Think back to when you were in school.
Now imagine if once a year, right at the end of the year, your teacher told you you’d failed.
Before that point, you’d gotten no grades, no direction, no encouragement, no support.
Sounds ridiculous, right? And yet, for decades that’s how workplaces have approached performance management.
“Performance management hasn’t changed much since the 1970s and it isn’t working,” says Saurabh Nangia, co-founder and CEO of Mesh. “Many employers do their reviews only once a year, so people rapidly disengage; what is actually required is feedback on an ongoing basis – continuous performance management.”—From a Forbes article, 2023
What if, instead of once a year, employees had ongoing, real-time insights into how they were performing?
Research shows they become more engaged, productive, and effective with their work.
That’s the power of real-time performance management.
To help you understand all you need to know about this approach, we’ve put together this guide.
It’ll cover:
- What is real-time performance management?
- 5 key components of real time performance management (+ their benefits)
- 3 famous companies that implemented real-time performance management
- Challenges you might face when implementing real-time performance management
What is Real Time Performance Management?
Real-time performance management is an agile and dynamic approach to performance evaluation.
Unlike traditional approaches which rely on annual or bi-annual reviews, a real-time approach builds continuous monitoring, feedback, and adjustments to employee performance throughout the year.
This “real time” approach facilitates an ongoing conversation between managers and their direct reports that accelerates performance improvement.
When employees are clued into how they’re performing, they’re more able to adjust their development and focus in a way that benefits the ambitions of the company as well as their own career.
The learning cycles are also more iterative. Daily small improvements quickly build into large ones as time progresses— improving your high-performer density more quickly.
The Shift from Periodic to Real Time Performance Management
The shift to real time performance management processes (also called Performance Enablement) is in response to growing discontent around traditional performance review processes.
In an HBR interview, Professor Peter Cappelli, Director of the Center for Human Resources at the Wharton School, notes that annual reviews are limited:
“With their heavy emphasis on financial rewards and punishments and their end-of-year structure, they hold people accountable for past behavior at the expense of improving current performance and grooming talent for the future, both of which are critical for organizations’ long-term survival.”—Peter Cappelli, Wharton School
Traditional quarterly or annual reviews often blindside employees who were not aware of their poor competencies or performance.
“Punishing” employees too late by withholding financial bonuses is demoralizing and creates frustration—but worse, it completely ignores the fact that employees are malleable and willing to improve continuously.
So, what’s the alternative? That’s where more real time performance management comes into play.
Professor Peter Cappelli says, “In contrast, regular conversations about performance and development change the focus to building the workforce your organization needs to be competitive both today and years from now.”
Continuous feedback, reviews and goal management fit with how employee expectations have evolved. Especially among Millennials and Gen Z who crave feedback and opportunities for growth (60% of Gen Zers said they need feedback from their managers every few weeks.)
What’s more, employees who receive regular praise and recognition are 10-20% more productive. If anything, the change to real-time performance management has been long overdue.
Josh Bersin estimates that about 70% of multinational companies are now moving towards the continuous approach characteristic of Performance Enablement.
5 Components of Real-Time Performance Management (And Their Benefits)
1. Continuous Feedback
For performance management to be ‘real time’, feedback has to be part of a constant, day-to-day process rather than an annual event.
This immediacy ensures employees always know where they stand, what they're doing well, and where they can improve.
Platforms like Mesh make it easy for managers and employees to give, receive, and request feedback as often as they need. They’ll also be prompted to provide feedback at regular intervals by the platform.
Keep in mind feedback doesn’t always have to be constructive. Praise is just as important as it makes employees feel valued and recognized. It also encourages similar behaviors in the future.
Key benefit of continuous feedback:
Increases clarity, reduces anxiety around performance reviews, and allows for immediate adjustments and improvements. This translates to a more engaged, motivated, and efficiently working team, positively impacting the company’s bottom line.
2. Regular Check-ins with Managers
In a real-time performance management system, regular check-ins are the heartbeat of employee-manager relationships.
They also provide an opportunity to review progress, address challenges, and adjust goals as necessary.
Mesh facilitates these vital interactions with its 1:1 product feature, making it straightforward for managers and employees to schedule, conduct, and follow up on meetings.
