The Ultimate Guide to Performance Management

Continuous Performance Management is an important introduction to your overall HRM strategy. It requires a buy-in from the business leadership and a detailed implementation approach to be successful.

Buy-in from leadership, managers and employees is crucial to the success of Continuous Performance Management roll-out. If the concept is lost upon its key users or if they perceive it as cumbersome impeding their work instead of aiding it, the whole effort is set up failure.

Moving from a traditional, commonly known and understood Annual Appraisal system to a new-age practice like Continuous Performance Management requires detailed planning, focused educating, and intuitive change management. 

Let’s understand the step-by-step implementation process:

Process Owner: Human Resource Management

Stakeholders: Executive Leadership, HR team, managers, employees

Step 1: Prepare for the transition

As a first step, create your organisation’s continuous performance management toolkit with your company’s goals, objectives, and culture in mind. So, before you communicate these performance management changes to management, build a case to explain its importance, benefits and the changes it will bring about in the organisation or employee behaviour. 

It’s at this stage you need to consider the following options:

• Goal-setting process
• Company-wide standards / evaluation parameters to implement
• Format of evaluation – rating scale, performance bracket, etc.
• Method of performance observation
• Frequency of review meetings / conversations
• Mode or method of communicating feedback
• Using feedback real-time for training, course-correction, etc.

Step 2: Training managers

Once you’re ready to kick-start the project, create a calendar for manager training sessions. Use these sessions to educate managers on how to follow the continuous performance management process. Sensitise them on the changes this process will bring about and the caveats for them to keep in mind when sharing feedback. If possible, give them reading material like case studies, FAQs, etc., to get a deeper insight into the subject. 

Encourage them to ask questions and raise concerns on the process right at this stage. This will build trust and comfort in the process enabling faster adoption with an open mind. This is a better approach than thrusting a new initiative on middle-level leaders simply because it has been endorsed by top management.

Step 3: Inform and Educate Employees

The next step is to share an update with employees on what changes they might expect. This eliminates speculation and builds excitement for the new initiative. When employees feel they are included in the planning of an initiative, they are that much more likely to participate in making the initiative a success, too. Also, Continuous Performance Management requires a clear understanding of why continuous feedback is being given to them and not see it as intrusion in their everyday work / micromanagement.

Step 4: Pilot implementation

Choose a small team where it is easy to implement new initiatives to first try out the concept. This way any unknown challenges you face will have a limited impact and help you prepare for the company-wide roll-out with first-hand learning and experience.

Allow the team to use the process for a pre-decided period of time – 1 month or quarter, etc. 

Step 5: Conduct the Formal Review of the Pilot

Facilitate a detailed discussion among the managers of the pilot team to exchange notes on the new process. They may each have ideas, observations, criticisms, and questions that you have not prepared for. This is exactly why a pilot is required. Conducted similar planned discussions among pilot employees as well to understand their view on the system.

You may also use an anonymous method for employees to share feedback on their experience to draw out candid reactions and honest opinions.

Compile a detailed report on your findings and share it with senior management. Share appropriate insights with managers and employees as well. This creates an environment of transparency and engages all levels within the organisation.

Step 6: Corrective steps

Use the feedback and insight report to determine the changes required to the system to make it better suited to your organisation and employee needs.

Make the necessary tweaks to policies, processes, methodology, timelines, etc. to prepare the system for a final roll-out.

Step 9: Full-fledged Roll out

This is the final stage that all the previous steps would act as a run-up for. Make a formal announcement and share a detailed roll-out plan with the entire workforce before Day 1. Ensure this communication is formally endorsed by senior leadership to facilitate faster buy-in and adoption.

Create a helpdesk, literature such as FAQ documents and policies, and an open forum accessible to everyone to raise queries even after the official roll-out, particularly during the first year of implementation. Ideally, time the full-fledged roll-out at the start of a business year to avoid any inconsistencies in appraisals and disruptions to ongoing practises.

