What Is Continuous Performance Management: Your 101 Implementation Guide
61% of managers and 72% of employees don’t trust their organizations’ performance management processes, illustrating the need for a different approach. Continuous performance management could help you correct this.
Unlike quarterly, bi-annual, or yearly reviews, continuous performance management involves talking regularly with your team, giving quick feedback, and helping them grow throughout the year. It keeps everyone on track and ensures that personal goals match company goals.
This article explores the importance of continuous performance management, its key elements and benefits, and HR’s role in the process. It also discusses how you can successfully implement it at your own organization to benefit your workforce and the company.
Contents
What is continuous performance management?
The benefits of continuous performance management
HR’s role in continuous performance management
The process of continuous performance management
Traditional vs. continuous performance management
7 steps to implement continuous performance management
What is continuous performance management?
Continuous performance management is an ongoing approach to managing employee performance. It aims to improve engagement, development, and alignment with company goals and, as such, focuses on conversations, feedback, and growth. The process involves managers and employees continually discussing the latter’s goals and job performance.
A typical continuous performance management process involves managers providing their employees with constructive, real-time feedback and aligning employee development goals with broader business objectives.
Traditional performance management: Fast facts
- Only 2% of CHROs think their performance management system works.
- Less than 33% of employees believe performance reviews are “very fair and equitable”.
- Only 6% of organizations are rethinking performance management and making significant progress toward changing it.
The benefits of continuous performance management
The benefits of continuous performance management include:
- Increased engagement: In a continuous performance management process, feedback is more frequent and timely, which can boost employee engagement.
- Better manager-employee relationships: Managers and employees communicate regularly, which enables them to build stronger, healthier working relationships.
- Early detection of issues: If an employee or a manager encounters potential issues, ongoing communication enables them to address them before they escalate quickly.
- Faster development and skills building: Continuous performance management allows employees and managers to detect and close skills gaps early.
- Easy adaptation to changing business environments. In a well-structured continuous performance management process, individual objectives and goals align with those of the team and the organization. This means that if, for example, due to changing market conditions, the company goals evolve, those of individual employees can evolve with them more easily too.
Continuous performance management: Fast facts
Compared to companies with annual performance management, organizations that use continuous performance management report significant improvements in their ability to:
- Engage the entire workforce (58% vs. 37%)
- Ensure enterprise agility (65% vs. 35%)
- Increase performance from all employees (58% vs. 35%)
- Retain high-performing talent (63% vs. 41%)
- Keep organizational focus on top business priorities (54% vs. 33%).
HR’s role in continuous performance management
Continuous performance management requires a well-structured process to function effectively. While this may look different for every organization, HR’s role involves some common elements:
Developing a performance management framework
This framework defines how a company structures and supports efforts to monitor and improve performance. For practical tips about how to develop such a framework, explore AIHR’s guide on how to develop a performance management framework.
Offering training on feedback
It’s essential to train managers and employees to give and receive constructive feedback. For in-depth information and best practices in this area, check out AIHR’s ultimate guide to continuous feedback.
Integrating performance and talent management
Performance management should be part of the organization’s larger talent management strategy and integrated with areas such as learning and development (L&D), promotions and rewards, and succession planning.
Collecting data
You need to track and measure the effectiveness of your continuous performance management process. You can use different methods, such as feedback sessions, performance management software, or pulse surveys.
Learn to implement effective continuous performance management
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AIHR’s Talent Management and Succession Planning Certificate Program teaches you to use data to optimize talent management, develop a performance management strategy tailored to business priorities, and create an environment for talent to thrive.
The process of continuous performance management
While implementation may vary, every continuous performance management process should include these core elements:
Regular goal setting and updating
Start by setting clear goals that align with team and company objectives. These goals help employees understand their priorities and how their work fits into the bigger picture. Review and update goals regularly to keep them relevant as business needs change and to enable employees to respond to new challenges.
