June 11, 2019

The continuous performance management cycle, unpacked

BY: Ben Dansie
white curved edge

When we talk about continuous performance management, we’re talking about the movement from a discrete performance management process into an ongoing performance management cycle.

The idea is, performance management becomes a series of consecutive cycles that feed into each other. So performance management becomes performance development on a long-term basis.

 

You’ll see various versions of the performance management cycle; but the main thrust is the same:

 

To start transforming your performance culture, structure your processes around the performance management cycle.

Here’s how.

 

Performance management cycle stage one: PLAN

The PLAN stage of the performance management cycle creates a roadmap for future performance.

 

The first stage of the performance management cycle is where you plan what employees should do, to create a roadmap for the next performance cycle (ideally a quarter). 

 

Traditionally the PLAN phrase happened annually and was strictly top-down.

 

Say the goal is to increase profit margins. To achieve that, the sales team are tasked with increasing sales volume by 15% in 12-months, while operations are tasked with decreasing operating costs by 5%.

 

Jane, a salesperson, is set the goal to increase her personal sales revenue by 10% and secure five additional key accounts. Joe, an operations assistant, is tasked with conducting a comprehensive supplier review, to make five cost reduction recommendations.

 

That’s the old, myopic way.

 

Now, PLAN is a multi-faceted stage in the performance management cycle.  It wraps the business’ strategy and goals around personal employee development goals, to collaboratively set goals that make sense for the individual and the business. 

 

So, take the same example. Jane’s manager sits down with her to chat about how Jane can contribute to increasing profit margins. They talk about prospective roadblocks – say, Jane struggles to negotiate terms and finds she’s not converting one-off accounts into long-term business.

 

They agree a Q1 target for Jane to complete cross-sales and negotiation training, and secure one key account.

 

The PLAN stage of the performance management cycle is where you collaboratively build a roadmap for employees, with challenging-but-achievable SMART goals that align personal development with business needs.

 

Read more on goal setting

 

Performance management cycle stage two: MONITOR

The MONITOR stage of the performance management cycle is where you track, measure and review progress against goals. 

 

The MONITOR stage of the performance management cycle happens on a continuous basis. It’s where you track, measure and review progress along the roadmap you defined in stage one.

 

In traditional performance management – the old way – MONITOR didn’t happen on a continuous basis. Certainly not in any formal way.

 

Let’s talk about Joe and his comprehensive supplier review. Joe’s manager assumes Joe’s getting on with the job. But when Joe submits his supplier review, he’s gone in completely the wrong direction. Months of wasted time – back to the drawing board.

 

Some proactive managers might have caught Joe before he followed a dead-end; but, given the institutional disinterest in people management in most businesses, it’s not common. Or Joe himself might have sought support - but that relies on him a) recognising a problem and b) feeling he can ask for manager support. It’s not a reliable way to manage performance well, every time.

 

Today, most businesses embrace continuous performance management, where you manage performance following the performance management cycle. Managers collect feedback regularly from a variety of sources, then have regular check-in conversations to ensure employees are on the right track. 

 

This stage is where continuous performance management tools make life much easier.

 

With TalTrack, for example, your entire workforce is empowered to give and collect 360-degree feedback through a mobile app. So managers have handy feedback at their fingertips, to help guide check-ins effectively.

 

Joe’s manager wants to check-in with Joe, two weeks into his supplier review project. He requests anonymous feedback from Joe’s colleagues with one tap, and learns Joe has a great attitude but he’s not clued-up about the company’s purchasing policies.

 

That’s the basis for a more meaningful conversation that helps steer Joe back on track – before his misses the goal, loses confidence and wastes time.

 

The MONITOR stage of the performance management cycle is where you track progress against the goals you set during the PLAN stage. So you can identify bottlenecks, hurdles and dead-ends before they become deal-breakers.

 

Performance management cycle stage three: IMPROVE

The IMPROVE stage of the performance management cycle is where you use the insights from stage two to refine performance.

 

The third stage of the performance management cycle, IMPROVE, comes hand-in-hand with the second. When you know how employees are doing, you have the insight to help them grow continuously.

