Three ways to solve the continuous performance management puzzle

Employers are increasingly choosing regular “check-ins” rather than annual reviews to manage employee performance. But what is the best way to implement this strategy? Emil Gigov examines the emerging technology behind continuous performance management (CPM).

Annual appraisals have been disrupted by continuous coaching practices that aim to improve employee engagement and productivity. Performance management is shifting from a centralised model facilitated by HR to a decentralised approach, which has increased leadership accountability. This requires significant cultural change in particular at the middle management level.

Those organisations that compete for highly skilled and talented staff have the most to gain from these changes and are at the forefront of implementing continuous performance management. The key question they have is how to deal with the complexities introduced by this relatively new thinking. Inevitably, software is providing the answer.

Technological revolution

Analysts predict that by 2022 more than 30% of organizations will abandon one-size-fits-all performance management approaches in favour of approaches tailored to support the distinct objectives of various business functions – including goals, objectives, check-ins and feedback.

Increasing the frequency of appraisals was not feasible in the past, largely due to the labour-intensive nature of the administration required. However, over the past decade technologies such as role-based self-service, mobile apps, workflow and role-based dashboards have made disruption of annual performance reviews possible.

The cadence and content of performance management is now changing. The expectation today is that there is an ongoing two-way conversation between an employee and their manager, rather than a point-in-time evaluation. There is also an increasing expectation that evaluations are shaped by additional people beyond an employee’s immediate manager or team. This process is closely linked to employee development.

In a low-touch environment, where interaction is minimal, managers may be synthesising information and feedback from multiple sources about individuals that they may not personally know very well, leading to sub-optimal performance management outcomes. New emerging technology solutions enable managers to do this efficiently and effectively.

Which model is best?

As performance management thinking evolves, technology solutions will remain somewhat fragmented and transitional. Traditional human capital management suites (HCM) are focused on the HR manager and struggle to engage with business managers, who often see the performance management modules of such systems as cumbersome and not user friendly.

This has created an opportunity for vendors of point solutions to provide simpler to use, more engaging tools that facilitate frequent interactions.

The competitive battlefield for CPM currently involves three main categories:

1. Traditional HCM or talent management suites

Almost every human capital management (HCM) suite vendor has been complementing or extending its performance applications. Enhancements include features such as predictive worker analytics, personality assessments, peer feedback, or mobile coaching sessions. Suite vendors are also building deeper flexibility into their traditional performance reviews by increasing options for review frequency and/or ad hoc reviewers.The suites of tools on offer may not be a perfect fit for every use case.

However, the tools delivered by suites have the advantage of process integration. For example, a manager can encourage development by assigning online learning during a coaching session. In reality, CPM as a module remains only a basic feature in the overall HCM suite. Also, the engagement profile of HCM suites (annual) and CPM applications (frequent) is different, highlighting the different needs and use cases each are designed for. HCM suites remain focused on the HR professional while CPM is inherently a business user application.

2. Worker engagement platform (WEP) vendors

WEP vendors have emerged in the past few years, providing various combinations of capabilities and tools. Most platforms include manager coaching tools, peer-to-peer feedback, and goal/objective management. They may also include any combination of rewards and recognition, pulse survey tools, employee communications tools, gamification, manager advice, wellness and volunteer program management, or other tools.Analytics and integration capabilities vary widely. While some organisations deploy WEP to complement traditional performance processes, others have replaced traditional performance applications with engagement platforms as their alternative toolset for driving and measuring desired performance results. This approach has allowed organisations to dramatically shift their performance and engagement culture and processes, while still maintaining a (less-rigid) structure that allows for alignment, measurement and defendable management decision making.

3. Point solution vendors

Point solutions are the opposite of integrated solutions – it is technology developed to address one specific problem. A small number of specific CPM point solution vendors exist today globally, each focusing on a set of purpose-specific functionalities including employee communications, feedback, goals rewards and recognition. CPM point solutions have the advantage of rapid deployments and a superior user experience, which translates into a significant increase in usage. Some vendors report an average of 70% of users log in to their systems at least once a month. Those achieving the best traction are seen as thought leaders in the CPM space, driving the debate on culture change and best practice.  They also focus on the small and medium sized companies, where HMC suites are largely absent.

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As different companies have different needs and different levels of maturity in terms of implementing CPM, all three type of vendors will be able to grow over the coming years.  It is likely that CPM and engagement will continue to converge and this will appeal to customers looking to reduce the number of vendors they work with. Those that can demonstrate a clear ROI, ease of use and high levels of user adoption will establish themselves as category leaders.

The best solutions may be the most simple. CPM technology which focuses on ease-of-use and is well aligned with employers’ key purchase criteria can dominate the market. Such technology is cost effective, allowing budget to be signed off easily by a single HR stakeholder. As CPM evolves, solutions with easy implementation, a great user experience, demonstrable ROI and exceptional customer service are likely to gain increasing traction with employers.