Frequent check-ins
Schedule regular check-ins between managers and employees to discuss progress and remove roadblocks. These conversations should be short, focused, and happen often enough to keep goals on track. Informal chats between meetings also help build trust and keep communication open.
Real-time feedback
Don’t wait for annual reviews to give feedback. Provide it in real-time so employees can adjust and improve right away. Include feedback from both managers and peers to give a complete view. You can use a variety of free feedback tools to make this an easy process that’s part of everyday work.
Development tied to business goals
Employee development should support company goals. When skill gaps come up in check-ins, help employees build those skills in ways that also benefit the business. This ensures personal growth leads to better job performance and business results.
Growth instead of ratings focus
Move away from once-a-year ratings, and focus instead on helping employees improve continuously through regular feedback and support. This can lead to stronger skills, better performance, and greater contributions to company goals. This can, in turn, help maximize employee retention and job satisfaction.
Traditional vs. continuous performance management
Continuous performance management focuses on regular, real-time feedback and ongoing development, while traditional performance management relies on infrequent, often annual, formal reviews. The table below provides an overview of the key differences between the two:
Review frequency
Annual, bi-annual, or quarterly reviews.
Ongoing, regular feedback.
Focus
Past performance.
Current development and future goals.
Goal setting
Static yearly goals.
Dynamic goals that are updated regularly.
Communication style
One-way feedback from managers to employees.
Two-way conversations between managers and employees.
Review structure
Formal, structured review sessions.
Informal, flexible check-ins.
Evaluation method
Performance appraisals between managers and employees.
Goal-setting, continuous feedback, and check-ins.
Integration into work
After the review(s).
Continuously throughout the year.
Issue management
Reactive, addressing them after they occur.
Proactive, addressing them before they escalate.
Employee engagement
Low — feedback can be late and even irrelevant.
High — feedback is ongoing, making employees feel heard and valued.
7 steps to implement continuous performance management
Making the shift from traditional performance management to continuous performance management requires some preparation. Here are seven steps to consider:
Step 1: Start with leadership buy-in
A successful project must start with leadership fully endorsing the initiative to ensure a strong foundation. Their buy-in ensures resources, support, and alignment. A lack of leadership buy-in, however, will likely hinder progress and possibly lead to the project failing.
Step 2: Create a timeline
Structure the transition from traditional to continuous performance management by determining its stages and timing. Questions to ask yourself include:
- By when do you want to roll out the new system?
- Are you going to start with a pilot first (highly recommended)?
- What performance management method do you currently have in place?
- What framework do you want to use moving forward?
Step 3: Train managers
Managers play a crucial role in continuous performance management. Ensure they receive training on areas like coaching, feedback, and goal-setting so they can apply their learnings consistently, confidently, and fairly to their performance management process.
Step 4: Set up a simple system
Choose, develop, and set up a simple continuous performance management system. You can use software for this, but if your organization has a limited budget, you can also initially opt for a manual process. This system will help standardize the process and ensure fairness for all staff.
Step 5: Pilot the process
Starting small, especially with a potentially large project like shifting your performance management process, is a good way to test the waters. Pilot the new process in one department first before deciding on a company-wide rollout.
Step 6: Gather feedback and adjust
Collect feedback about the continuous performance management process from everyone involved in the pilot (and from everyone else once you’ve rolled out the new method). This will help you decide how to adjust the new process as soon as possible.
Step 7: Make check-ins part of the culture
Schedule regular check-ins to build trust between managers and employees. To make them a part of the organization’s culture, emphasize them in your employer branding, during the employee hiring and onboarding processes, and when you onboard and train managers.
To sum up
Continuous performance management is a more innovative way to keep your people engaged, motivated, and aligned with business goals. By focusing on regular conversations, real-time feedback, and ongoing development, you build stronger relationships and address issues before they escalate. This not only helps employees grow but also drives better business results.
Start small, train your managers, and build a system that supports open communication and continuous improvement. When done right, continuous performance management can become part of your company culture and help you turn high potential into high performance.
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