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3 New Reasons to Make the Move to Continuous Performance Management

By Betterworks
4 minute read
Updated on March 31, 2022
3 New Reasons to Make the Move to Continuous Performance Management

According to McKinsey, organizations are three times more likely to outperform the competition if they have an effective performance management (PM) system. To understand why PM has such an impact, just look at what happens when it’s not done well.

A recent Gallup survey found that half of the employees don’t know what’s expected of them in their jobs, while just 26 percent agree that their managers help them prioritize their work. When people don’t have a clear idea of what’s important, companies struggle to meet targets. Such an unfocused business environment also leads to disengaged employees, which costs American corporations $550 billion each year.

Effective performance management is essential for developing motivated employees, in partnership with Betterworks, recently carried out a major study on performance management. One of the key findings is that employee feedback and recognition is better at driving engagement than perks and bonuses, but while the majority of organizations have a PM system in place, two-thirds don’t think that theirs is effective.

Most businesses still use the standard annual review process that is widely considered “outdated, time-consuming and stressful”. A major issue with annual or even quarterly reviews is that feedback is only provided at set times of the year, not when a problem is happening.

This lack of timeliness is why less than a quarter of employees studied by think that the process is useful and why only 14 percent say that performance reviews help them to improve.

Motivation is not a one-time event

It’s no surprise to learn that half of those organizations that are unhappy with their existing performance management systems plan to change it within the next two years. Recognizing the need for a different approach, more than two-thirds of these organizations are currently implementing or exploring a Continuous Performance Management® system.

Continuous Performance Management is a system that emphasizes regular conversations between managers and employees. According to the report, ongoing feedback and check-ins about goals make it much more likely that these goals will be met.

Three-fifths of the organizations that say they have an effective PM system use continuous performance management. Here are three ways that implementing Continuous Performance Management can benefit your employees, managers and the business as a whole.

#1: It motivates and engages employees

58 percent of people believe that annual performance reviews “are a needless HR requirement”, done for the benefit of the business, not employees. Because they are big deal, one-a-year conversations, employees often find them stressful.

Continuous Performance Management is an ongoing process, so people are less anxious about receiving feedback. When comments and coaching are not saved until year-end, employees find them to be more useful. A good Continuous Performance Management® system also enables individuals to align their personal goals with those of the wider organization. This connection helps employee understand how their work contributes to the big picture, providing an engagement-boosting sense of purpose.

Continuous Performance Management also encourages managers to talk with employees about personal development and career goals, another way of increasing engagement. Because 34 percent of people say that they are motivated to use PM software when it is tied to their career trajectory, an investment in Continuous Performance Management is more likely to yield benefits.

#2: It makes managers better

70 percent of employee engagement is linked to their manager. Despite this crucial role in engagement and retention, just 39 percent of new managers received training for their role. Managers need more help from their organizations. CPM will provide it.

Having ongoing performance-related check-ins with each team member can sound like a burden. But Continuous Performance Management is a much more lightweight process than annual reviews where all the time-consuming work has to be done during the already-busy year-end.

By prompting regular conversations and providing questions to ask, a good Continuous Performance Management tool allows a manager to do all the things great managers do: helping employees meet goals, connect their work to the organization’s overall strategy and focus on career development.

Continuous Performance Management also helps with recognizing and rewarding people’s achievements, especially now that teams are more cross-functional than they used to be. When recognition and feedback are from people other than an employee’s manager, Continuous Performance Management software makes this visible, so the manager knows about it and can incorporate into their PM conversations.

#3: It leads to more business insights

People are the largest investment for many businesses, often as much as 30% of revenue. The continued use of outdated annual reviews is the equivalent of only analyzing product sales once a year when you could be doubling production of best-sellers.

Continuous Performance Management provides a business with an endless flow of insights about its workforce that can be easily shared across the organization and used to identify top performers and skill gaps. Many large corporations now have internal hire rate KPIs for management positions and Continuous Performance Management helps build that leadership pipeline.

It also enables HR departments to plan for and easily approve pay and promotion decisions because ongoing feedback and cross-functional recognition are visible in one place.

Continuous Performance Management is for everyone

According to’s research, the top priorities for human resources departments are improving employee performance, staff retention and finding the next generation of high performers. Continuous Performance Management helps with each of this aims by making employees more likely to meet goals and less likely to leave their manager, while providing the business with critical workforce insights.

If you want to improve employee performance and drive growth for your business, make the move to Continuous Performance Management.

To learn more, get your exclusive copy of’s report “Moving Towards Continuous Performance Management.”

Want to see how betterworks can help your organizations move to FAST goals within continuous performance management? We’re here to help.