Are You Ready to Adopt a Continuous Performance Management System?

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Improving the performance management process has been top of mind for HR professionals in recent years. Many organizations are now rolling out new methods and tactics that put employee engagement at the forefront, with processes taking a back seat. The most popular trend continues to be a push towards continuous performance management and the abandonment of long-held norms, such as the annual appraisal. According to Deloitte’s 2017 Global Human Capital Trends report, more than 70 percent of companies say they are designing their system around continuous performance management practices. Similarly, a separate 2018 survey by Forrester found that 79 percent of companies promote continuous performance management.

What is continuous performance management (CPM)?

What are the benefits of continuous performance management?

The shift to continuous performance management is a philosophical one and is based on the belief that good, frequent communication will result in a more efficient performance management process. To that end, many organizations are taking a closer look at building on existing communication channels or adopting new ones — especially when they are enabled by technology to do so.

Make the process simple

The most effective systems also tend to be simple. According to Deloitte’s research, 96 percent of organizations working on improving their performance management process are also working towards making it simpler and easier to understand. There is a particular emphasis in cutting down on the bureaucratic nature of performance management and creating a system that is easier to put into practice, use and iterate on.

Historically, performance management can be a source of frustration for employees. Common complaints include employees seeing evaluations as a “waste of time,” “unfair” and “one sided.” In a recent survey from the management consulting firm McKinsey, 54 percent of respondents said that performance management does not have a positive effect on overall performance. This explains the need for change, and the most common changes organizations have made are to simplify ratings, simplify the review process and separate performance and compensation conversations.

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Intending to create a simple process may sound like an easy proposition, but it can sometimes be difficult to put into practice. The problem with switching over to an informal, ad-hoc process is that is still requires structure. Change begins with buy-in from decision makers, but it must also be clearly communicated to all employees and managers. Appropriate training sessions should be scheduled, especially in preparing managers for something they might not be familiar with.

A CPM system creates top-down alignment between personal goals and the objectives of a credit union’s strategic plan and should therefore be a leading priority for credit unions looking to fully embrace increased employee engagement as a key to company growth.

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