10 ways continuous performance management works better than annual appraisals to address poor performance

Oct 16, 2023 | Good Management

Small businesses thrive when each team member is optimally productive, aligned with the company’s goals, and invested in its vision. However, every business, regardless of size, will at some point grapple with performance issues, and how these are addressed can significantly impact the business’s health and future.

Continuous Performance Management (CPM) is a modern methodology that can be more effective in handling poor performance than a traditional approach to performance management.

1. Early detection of issues

Traditional performance management often involves annual or semi-annual reviews. By the time these reviews roll around, an underperforming employee might have been struggling for months. In contrast, the regular check-ins that form the cornerstone of CPM allow for the early detection of performance issues, ensuring they’re addressed before they snowball.

2. Real-time feedback fosters improvement

With CPM, feedback is given in real-time or shortly after a project or task is completed. This immediacy means employees can adjust and improve their performance promptly, rather than waiting for an annual review to discover where they went wrong.

3. Frequent conversations reduce anxiety

Traditional annual reviews can create anxiety, especially if an employee is unaware of their performance shortcomings. Regular check-ins make feedback a routine part of an employee’s professional life, promoting a culture where feedback, both positive and constructive, is normalised. This can make it easier for employees to accept and act upon areas of concern when raised, rather than spiralling into negativity or allowing anxiety about the process to make things worse.

4. Building stronger relationships

The frequent interactions fostered by CPM can lead to a more robust relationship between managers and employees. A trusting relationship can make it easier to address and resolve performance issues in a supportive, rather than punitive, manner.

5. Tailored development and support

With CPM, the ongoing dialogue about performance means managers can quickly identify if an employee needs additional resources or training. Instead of being a reaction to a year’s worth of underperformance, interventions can be proactive and tailored to an employee’s immediate needs.

6. Focus on forward-looking solutions

Traditional reviews often focus on evaluating past performance. While understanding past mistakes is essential, CPM’s emphasis is on identifying future solutions and strategies for improvement. This positive, forward-looking approach can be more effective in encouraging employees to make necessary changes.

7. Agility in adjusting goals

Sometimes, poor performance can be a result of unclear or rapidly changing objectives. The fluid goal-setting inherent to CPM allows businesses to realign and clarify goals more frequently, ensuring employees have a clear direction and aren’t set up to fail due to ambiguity.

8. Shared accountability

Regular check-ins involve both the manager and employee discussing goals, challenges, and progress. This collaborative approach means both parties have a shared responsibility for performance outcomes. If goals aren’t met, it becomes a shared problem to solve rather than just the employee’s.

9. Enhanced employee engagement

Employees who feel that their managers are invested in their success are more likely to be engaged and motivated. By addressing concerns continuously, CPM communicates to employees that their success is a priority, potentially driving them to address and overcome performance challenges more effectively.

10. Opportunity for reassessment

In some cases, poor performance might be a result of an employee being a poor fit for a particular role. Continuous conversations allow managers to make quicker decisions about role adjustments, transfers, or even terminations if necessary.

Continuous performance management offers a proactive, solution-focused approach that can be highly effective in addressing and preventing poor performance, especially for small businesses, where a very formal process can feel a bit alien to your culture and is often something managers and owners avoid.

By shifting from a retrospective review to a real-time, forward-looking approach, you’ll be less likely to need anything very formal, and won’t be ‘starting from scratch’ if a problem is serious in terms of being able to show you’ve managed it.

If you’d like further advice on continuous performance management in your small business, do get in touch.