Continuous Performance Management (CPM) is proving to be the much needed recessitation for traditional performance management systems that long have been mired in stagnation, formality and a structured way of wasting time that has almost never added much value to organizations or managers and employees who were forced to do the annual routine. CPM is providing welcome relief. Our team did research with HR colleagues at 77 customers and found out some interesting insights I'd like to share with you.
Yes performance management is still very important to 3/4 of companies. Maybe the other 1/4 has given up on this, or found a new way to do it already or have always done performance management differently, which I think there are more of these organizations out there than we know about. The main reasons firms feel this process is important is twofold: 1) to align employees to what's important for the business, what people should focus on and 2) as a result, what should employees be developed toward doing. This is where old systems let us down, as there isn’t much alignment upwards, outwards or across departments in meaningful ways to help people focus on what matters. If there was a high priority on this, performance goals would change regularly through the year which they typically do not. By end of year, the relevancy of the goals set 12 months earlier and discussed in the yearend review is minimal. And the dreadful 360 feedback that happens at year end when we are all so busy with other priorities only to get deluged with the requests to give feedback on 10 people we worked with 7 months ago - ugh. There is a better way to get feedback. We do try hard though to make all of this relevant and useful because we have to keep employees engaged and justify pay decisions and talent review recommendations. More on that later.
More than half of our survey respondents are exploring how to get rid of performance ratings and are making major overhauls to their systems. My company started our overhaul last year I am pleased to say. The reasons that change is slow according to our survey was:
- Difficulty aligning CPM to compensation decisions
- Corporate culture that won't embrace this risky new approach
- Legal or compliance
These are solid and real reasons not to change, but there is compelling evidence why this is becoming outdated thinking. Compensation related decisions and the calibration process still happen in organizations where CPM is present. Cultural changes evolve over time and CPM can truly nudge forward a "pay for performance" culture or a culture of "transparency" or one where speed and fluidity are desired. And when ratings disappear, I haven’t heard anywhere that legal action by employees spikes or employee engagement drops. My prediction is engagement will actually increase over time, especially for managers.
Here are a few tangible ideas for how to evolve your CPM program and our survey confirmed these are the areas companies are considering going to first:
- Use cascading goals from top to bottom and through the organization. The easiest way to start doing this is usually compliance related - cascading goals such as diversity, safety, or ethics training. Then build it out.
- Mobile mobile mobile. Doing CPM on the go via mobile changes the whole vibe and dynamic and simplifies the process. It forces forward progress a step at a time vs. changing a long term cumbersome desktop confined year long process.
- .And yes performance management is here to stay. We need it. It's not going anywhere and in fact, it should be with us all year long. Best practice companies encourage behaviors where performance discussions happen throughout the year vs. just the obligatory chat at year end.
So if your performance management system is sick, maybe CPM is the CPR you need.
This article was published previously on LinkedIn.