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Four continuous performance management best practices

In today's world, using traditional annual reviews to manage performance is as effective as relying on print newspapers to get breaking news. Here's how to make a shift to ongoing feedback.

Although few people in HR will say the traditional performance review is dead, a growing number agree it's on the way out. In the Harvard Business Review article "The Performance Management Revolution," The Wharton School's Peter Cappelli and New York University's Anna Tavis wrote that more than one-third of U.S. companies are rethinking their approach to performance management. Their aim, HR executives said, is to make the process more dynamic by focusing on frequent exchanges of feedback, often delivered in the course of a project meeting or immediately after an assignment has been completed.

That approach is a decided shift from the traditional annual performance review and requires both the strategy and technology to support its success. To help guide you in deciding what's right for your organization, here are four continuous performance management best practices.

Understand why continuous performance management is necessary

As with any change, it's important to understand the why. In the case of continuous performance management, a number of factors explain why more companies are adopting it, either in addition to the traditional annual review or as a complete replacement.

Ongoing performance conversations can adjust an employee's goals in real time.
Lisa PaddenPrincipal, Big Toe Consulting

First, today's companies are more prone to pivot than they've been before, which forces both employees and managers to constantly reprioritize goals, said Lisa Padden, principal of Big Toe Consulting, an HR advisory firm in Chicago. "The objectives set out at the beginning of the year often shift or morph as the year unfolds," she said. "Ongoing performance conversations can adjust an employee's goals in real time."

Second, continuous performance management looks forward rather than backward, said Martin Fiore, Americas tax talent leader for EY in New York. The approach "is based on what you're doing today, what areas of development would make you a better leader based on what you're trying to achieve versus, 'Hey, you just did this project for us in the last six months, and here's the feedback.' Those are two very different ways of looking at building leaders of the future."

Finally, a number of HR experts see continuous performance management as being closely tied to employee engagement. continuous feedback "means that you're having conversations as part of your culture, part of your fabric, not waiting for a milestone event," Fiore said.

Realize sharing frequent feedback requires a cultural shift

As you might guess, implementing ongoing performance management processes is no small task. For continuous performance management to work, employers must be committed not only to implementing the approach, but also to adapting their culture to support it.

By definition, "it's not something that can be one-and-done, and it's not something that can happen just once a year if it's going to be a meaningful experience for not only the employee, but for the organization," said Susan Baranowski, director of HR for Living Branches, a not-for-profit system of retirement communities based in Lansdale, Pa.

How the performance review process works varies from company to company, but professionals in HR, consulting and technology agree on its core components: more frequent formal meetings between managers and subordinates -- for example, at least quarterly instead of annually -- interspersed with regular, and even more numerous, informal discussions to offer, receive and discuss feedback.

However, having a framework for performance reviews is as important as increasing their frequency. Four years ago, for example, accounting and advisory firm PwC transitioned to an approach it calls the "PwC Professional." According to Bhushan Sethi, partner and New York-based leader of the firm's Financial Services People and Organization Practice, PwC set five competencies that would be the basis for evaluation of all of its employees, regardless of their role or level: whole leadership, business acumen, technical capabilities, global acumen and relationships.

"Whatever level you are and whatever function -- whether you're in tax, whether you're an M&A [mergers and acquisitions] consultant, whether you're in strategy, whether you're an auditor -- you'll be evaluated formally around those five dimensions," he explained.

But these "dimensions" are simply a foundation. They provide the basis for setting expectations, reporting on an employee's progress and providing feedback, Sethi said. While a "very digitally engaging mobile app" is a part of the process, he described the app's use as "necessary but not sufficient." The program's true core is "a whole ecosystem of real-time feedback." PwC encourages people at all levels to request feedback, often "in the moment."

"Sometimes, people who've engaged with me over a piece of client research or a client meeting will stop and say, 'Can you give me some feedback?'" he explained. The dimensions provide a consistent language and context for such discussions to provide perceptible value. For instance, Sethi might say, "This was really good from a technical perspective, this could have been improved from a client relationship perspective or I didn't quite see the business acumen there."

Such conversations shouldn't only be directed from managers to subordinates, Sethi and others pointed out. In true continuous performance management, team members are encouraged to provide and request feedback from their managers, as well as their peers.

Understand how technology facilitates ongoing communication

When it comes to continuous performance management, technology serves two roles, experts said. First, it facilitates dialogue by providing a communications platform and even performing simple tasks, like pinging managers when a formal review needs to be prepared. Second, it enables employers to aggregate employee data to discern trends or other factors that might impact how they manage and develop their workforce.

"It's meeting people in terms of how they work today," Sethi said. "Most of our workforce is pretty mobile, and many complete these snapshots on either a device or mobile phone." As a manager, he uses the app to review his team's progression in real time, "and I can see that when I'm getting on an airplane."

Continuous performance management and "continuous leadership" were more challenging without technology "because it was harder to capture the information in a way that was simple, that was easy and, quite frankly, that was somewhat fun," Fiore said. "If you can capture feedback through an app versus going into the office, logging onto your computer or filling out some form, there's a huge difference between those two points."

"Tech is never going to replace personal relationships," observed Alex Kracov, head of marketing at Lattice, a performance management platform developer in San Francisco. "My ability to give feedback to someone I've known for 20 years is radically different than it is for somebody I've known for a year," Kracov said. "Technology's never going to replace that. You still have to build relationships with the people around you. There's a culture, and you still need to have those conversations."

Don't equate technology with continuous performance management

While technology can streamline performance management and provide data to help develop the workforce, it's not without its downsides. For example, some worry that managers might try using it to avoid uncomfortable conversations.

Baranowski, for example, said apps could devalue dialogue, even though a review's conversational aspect shouldn't be minimized. Electronic messages can be too easily misinterpreted, she believes, so technology must strike a balance between streamlining continuous performance management and becoming a crutch. "The dynamic component comes from the conversation," she said.

An overreliance on technology might be especially tempting for younger managers, Padden suggested. "Managers earlier in their career have always had technology support and are comfortable communicating in short bursts on technology platforms," she noted. "But I think real conversations are what build trust and allow for the back and forth that good feedback requires."

Jeremy Spake, principal consultant for Cornerstone OnDemand, an HR platform provider headquartered in Santa Monica, Calif., echoed the thought in somewhat starker terms. "The notion of holding off potentially difficult conversations with employees until the mandated formal conversation represents a failure of management," Spake said. "Managers should be both empowered and required to actually manage their employees' performance -- every day, all day."

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