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This content is part of the Essential Guide: The essential guide to managing HR technology trends
Definition

continuous performance management

Continuous performance management, in a human resource (HR) management context, is the supervision of an employee's performance through one-on-one discussions and ongoing feedback from supervisors during regularly scheduled check-ins. It occurs more often, offers more flexibility and is less formal than the traditional, annual employee appraisal process, although both types of evaluations are aimed at improving performance and monitoring personal and organizational goals.

Continuous performance management is a growing trend in human capital management (HCM) and can take place virtually any time, including daily, weekly or biweekly. It can be facilitated through software, surveys, phone calls and in-person meetings.

"Large global companies including Adobe, Dell, Accenture and Deloitte have abandoned traditional [performance management] models and replaced annual ratings and merit increases with continuous feedback and immediate rewards," according to the 21st annual Sierra-Cedar "HR Systems Survey," released in September 2018.

Importance of continuous performance management

For managers, a continuous performance strategy can more effectively track an employee's work achievements and weaknesses while encouraging supervisors to address these situations when they occur. Goal setting can also ebb and flow more easily with a continuous performance approach, given that some employees' yearly goals are adjusted when corporate objectives change.

For employees, this continuous process allows them to receive more timely feedback than an annual review does, which can eliminate surprises and spur improvements quicker. With continuous performance software, employees can also recognize peers and coworkers for their successes.

A brief look at the continuous performance process in HR

In the bigger sense, continuous performance management more firmly roots performance measurement in human conversation. While technology can aid overall efforts, at its core, frequent check-ins between supervisors and workers relies on people talking more and building better relationships with each other.

Benefits

Companies often use the continuous method as a supplement to the written annual review, which faces criticism because it is labor intensive, dwells on the past and puts too much emphasis on categorizing and rating employees. Annual evaluations are also hindered by time and a supervisor or employee's memory; achievements that occurred earlier in the performance period may not be remembered as well as things that happened closer to review time.

By comparison, more frequent check-ins can help document accomplishments throughout the year, and that documentation can roll up to annual review, making it easier to prepare.

Another major objective of continuous performance applications is to increase employee engagement because research links higher engagement to better business outcomes. In other words, employees work harder if they feel they supervisors listen to them and care about them.

Potential drawbacks

Not surprisingly, continuous performance management's success hinges on cultural changes within an organization, as the idea of the traditional, annual performance review is embedded in many HR processes. A switch to a continuous performance approach requires leaders to use change management skills, which may necessitate additional training for leadership.

Also, the software may make it too easy for people to dash off quick thoughts and feedback electronically as a way to avoid potentially difficult conversations. This tactic would come at the expense of the human conversation that truly pushes continuous performance strategies forward.

Tools and software

Continuous performance management products -- which fall under the umbrella of talent management software -- usually take the form of automated, cloud-based apps.

In addition to performance management software for annual reviews, vendors offer mobile and desktop applications to allow for real-time feedback and coaching. SAP SuccessFactors, for example, introduced a continuous performance management application that includes options such as allowing an employee to track goals and accomplishments or to ask a manager or another worker for rapid feedback.

Applications in this area often measure progress on goals with visuals or charts, display alignment with companywide goals or allow employees to comment on each other's work.

Workday Inc. and other vendors include sentiment analysis as part of their continuous performance management products. Such analysis reviews language used by managers in check-in documentation or phrasing used by employees during pulse surveys to see if goal-oriented wording is present or if bias is detected.

Other tech features include the use of artificial intelligence (AI) to help aggregate and compare employees' performance; tie-ins with learning and employee development programs as part of goal setting; and the ability to link employees' professional or social interests with future job openings in the company as a way to advance career paths.

ADP, BambooHR, Ceridian, Cornerstone OnDemand, Kronos, Oracle, Saba and Ultimate Software are other established vendors offering continuous performance applications. Newer contenders include 15Five, 7Geese, BetterWorks, Clear Review, Reflektive, SnapEval, WorkBoard and Zugata.

This was last updated in December 2018

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