As the annual appraisal continues to show its age and lacks of business value, companies are adopting Continuous Performance Management software.
FREMONT, CA: For many years, HR professionals have been predicting the end of the yearly performance review. Indeed, a raft of major corporations, including Microsoft, IBM, GE, and Accenture, made headlines four years ago after declaring that such evaluations were no longer useful and that they were formally abandoning them. Such a posture would appear to be justified as well. A research based on the performance assessments of 23,000 employees from 40 organizations in the United States found no evidence that this type of annual evaluation had any impact on profits or losses, or that it was related to organizational performance.
In fact, according to studies undertaken by Herman Aguinis, professor of management at George Washington University, and Ernest O'Boyle, associate professor at Indiana University's Kelley School of Business, an organization's top 1 percent of employees account for 10 percent of total production. In other words, regardless of how much time managers spend conducting annual performance evaluations, the great majority of employees who are competent but not extraordinary contribute roughly the same amount to the company's bottom line.
The notion of continuous performance management (CPM) was established as a result of such scepticism, paired with widespread dissatisfaction among employees, managers, and HR experts alike with activities that all too frequently wind up becoming check box exercises. Managers and employees – and even teams or the entire organization – exchange feedback throughout the year rather than only once a year as part of CPM. However, it also includes actions such as creating short- and long-term objectives, as well as providing regular one-on-one feedback. This technique was seen to have considerable promise in terms of making interactions between employees and leaders more relevant and timely while also lowering managers' administrative burden. Despite the potential of CPM, adoption has been slow to date, with the market only recently gaining traction.
