Talk to any HR professional, and they will state their objective is to move to continuous performance conversations over the old-style traditional appraisal. Article by Stuart Hearn, CEO – Clear Review.
The end of the annual appraisal has been long declared. Introducing more informal and regular performance reviews is not a new concept, however, it is not naturally easy to implement the shift and change engrained behaviours. This is despite the compelling evidence that it leads to better productivity, increased engagement and less churn.
Continuous performance management is based on three simple principles
Firstly, the concept that getting each of your employees to work on three-month, shorter term goals will be far more productive, particularly if they are reviewed and discussed on an ongoing basis. Little and often is the recipe when it comes to continuous performance management, with research showing that companies who set near term goals – as opposed to annual objectives – are more likely to be in the top quartile for financial performance.
Secondly, ‘in the moment’ feedback, is an incredibly powerful tool, with studies as well as customer implementation showing that this drives up to 39% better performance. Thirdly, there is compelling evidence that regular ‘check in’ conversations between employees and managers enable more meaningful conversations around performance and development – something that the old-style, rigid annual appraisal always prohibited. A Gallup survey reported that regular conversations lead to staff being x3 more engaged  and 21% more productive.
These benefits have been achieved by organisations like The Chartered Institute of Marketing, Investors in People, Clydesdale & Yorkshire Banking Group (CYBG) and Perkbox, by adopting a continuous performance management system, and simply having more regular and meaningful conversations. But how?
Customers in conversation
One clear example that demonstrates success parameters is CYBG. In October 2017, the organisation changed from an annual appraisal model to a new framework centred around ongoing conversations and feedback. The company also carried out experiential training with its managers on how to instigate meaningful conversations and give effective performance feedback. As part of this, CYBG also recognised the importance of technology in supporting this positive transformation and providing valuable data-led insights.
As another example of making conversations part of company culture, The Chartered Institute of Marketing (CIM) implemented a new performance coaching model in 2017, again based around regular conversations and feedback. Like CYBG, CIM also chose to use technology to underpin their performance management process. The new approach has been a huge success and as CIM’s Director of People and Organisational Development, Sarah Lee-Boone says: “It’s about building trust and empowering employees, and we’re really managing to achieve that. Managers don’t feel like they’re being policed, and we’ve got more purpose and alignment than we’ve ever had before.”
So why do some of us avoid those frequent conversations?
Continuous review and conversation sounds simple – so why isn’t every organisation doing it? For one, the annual appraisal format or ‘thinking’ is still entrenched within most companies. Managers lack the requisite framework to support these regular, less formal conversations, as well as the skills and confidence to have quality performance conversations. They fear the difficult conversation and need the necessary training and guidance, as well as an intuitive platform that can both prompt and support them along continuous employee performance dialogues. They also fear it will take too much time, as ‘more frequent’ sounds like ‘more work’. However, this presents a false economy when a lack of real-time feedback prevents the necessary corrective measures being put in place to get the employee back on track and focused on delivering their objectives.
The solution – make regular conversations the focus of your performance management framework
Organisations need to break away from traditional performance management behaviours and create an empowering framework and ‘culture of conversation’ instead.
All too often, company leaders get tied up in discussing whether they should get rid of annual appraisals and ratings. While many organisations have done just this with great success, others are not culturally ready for this quite yet. However, the key to empowering performance management lies in moving the emphasis away from the the completion of appraisal forms, and towards the quality and frequency of performance conversations. Most performance management processes place 80% of emphasis on measurement and documentation, and only 20% on the conversation. To get value from performance management and empower managers to succeed, we need to flip this statistic so that 80% of the focus falls on conversations and feedback.
Another important mindset to adopt is that conversations with employees are far more meaningful if de-coupled from performance measurements and ratings. A difficult performance conversation can be far more easily tackled as part of a monthly ‘check-in’ as opposed to formalising this as a traditional appraisal conversation. This also ensures issues are addressed quickly, meaning they are less likely to be forgotten about, only to occur again. The right technology should support and facilitate the process – creating triggers, alerts, discussion prompts, guidance, data collection – but it shouldn’t dominate the conversation, in the same way PowerPoint shouldn’t lead a presentation. If the technology has been purpose-built to empower meaningful conversations and feedback, it will actually encourage much richer discussions.
Chat more, churn less
For most organisations, employees are typically the most expensive resource. With that in mind, when presented with the opportunity to improve performance by 39%, increase productivity by 21% and reduce churn by 30%, most HR directors would sign up to whichever system could promise that. To achieve these results, the best people organisations need to have a framework that empowers conversations rather than undermines them; have technology that supports the conversation framework and helps to build new habits; and have visibility of conversations and hold managers accountable for making them happen. If we get those right then we can transition from a culture of performance management to one of performance improvement. After that the statistics speak for themselves.
 Bersin by Deloitte (https://www.successfactors.com/static/docs/Bersin-Competency-Report.pdf)
 Mind Gym UK (https://uk.themindgym.com/topics/fantastic-feedback/), from a 2002 Corporate Executive Board study
 Gallup (https://www.gallup.com/workplace/236570/employees-lot-managers.aspx)
 Adobe (https://www.forbes.com/sites/davidburkus/2016/06/01/how-adobe-scrapped-its-performance-review-system-and-why-it-worked/)