Work is happening in real-time and employees now expect real-time feedback to achieve their objectives and to improve their performance. Everyone seems to agree that traditional performance reviews are broken but how do you create a more continuous performance management process in your organization?
The best place to start is to identify the different functions that a traditional performance review has and then design new continuous processes to address these functions. Below is a list of the functions of the performance review and how you can make them more continuous.
Improvement: helping both the employee and organization to get better results.
Rolling out an OKRs goals setting process is one of the best things you can do to make sure employees and the organization are achieving better results. OKRs have a quarterly cadence that is more frequent than annual goal setting done through reviews. Furthermore, by using an OKRs tracking tool, you can have employees and managers to review progress on a weekly basis and stay in sync.
Coaching & Guidance: having a tool and framework for coaching, counselling, and motivating employees.
Frequent 1:1 conversations between managers and employees are one of the best ways to develop a culture of continuous coaching that is much better than having coaching discussions once a year during an annual review. You can empower your employees to prepare for their 1:1s and do most of the talking to make it more effective. You can use a 1:1s tracking tool to make sure that managers and employees are conducting 1:1s discussions at least once a month.
Feedback & Communication: enhancing communication between employee, supervisors, and others inside of the organization
Relying on an annual conversation to get feedback doesn’t work in this fast moving world. A better alternative is to make feedback readily available by enabling social networking or continuous feedback tools that employees and managers can use. Creating a values-based employee recognition program also helps employees get the positive feedback they need to keep doing great work. On top of the processes you design, you have to create a company culture where giving and asking for feedback is normal and expected.
Compensation: Tying pay for performance to calculate salary increases & bonuses
Traditional performance reviews have been used to rate and rank people to figure out salary increases and bonus allocations. Rating and rankings create complications and are not always objective. Many companies such as Adobe have moved away from this process. It’s best to decouple performance from pay and then make salary adjustments based on market rates and team/company performance, rather than just relying on individual performance ratings.
Staffing Decisions: Making fact-based decisions regarding promotions, layoffs, or identifying training needs.
Traditional performance reviews have been used to identify high and low performers to make staffing decisions. While this process is important, doing it once a year is not frequent enough as it’s already too late to correct. The best is to use the information from 1:1 discussions and performance on objectives to identify high performing employees or the employees that need further coaching or training.
Termination and Legal: Identifying and documenting discharge decisions
Traditional performance reviews have been used as a way to document discharge decisions and to defend the company from any potential law suits. The best way to deal with this function is to create a process that deals with these situations separately and have proper documentation based on the law in your jurisdiction. A few under performing employees should not force every other employee to go through the same process.
As explained above, creating a continuous performance management process in your organization requires de-coupling of the functions of a traditional review and creating new processes that are continuous. It requires planning and change management that may take a couple of years; however, using a continuous performance management platform can make the process faster. Many companies such as Adobe and Return Path have already moved away from traditional reviews and are reaping the benefits of a continuous performance management process. Are you next? If you are interested in learning more, we have webinars available to get you headed in the right direction.