Insights from Engagedly’s State of AI in HRM, 2nd Edition Survey.
Frequent employee departures are a major setback for any company. They slow down projects, bringing someone new up to speed up, but the added recruitment and training costs put a strain on the company’s coffers.
A great way to identify such problems and build long-term relations is through Continuous Performance Management (CPM).
CPM is not a testing tool. On the contrary, it is a two-way street that keeps communication open between a company and its employees. The process allows for an ongoing feedback mechanism between employees and the company.
The company can help employees understand their performance and thus align with company goals. At the same time, employees can point out their pain points within the company, which, if dealt with correctly, can build trust in the long run.
The impact of Continuous Performance Management on employee retention is substantial. This article dives right into the process’s dos and don’ts and explains how to use it effectively.
CPM, in contrast with its traditional counterpart, evaluates employee performance throughout the year. It emphasizes regular feedback and constant real-time communication instead of depending on a singular annual review.
The key components of Continuous Performance Management are:
So, what is the impact of Continuous Employee Management? By its very nature, CPM distributes the load of a cumbersome process of annual reviews and brings in multiple benefits:
Let’s take a deeper dive into how CPM directly affects employee retention.
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Although the concept of Continuous Performance Management might seem like someone breathing down your neck at first glance, rest assured, it’s anything but that. CPM is not an evaluation but rather a constructive discussion on how to best improve everyone’s lives. It benefits both employees and the company, ensuring both their needs are met.
With a regular feedback mechanism in place, employees are now aware of how their performance is stacking up against company expectations. Managers can set clear and attainable short-term goals. On achieving these goals, the employee feels a sense of achievement, which, more often than not, aligns with increased motivation and productivity.
The employee finds they can put their trust in the company. Their achievements are celebrated while the problems they face are taken up proactively. This boosts engagement and, in turn, leads to better employee retention.
Continuous conversations help employees grow by identifying skills that need work and additional skills they may need to upgrade to. It also gives employees the confidence to take up more leadership roles. They learn to adapt to changing industry trends and feel more accomplished.
Along with the guidance employees receive from their managers, the opportunities presented to them make employees feel valued within the company. As job satisfaction rises, so does long-term retention.
It’s no secret that people like being recognized for their contributions to a project. Employees also expect to be appreciated for the work they put into their organization. It fosters a sense of belonging and increases employee loyalty towards the company.
Continuous Performance Management ensures every small achievement is celebrated. It encourages employees to take initiative and motivates them to maintain higher standards of performance. It celebrates their efforts every day, creating a positive work environment that retains employee favor for the long run.
Now that we have established the tremendous impact of Continuous Performance Management on Employee Retention, it is time to understand how to establish CPM in your organization effectively. To do so, you need to understand the key components of CPM.
You may have heard the saying that smart work beats hard work. What that essentially means is focussing on the right goals and working smart, where SMART stands for Specific, Measurable, Achievable, Relevant, and Time-bound:
Mentorship is key to ensuring employee comfort. Designate coaches to help your employees achieve their professional goals in their individual capacities and grow within the company.
Development plans must be personalized to fit individual needs. This will boost confidence in employees, and they will be more invested in the company’s progress as they start equating it with personal success. Of course, this will lead to higher retention.
This is perhaps the most important step in CPM. Having a regular feedback mechanism is the step that leads to the most profound effect of continuous performance management on employee retention.
Not only can employees offer real-time feedback to management on what is working and what is not, but management can also directly inform employees of what needs improving and celebrate their strengths. This transparent exchange of information leads to a strengthened relationship between employees and management, which, in the long term, promotes employee retention.
So, what is the impact of continuous performance management? Let’s look at some data:
Now let us look at some continuous performance management examples in real life that have shown promising results. Here are our top 3 finds:
Microsoft decided to pick a more dynamic approach, moving away from the traditional annual appraisals. They installed conversations between managers and employees as a regular check-up point.
Microsoft saw employees quickly align with company goals. Teams could now quickly adapt to changing business needs, as they were always informed of the bigger picture.
IBM saw similar results as Microsoft. They were able to become an organization that responds to market needs quickly and effectively.
General Electric is one of the early adopters of CPM. Their 2013 FastWorks program had HR teams leverage customer feedback and open communication lines directly to boost employee engagement.
GE also removed archival practices like employee ratings, instead preferring instantaneous, upward feedback.
CPM is the way to build a company focused on creating an environment where employees feel appreciated, and there are quite a few ways to do so.
Employee turnover is a real headache for companies. It slows things down, costs a ton, and leaves everyone stressed. Like Microsoft, IBM, or GE, you too can adopt Continuous Performance Management to overturn the dreaded annual review and create a supportive corner with regular check-ins, helpful feedback, and a clear path forward for everyone.
In this regard, you can consider an easy-to-use, all-in-all talent management suite like Engagedly to turn challenges into opportunities.
CPM replaces the dreaded annual review with frequent feedback sessions, focussing on solving problems rather than just assigning blame. Goal alignment replaces performance assessment.
There are three key components essential for effective CPM implementation:
Increased engagement, combined with a supportive environment, leads to employees feeling a sense of loyalty to the organization. This, along with increased job satisfaction, leads to long-term retention.
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