According to recent research, companies that implement continuous performance reviews experience 14.9% lesser rate of turnover compared to companies that engage in annual reviews. In fact, only about 8% of companies around the world believe that performance reviews add value to their business process.
The traditional annual performance management scheme has been in use for decades. While there are certain merits to its name, about 45% of global HR managers believe that it’s time to scrap the annual review system in favor of a current and more comprehensive performance management scheme.
An archaic approach
Traditional annual appraisal systems have received a lot of criticism for the limitations they pose on managers and employees. Some of the main problems with the annual system include:
v They don’t keep pace with changing work requirements
v Focus is limited to the monetary benefits that appraisals offer
v Gives way to power dynamics and work politics
v Doesn’t offer encouragement to employees for 11 months of the 12-months cycle
If considered practically, the annual system doesn’t provide flexibility for making changes in workflows and processes. Changes can only be made once the one year cycle is complete, by which time it might be too late to effect positive results.
A new approach to work optimization
The continuous performance management system seeks to plug in the gaps and supplement the work done by the annual system. The objective of this new type of performance management is to help managers and employees proactively work towards optimizing productivity and work performance.
Some of the benefits that continuous performance management system brings in are:
v Provision of timely feedback
When reviews are provided all-year-round, it becomes easier for managers to identify the mistakes in the system, processes, and technology. Employees can be provided immediate feedback and changes can be implemented with ease.
v Increased opportunities for employee development and employee engagement
Employees can work on their shortcomings and develop their strengths only when they are aware of them. Continuous performance management system allows managers to engage their personnel constantly and provide them with opportunities to expand their talents and work on their deficiencies.
v Saves operational time
Annual systems take a lot of time and effort on part of every member of the organization. Considering that reviews happen only once a year, managers are stretched for resources at the time of the annual reviews. This impacts the overall productivity of the organization. Providing reviews constantly ensure that there is a smooth flow in the operations. Tasks can be efficiently managed and changes can be implemented with ease.
v Better resource utilization
Whether it’s a concern regarding technology utilization or skills gaps, managers can schedule their resources and plug in gaps easily and effectively due to their being aware of the problems in the operational system. Productivity increases as a result.
v Improved manager-employee relationships
Continuous performance management system allows for the creation of an organizational environment that is open, honest, and transparent. Such an environment has a huge positive impact on working relationships and work performance.