. and become more valuable to the company.

Performance Management: Checking In

Instead of waiting for an annual appraisal, continuous performance management fosters ongoing and open communications that allow managers to check in on employee progress frequently and informally. Likewise, it allows employees to seek guidance or raise red flags when things aren’t going as planned. Checking-in might result in simple words of recognition and encouragement, or in real-time coaching to help employees overcome hurdles. Regular, light-touch meetings create a more transparent work environment that is less stressful because expectations are clear. It also establishes an informal framework for continuous accountability which makes it easier for managers to point out performance deficiencies and to help employees get back on track.

Performance Management: Review

Performance review is a more formal process of assessing employee progress toward the goals that were set. Based on the performance review, decisions are made regarding remuneration, skill development, training needs, promotion opportunities, and other topics. Continuous performance management promotes frequent review of employee progress throughout the year, and avoids the pitfalls of annual appraisals where managers give more weight to recent events because those are freshest in their mind.

An effective performance review is a collaborative process between manager and employee that includes:

• Timely feedback throughout the review period. This is actually accomplished through “checking in” on employee performance.
• Transparent assessments of employee performance measured as objectively as possible against the goals that were set, as well as an open dialogue of assessment feedback.
• Acknowledgement and documentation of the employee’s performance review including any conclusions and new objectives for the next performance period.

With the new objectives comes a new cycle of performance management. And on it goes.

Avoiding Performance Management Pitfalls

Ineffective performance management is often blamed on the performance management system being used, but actually, the common pitfalls are much more “human” in nature and not related to any specific software or process. Some of these will sound familiar as they could beset any management initiative:

Lack of top management buy-in: When senior management does not send a clear message, actively participate in the process and take responsibility for it, mid-managers, supervisors and employees will doubt its value.

Communication breakdown: Failure to communicate clearly and openly about performance goals and expectations means employees may not know what they’re aiming for. Continuous performance management stresses informal, ongoing communications to avoid misunderstanding and surprises.

Rater inconsistency: Despite manager training and good intentions, managers often interpret and apply the rating scale differently. This is especially true if they allow personal biases to affect their rating (high or low) or if they lack the confidence to differentiate and rate everyone somewhere in the middle. Either way, the rating is inconsistent and employees do not respect it. Performance management software can help organizations adjust for inconsistencies in whatever rating system is used.

Performance Management is Important because it:

• Gives organizations practical tools to maximize employee performance toward the achievement of company goals.
• Enables the organization to engage employees individually, within the context of the overall workplace.
• Fosters a clear understanding of expectations along with honest feedback and accountability to improve performance.

Learn more about WFO >>