The shift from rankings & annual evaluation reviews to data-based continuous performance management

The 20th century was an era of industrial work with employees that were easily replaceable if they didn’t meet the norm according to the ratings and rankings. We live in different times now, in both business and workplace terms. Nowadays, the value of most companies lies in their brand, services, intellectual property or software, not in a number of industrial pieces produced per hour. For today’s values, people are crucial. Every employee does matter, especially in the business sectors where it’s already difficult to attract and keep staff – the challenges we wrote in our previous article.

Accordingly, performance management has to be adapted to the new workspace reality. The annual evaluation review based on superficial ratings and rankings is being replaced by continuous performance management. Many companies are already making this shift.

Annual evaluation review serves no one

If you are in one of the companies that hasn’t done the shift yet, think of the yearly evaluation review you or your colleagues conduct. Have you ever felt it’s all being a merely bureaucratic process? Always looking back to how it was instead of into the future?

Now think of the employee who mostly dreads the annual evaluation moment and is afraid how it is going to influence her/his salary or bonus. Employees often report that they find the annual evaluation full of personal opinions. Or it is based on events that have taken a long time ago and therefore don’t seem that credible anymore.

It’s usually demotivating for everyone involved. And what counts most, it doesn’t contribute to the development of the employees or to the progress of the company.

Continuous performance management to act in this moment, to know what to act on and how to achieve it

The only thing that matters regarding performance management is how to improve the employee’s performance. There is no need to ditch ratings completely, but reinvent them. Make them objective, fact-based and specific. Program them to be a part of a more frequent and less formal process so that they can be acted on when needed.

But how to provide the objective and fact-based ratings? There are different approaches that companies are using. Some crowdsource and collect data through apps where employees can rate each other and comment on specific tasks. For some profiles you can take the data from the productivity tools they are using on a daily basis, from ERP and CRM to project management apps and other tools. Or what is commonly used as a continuous performance management technique, is a performance scorecard which is basically a dashboard that outlines the employee’s performances relative to the Key Performance Indicators (KPI’s) and Role Skills or competencies.

What’s important is that the technology or data don’t replace the human feedback and conversations between managers and employees. The data is just the basis on which the managers can build the coaching for development into the right and measurable direction.

A look into an example of a data-based scorecard

The approach we are using in Talent Development Center starts with the Talent Scan: a KPI review, a bottom-up & top down survey and skill mapping workshop. Then the target group takes a customized competency test, based on the skill mapping and we conduct a 360 feedback process. Based on that, we generate a scorecard which outlines clearly and objectively how an employee is performing and what talents he/she possesses. You can read here more about our approach.

The Talent Scan is the foundation for all the processes of talent development we carry out together with the client.

A scorecard is the foundation, but it’s still only one element of the big picture of the continuous talent development. To show the big picture, we are currently working on an exiting case study. To get access to this case study, you can leave your email here to be notified when it’s published.