Annual Performance Reviews have long been an integral part of Human Resource operations. However, many of today’s organisations are now ditching the Annual Performance Reviews in favour of Continuous Performance Management (CPM). This is because CPM is regarded as more effective by many organisations as it allows them to assess employee performance on a weekly, fortnightly or monthly basis.

Indeed, according to Stuart Hearn – the CEO of international performance management experts Clear Review – it is the superior agility of CPM that makes it so useful and successful for organisations.

To explain this in detail, Mr Hearn outlines some of the benefits of using CPM, which include:

1. Feedback in ‘real time’

By gathering feedback on a more regular basis, organisations are able to better monitor employee performance. More frequent meetings also give managers the opportunity to step in and address issues as they happen. With the old Annual Performance Review model, many issues could only be dealt with long after they had occurred; thus allowing much of the unfavourable behaviour to ‘set in’. By using CPM, employers can deliver much-needed recognition more quickly; and this can have a hugely positive impact on employee engagement and productivity

2. Better development opportunities

Using CPM gives employees a better chance of improving themselves and progressing up the career ladder. This is because it allows employers the opportunity to have more frequent performance discussions with their staff; thus identifying early on any areas of concern that the employee needs to work on. This assists both the employee and the organisation as it targets and gets on top of problem areas much more quickly

3. A quicker response to objectives

CPM allows employees to react and respond to their objectives as they go, and not just once a year. In the past, the ‘old model’ objectives set by management were generally very rigid and inflexible. However, when an organisation uses CPM, its employees can better put their objectives in context; thus gaining a better understanding of how the objectives can contribute towards the achievement of company goals. In other words, CPM gives employees much more autonomy over their objectives

4. New technological advances assist CPM

New advances in software technology are also a major reason behind the recent rapid rise of CPM. This technology has led not only to more agile performance management in the workplace, but also to such breakthroughs as ‘in-the-moment’ feedback. Other areas of improvement include enhanced meeting scheduling, more efficient goal tracking, and superior digital storage: eliminating the need for old-fashioned, paper-based record systems.

Research Findings
In line with these points, a recent Pricewaterhouse Cooper (PwC) study found more than 78 per cent of Australian companies reported a focus on process – rather than quality of discussion and outcomes – was an issue in their organisation. The study also found 67 per cent of respondents maintained the old performance management model was merely a ‘compliance exercise’.

Another major finding was that although some large listed organisations had not yet made the complete change to Continuous Performance Management (CPM), they were making wholesale innovations to existing elements. These include abandoning the annual review cycle altogether, and removing the old focus on performance ratings: which includes the ‘carrot and stick’ policy relating to results and reward.

It was also found that although 92 per cent of those surveyed had used ‘SMART’ goals; less than a third of those goals were typically SMART in practice. To put this in perspective, a ‘SMART’ goal is defined as one that is Specific, Measurable, Achievable, Results-focused, and Time-bound.
Another interesting finding was that although most organisations maintained that HR and senior leadership were most responsible for performance management effectiveness, 61 per cent of employees believed they (the employees) were equally responsible. It was also found those companies most focused on change believed the Executive members were most responsible for improving the alignment of goals to business strategy: as well as enhancing the quality of those goals.

Finally, and in what could be interpreted as a major step towards CPM, most organisations reported a focus on removing or reducing the importance of the mid-year review, in an attempt to encourage more regular feedback. Thus, in conclusion, although some organisations may still be in the process of adopting CPM on a regular basis, the steps towards it as a major process are definitely being taken.