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Continuous performance management vs. periodic reviews


Continuous performance management vs. periodic reviews

MARCH 20, 2019

If you look at media headlines alone, 2018 was the year the annual performance review became obsolete. The practice of meeting annually or biannually with employees to discuss past performance and set goals has been dubbed outdated, problematic, and even a source of employee misery.

Instead, a growing body of research highlights the benefits of continuous performance management: tracking employee performance throughout the year and giving continuous feedback. Deloitte Research found 83 percent of companies implementing regular performance reviews have seen conversations between employees and managers improve.

Still, at least 70 percent of companies practicing annual or biannual performance reviews, which begs the question: Are they really all bad? While there are certainly advantages to more continuous performance reviews, periodic performance reviews might still have a place depending on your company’s needs. To figure out the best option for your team, here are the pros and cons of each.

Periodic Performance Reviews
Most of the workforce is accustomed to this style of performance management—where managers meet with their direct reports annually or biannually. These conversations review performance, progress against any previously-agreed-upon goals, and are often used to trigger compensation and promotion decisions.

Pro: Periodic performance reviews are heavily based on benchmarking and assessment.
Periodic performance reviews are highly structured, and incorporate data needed to prove competencies and hit company objectives. These conversations act as valuable checkpoints against long-term goals. For an employee looking to take on more of a leadership role, for example, their time horizon for review extends beyond a weekly meeting. Moreover, employees tend to be more motivated when pay is linked to performance—an arrangement which the more infrequent review structure supports, since companies likely can’t sustain pay increases across weekly or even monthly meetings.

Con: Periodic feedback doesn’t satisfy employees.
According to one study, over 50 percent of office professionals whose companies practice annual/biannual performance reviews were dissatisfied, and expressed wanting check-ins at least once a month. Employees want consistent feedback from their manager, according to a Gallup survey, and this is especially true of the millennial generation, which makes up the majority of today’s workforce.

Continuous Performance Management
The rise of new technology has helped foster the growth of continuous performance management. Employee time tracking software, learning management systems and other tools help gather employee data on a regular basis and can facilitate more conversations around performance and goal-setting.

Pro: More consistent performance meetings encourage employee-driven growth.
More consistent feedback helps focus feedback conversations on employee development and well-being as opposed to the company’s performance metrics. This framework can allow employees to take a more active role in setting and meeting personal goals, which Gallup research suggests increases employee happiness and engagement at work. A better employee experience, in turn, can create more efficient workers and give companies the retention of top-talent they need to succeed.

Con: Implementing a new performance management model can take time.
While the number of companies following the old model is on the decline, there’s still a clear majority, with 70 percent of companies still performing annual reviews. Part of the challenge is the time it takes to implement, both from a technology perspective and from a training perspective. It can be challenging for some managers to transition to this new style of management, and moreover the continuous style of performance review requires more time and energy from managers long-term.

Another major reason for the trend toward more regular performance reviews is centered around the fast-paced nature of change in the workforce. Adopting a learning management software can help managers track employee progress, and even send them relevant learning modules to enhance their skill-sets as needed. Still, that doesn’t mean there’s no time for a more formal review of longer-term performance and goals. Both approaches have their merits and drawbacks. The type of performance review that is right for your company and your employees may vary depending on the type of work they do, the size of your company, your industry, and more. It may even be worth implementing some combination of the two.

Looking for an effective way to implement a more continuous performance management model? Start with the right tool: Cornerstone Performance.

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