It’s no secret that continuous performance management (CPM) is picking up steam. Dozens of high-performing organizations have announced a switch to ongoing feedback. When I meet with HR and operational executives to discuss CPM, it’s usually a no-brainer that they need a better way to give employees ongoing feedback. It’s no longer a question of why they need to revamp their outdated performance management processes, but rather when and how?
This month, we commissioned a survey with Wakefield Research among 500 U.S. HR executives to uncover the gaps that exist between what HR executives intend to do with performance management and which processes they’re implementing today. It turns out we’re not just imagining the CPM “buzz” — 99% of HR executives say they’re committed to revamping some or all of the performance management process. 81% say they use or plan to use continuous performance management. But there’s still a lot of work to be done: 58% of HR executives have yet to begin implementing all the changes they want to make.
As the performance management overhaul becomes a top priority for businesses, HR executives will be putting their money where their mouth is. 79% of HR executives plan to increase their spending on performance management processes in 2018, and 43% expect to increase their budget by 10% or more. We rolled out the full BetterWorks Continuous Performance Management suite earlier this year to support this evolution.
The Wakefield Research survey results are perfectly aligned with the top trends we’re seeing across the leading organizations we work with every day, from Kroger to GoPro. The study pointed to a few key trends, including:
Traditional Annual Reviews Cause Stress — And They Don’t Always Work. The survey found that one in three HR executives have committed to eliminating traditional annual reviews and rankings and ratings systems. When asked about the biggest flaws of the annual review process, the top response was that they cause too much tension and anxiety for employees and managers — and 41% believe they fail to actually improve employee performance at all.
Ongoing Feedback is Best Practice for Managing Younger Generation. 83% of respondents believe feedback that is provided regularly throughout an employee’s tenure is more important for younger generation employees than older generation employees. Similarly, most HR executives (90%) say that leveraging technology in the feedback and check-in process is crucial for successfully managing younger generation employees.
Growing Emphasis on Rewarding for Performance. 47% of HR executives plan to increase spot bonuses, or bonuses given for exceptional work. As performance management becomes more continuous, managers gain visibility into who is performing beyond expectations and can recognize them accordingly.
Continuous Performance Management Will Become Standard Across the Workplace. 99% of HR leaders have committed to replacing some or all of their performance management process. 54% have already implemented a more frequent goal setting process, and many are committed to moving away from rankings and ratings. While change won’t happen overnight, the survey points to the major overhaul the large majority of businesses will face in the months and years to come.