Guest Blog from Mischa Riedo, Co-Founder of QuercusApp
Nobody enjoys performance reviews. They are an annual event that costs everyone in your business time and money while generating little improvements. Even though most companies know that classic performance management is incredibly ineffective for evaluating performance, they are still looking for new alternatives.
The alternative is called continuous performance management and was already discovered by major corporations like Adobe, GE, Deloitte and Goldman Sachs. Because the focus of the approach is establishing a culture of ongoing, real-time feedback and discussion, it eliminates the headache of reviews and improves employee performance.
Here are 10 reasons why you should transform you process as well and benefit from overwhelmingly positive results:
1. Employees always know where they stand
Studies show that fewer than half of the employees know where they stand concerning their performance, and how can we expect employees to be at their best if they don’t know where they stand? Ongoing, real-time feedback will provide them with the guidance they need to develop and accomplish your company’s goals continuously.
2. Timely and Actionable Feedback
Giving feedback once a year almost guarantees that it will be vague and largely irrelevant by the time your staff hears it. To perform at their best, employees need feedback immediately after a situation. Whether it’s encouragement or coaching, delivering a timely response helps to improve engagement levels and growth.
3. Constant Opportunities for Development
Imagine if a sports coach waited until the end of the season to provide feedback to his team. The very idea is absurd, right? Leading your team is no different. In our fast-paced business world there must be a consistent stream of feedback throughout the year, so that employees have a chance to improve consistently.
4. Forward Focus
Saving up a year’s worth of critiques is detrimental to morale and often hurts engagement and productivity. Luckily, continuous performance management shifts the focus from past mistakes to future opportunities. Rather than a year-end judgment, you’re now engaging in a year-long conversation. Feedback is focused on minor adjustments instead of overwhelming course corrections, which leads to better outcomes.
5. Managers Enjoy a Richer Picture of Employee Performance
According to the research firm CEB, roughly 90 percent of HR managers believe that the traditional review process doesn’t paint an accurate picture of an employee’s performance. In a continuous performance management process, 360-degree feedback data is collected and accessible throughout the year. Consequently, managers enjoy a much more comprehensive picture of an employee’s actual performance.
6. More Meaningful Interactions
Every leader knows just how stressful it is to go through the administrative work that comes with annual reviews. The extra paperwork and planning can make it difficult to focus on having a substantive conversation, which is supposed to be the whole point of this exercise. When feedback is collected and exchanged throughout the year, the review is essentially already over with by the time the two sit down. This allows managers to focus their attention on helping employees grow and work towards their goals.
7. Reduced Recency Bias
A glaring flaw in the traditional review process is the tendency to place too much weight on recent events. This “recency bias,” whether the events were good or bad, can render the reviews ineffective and can often be demotivating. When feedback is exchanged throughout the year as the situations arise, the risk of recency bias is nonexistent, because the feedback was documented transparently and fairly. This translates into happier workers that are more engaged and productive.
8. Improved Ability to Close Skill Gaps
According to Deloitte’s Human Capital Trends, executives view shortages of skill as one of the most critical roadblocks to executing business strategies. Because they cannot always just recruit the needed talent, they must identify and close skill gaps internally. In a continuous performance management process, employees, managers, and organizations have a real-time cockpit throughout the year to spot and tackle skill-gaps immediately.
9. Corporate Values Come Alive
Every company creates a set of values that they hope will establish the kind of culture that drives engagement and performance. Continuous feedback allows corporations to make those values come alive in a way that will create the company culture they strive for, instead of vague ideals on posters.
10. Getting What You Pay For
CEB estimates that a company with 10,000 employees will spend upwards of $35 million annually on traditional performance reviews. It’s an astounding investment into a process that produces no results. In contrast, businesses that have adopted an ongoing process have reported a 30 percent reduction in employee turnover, record-breaking engagement levels, and increased productivity. Continuous performance management is a highly effective, cost-efficient way to boost morale, increase productivity and create a team that will lead your company to success for years to come.