Pitfalls to avoid while implementing Continuous Performance Management:

1. Lack of top management buy-in:

When senior management is not fully vested in an initiative, do not actively participate in its processes and do not seem to take responsibility for it, employees will naturally question the value of such an initiative.

2. Flawed Communication:

Inadequate, unclear or non-transparent communication of performance goals and expectations will lead to confusion and frustration among employees and break down the entire Performance Management framework. Continuous Performance Management places extreme emphasis on informal, ongoing communication at all levels and stages of the process.

3. Rater Biases:

As discussed earlier in this guide, rater biases can cause serious damage to the Continuous Performance Management machinery and defeat the very purpose of the activities undertaken. If ratings given by a biased manager do not accurately reflect the overall performance of employees or seem to average everyone out (ref. Central Tendency Bias), employees lose respect for the process. It is not only detrimental to the well-being of employees but will also, as a consequence, result in a drop in overall organisational performance.

4. Inadequacy or absence of pilot plan

Continuous Performance Management is a serious, continuous and deliberate method of organisational improvement. Traditional Performance Management methodologies have existed since long and most people may be too comfortable with it or may simply resist change. In such a scenario, jumping into an organisation-wide implementation instead of a detailed, well-observed pilot can be dangerous and will heavily contribute to the failure of this initiative.

5. Failing to evaluate the system itself

Even if the Continuous Performance Management process has been carefully tested and rolled out with flawless planning, it is equally important to keep evaluating its effectiveness from time to time through employee feedback and overall results. Otherwise, the organisation may end up investing time and efforts in a system that is not only draining resources but also causing the exact opposite effect of its purpose – lack of performance and failure to meet organisational objectives.

Summary

Continuous performance management offers a range of benefits against the outdated annual review process thus gaining increasing popularity worldwide. This method of performance management can help your organisation increase efficiency, boost performance, reduce turnover and improve morale, while saving money against ineffective and outdated earlier processes. Continue to review the new process from time to time, keep an open-door policy for any questions / resistance on the new process from any quarters of the workforce and maintain a flexible approach toward managing the change.

Once the process is settled in, you will soon begin to see the benefits of this agile, technology-enabled, dynamic Performance Appraisal process across the organisation.

Checklist: Tips to make your Continuous Performance Management truly effective

1. Make the change gradually

Moving from an annual appraisal system to a continuous feedback process needs a cultural shift and a clear understanding of the concept before it can be implemented across the organisation. Give employees / managers time to accept its nuances steering past the perception that it is a tool for micromanagement.

2. Establish clarity of organisational goals

Ensure the complete workforce first understands what the organisation is trying to achieve along with its founder’s vision. From there, work backwards to connect those goals to smaller unit-level goals and then help establish the connection with employee-level goals. This way managers can keep their feedback aligned to the organisational objectives and make meaningful conversations with their teams

3. Prepare the continuous feedback mindset

Train and sensitise managers on how to provide regular feedback that is informal yet useful, real-time yet non-intrusive, and specific yet non-judgemental. Educate employees on receiving real-time feedback without bias. It is important for employees to be comfortable receiving feedback on a regular basis and not see it as micro-management or ‘nagging’.

4. Embrace the appropriate competency frameworks

Continuous feedback isn’t just about finding faults in everyday work. It is about targeting the selected areas of improvement and collectively moving towards the organisation’s common goals. For this purpose, feedback should be guided by the right competency frameworks  - industry-specific knowledge areas, functional skills, behavioural aspects, and leadership skills. Different team members may require focus on different skills at different times. Unlike annual appraisal forms which have a set number of parameters to rate employees on, Continuous Performance Management requires an intuitive approach towards when to focus on which aspect.

5. Choose the right continuous performance management software

Technology plays a vital role in implementing Continuous Performance Management and there are various tools and software solutions available to facilitate it. Ensure you measure the features, pros and cons to suit your organisational requirement and choose an efficient, cost-effective solution easy to adopt across all levels.