 

These insights form the backbone of regular manager check-ins, to help employees’ improve gradually without investing time and effort down the wrong path.

 

That’s a break from traditional performance management, which gave retrospective feedback following annual reviews. Feedback that was well-intentioned but rarely helpful because it was so distanced from real-time.

 

(Hence only 8% of companies believe traditional performance management methods drive value.[i])

 

Imagine Jane is hitting a roadblock increasing sales revenue. Her manager wants to help but has no ammunition – so instead resorts to general advice based on what Jane thinks the problem is.

 

But Jane’s assumption is wrong – she only has one perspective – and ultimately that manager conversation costs time and adds no real value. Both the manager and Jane are left disgruntled – and Jane’s performance doesn’t improve.

 

The continuous performance management process is better because it gives near real-time insight. Insight that’s relevant because it’s timely, so you can better influence outcomes.

 

Jane again. In preparation for a monthly check-in, her manager gathers feedback from Jane herself, plus Jane’s colleagues and team leader. Going into the conversation, Jane’s manager can instantly see that Jane’s struggling.

 

Jane thinks that’s because she can’t work long-enough hours but a recurrent theme from colleagues says that Jane lacks confidence talking to senior prospects. Armed with that knowledge, Jane’s manager can book further training for Jane, or set her up with a senior sales mentor to boost her confidence.

 

The IMPROVE stage of the performance management cycle is where you structure manager check-ins that spot the root cause of issues and tangibly impact performance.

 

Read more: 7 tips for check-ins that drive performance and happiness

 

Performance management cycle stage four: REVIEW

The REVIEW stage of the performance management cycle is where you wrap the performance cycle’s learnings into one session, to inform the next PLAN stage.

 

The fourth stage of the performance management cycle is where you review progress towards the goals you set at stage one, including personal development goals. And use those learnings as a springboard to inform the next PLAN stage.

 

In traditional performance management, this was the annual appraisal. Lacking the insights from the MONITOR stage, and the immediacy of the IMPROVE stage, annual appraisals were almost useless.

 

(Only 14% of employees say annual performance reviews help them improve.[ii])

 

Read more: How annual appraisals stall growth

 

And because the PLAN stage of traditional performance management relied on top-down goal-setting, there was little continuity.

 

Joe gets a poor annual performance rating because his supplier review was poor. But next year, the business goal shifts to increasing market share. You don’t need another supplier review from Joe, so your feedback becomes irrelevant. And takes the tone of chastising, not helping.

 

By contrast, when the REVIEW stage is backed-up by the previous three stages in the performance management cycle, these discussions become meaningful.

 

Even if the business completely changes direction, Jane’s personal goal to improve her negotiation skills and confidence carry through. So her lessons learned can always translate, and she can grow continuously even as the business shifts focus.  

 

Even though they happen more often than annual appraisals – quarterly is ideal - managers ultimately save time because they’re much more involved in employees’ continuous development.

 

Jane’s manager doesn’t need to suddenly refamiliarize with year-old goals. They were only catching-up last week about confidence, and Jane’s manager has 360-degree feedback on her TalTrack app, right there.

 

The result is, these conversations can add more value – and employees are genuinely empowered to grow.

 

Continuous performance management is proven to unlock more value from your biggest strategic asset – your people. To elevate your performance management processes, map your efforts to every stage of the performance management cycle.

 

TalTrack is the smarter way to manage your people, to build a higher-performance culture. Book a free demo to explore for yourself.

 

[i] Deloitte, ‘Performance Management is Broken’.

[ii] PersonnelToday, ‘Over half of UK employees think annual appraisals are pointless and time-consuming’. 2017. Accessed March 2019.

 

About the author Ben Dansie

Entrepreneurial and commercial CEO specialising in digital marketing strategy. Completed Executive Education marketing courses at Kellogg School of Management, North Western University, Chicago in 2007 and at the Cambridge University Business School (Judge Institute), 2014. Member of the CBI Regional Committee, Member of the Marketing Society, Queen's Award for Enterprise 2016. Founder and director of Omobono Ltd (Currently B2B Agency of the Year - UK & USA). Advisory Board, Check Risk LLP.