With 45 percent of global employers experiencing difficulty filling vacancies due to talent shortages, total employee experience management has become one of the most important human resources (HR) concepts of 2018. Experience is, by Deloitte's definition, an "integrated focus...[brings] together all the workplace, HR, and management practices that impact people." Worker expectations have evolved along with the workplace, creating a need for organizations to reinvent talent management.
Just 32 percent of the U.S. workforce is actively engaged, according to Gallup. Disengaged employees cost the U.S. economy $450 billion to $550 billion each year, and they're a risk to culture and retention efforts. Redefining the employee experience is imperative for many organizations. For some organizations, ditching traditional performance reviews for Continuous Performance Management has been the key to improved satisfaction and employee engagement.
What Is Continuous Performance Management?
"Performance management is management," writes Josh Bersin. However, demographics, technology, and new ways of working have changed employee expectations about feedback. "This paradigm shift means that if we want to set goals, measure progress, and improve performance in our teams, we have to create goals in a more agile way, give people lots of feedback, and coach people to succeed."
In 2015, Deloitte joined Adobe and Accenture and dramatically recast the concept of goals and feedback in the organization. There is variation among organizations with an active Continuous Performance Management practice, but the framework typically includes:
- Actively aligning individual goals with team and organizational objectives
- Frequent review, including monthly and quarterly feedback
- Setting "timely, transparent, ambitious" performance goals
- Adopting systems and technologies to support open communication
Why Traditional Performance Management Is Failing the Workforce
Psychologist Abraham Maslow was among the first to recognize the inherent human need for recognition, in 1943. While the value of reward and recognition is unchanged, employees expect feedback to occur in near real time. Among millennials, training and feedback is the most valued workplace benefit. Millennial talent is driven to maximize impact and contribute, which requires clear and frequent recognition around performance.
While millennials may thrive within systems of Continous Performance Management, data indicates annual review systems could have a negative impact across demographics. Forty-three percent of highly engaged employees receive feedback at least weekly, while 40 percent of workers actively disengage when they get "little or no" positive or negative feedback.
Deloitte's decision to adopt Continuous Performance Management was, in part, motivated by a desire to maximize returns on investment. Before the switch in 2015, the organization spent two million hours each year on performance reviews. The approach was costly, not agile enough for the demands of the modern workforce, and a risk to employee engagement.
3 Best Practices for Continuous Recognition
Studies continually corroborate the return on investment of recognition and reward programs, including a lift in profitability, retention, presenteeism, safety, and creativity. While shifting to new systems of real-time recognition is a low-risk decision, organizations should understand that successful performance management can require new strategies and information systems.
1. Make a Case for Continuous Recognition
Gaining executive buy-in is necessary, but the data is clear that an agile approach to employee experience through recognition and reward fuels excellence.
2. Shift Your Culture
Continuous Performance Management is a cultural initiative that challenges traditional management concepts. Adopting frequent dialogue, dynamic goals, and flatter organizational charts requires a strategic shift.
3. Utilize Technology
Using new technologies for recognition and reward is likely key to a transparent culture of constant feedback, especially for global teams. Technology can facilitate communication and social recognition and offer motivating features such as leaderboards to shine a light on high performers.
Continuous Performance Management is the active practice to "recognize, see, and fuel performance," write Marcus Buckingham and Ashley Gooddall in the Harvard Business Review. A culture of recognition for the employee experience and the future accomplishments can offer a host of organizational rewards, from better employee engagement to happier customers.