The platform also ensures managers come prepared with talking points and insights on the employee’s current capabilities.
Key benefit of regular check-ins with managers:
Fosters a culture of trust and support, leading to higher employee engagement and a more cohesive team dynamic. Regular interactions ensure everyone is aligned with the team’s goals, driving collective and individual success.
3. Habit Formation
Transforming feedback and check-ins into tangible improvements requires a focus on habit formation.
Real-time performance management technology helps by nudging employees to improve their competencies and reach company goals every day. This subtle growth can have big impacts in the long term:
To be effective, these nudges should be delivered in the platform and integrated into workplace tools like Slack and Microsoft Teams. This guarantees your team will see them, increasing the likelihood they follow through on the behaviors.
Mesh nudges employees to complete timely feedback, schedule 1:1s, update goals, and more.
Key benefit of habit formation:
Creates a proactive learning environment where continuous improvement is the norm, not the exception. This leads to a more adaptable and skilled workforce, capable of meeting today’s challenges and anticipating tomorrow’s needs.
4. Capability Focused
Development without direction is a waste of time and effort. That’s why real time performance management will focus on identifying and measuring capabilities that will help the employee progress and the business perform.
This is real time performance management with a performance enablement twist.
Not only are managers able to see the progress employees are making, employees are able to reflect on their strengths and areas of opportunity.
Mesh even provides a holistic view of competencies across organizations to help people leaders prepare for the future and plug development gaps along the way
Key benefit of being capability-focused:
Ensures the organization always has the right skills at the right time, promoting innovation, agility, and competitive advantage. Employees feel valued and invested in, which in turn drives engagement and retention.
5. Goal Alignment
Real time performance management helps individuals set clear, measurable, and attainable goals in alignment with business needs.
It also makes goal-setting a dynamic, ongoing process. So as priorities shift and new opportunities arise, goals can be quickly adjusted to keep everyone moving in the same direction.
With Mesh you can link individual goals directly to company initiatives, guaranteeing alignment and consistency across the org.
Key benefit of goal alignment:
Enhances organizational agility and responsiveness to change. By ensuring that everyone's efforts are synchronized towards common objectives, companies can achieve strategic goals more efficiently and effectively.
Famous Companies That Implemented Real Time Performance Management
If you’re considering a switch to real-time performance management, you’d be in good company.
Adobe, Deloitte, and Microsoft are just three corporate giants who’ve abandoned yearly performance management in favor of a process that helps them keep a finger on the pulse and employees in the know.
Adobe
Adobe, a leader in the creative software industry, was one of the early adopters of real time performance management, making the shift back in 2012. The company moved away from traditional annual performance reviews to a more fluid and frequent "Check-in" system.
They’ve been candid about what issues they saw with annual performance reviews and why they made the change to more continuous performance management.
Employees felt the process was too bureaucratic and created barriers to teamwork. Being rated and stack-ranked for compensation also led to employees feeling undervalued which negatively impacted engagement and performance long term.
Adobe's Check-in framework encourages open dialogue between managers and employees, ensuring goals are aligned, feedback is actionable, and support is ongoing.
Deloitte
Deloitte overhauled its performance management system in 2015 to focus more on the future rather than evaluating past performance.
Their system is designed to be simple, yet powerful, with a focus on regularly checking in with employees rather than relying on annual reviews.
By asking forward-looking questions, Deloitte's managers concentrate on the development of their team members, identifying opportunities for growth and providing insights and support to help them reach their full potential.
This approach has streamlined the process, making it less about filling out forms and more about meaningful conversations that drive performance.
Microsoft
Microsoft's transformation under CEO Satya Nadella included a significant overhaul of its performance management system.
The company shifted from a curve-based evaluation model that forced managers to rank employees, to a more collaborative and growth-oriented approach.
This change was part of a larger effort to foster a culture of innovation and learning.
Microsoft now emphasizes regular feedback and a growth mindset, encouraging employees to learn from experiences and failures, and to see them as opportunities for development and improvement.
This shift has contributed to a more dynamic and agile organization, where employees are more engaged and motivated to contribute to the company's success.
Challenges You Might Face When Implementing Real Time Performance Management
Switching to real time performance management can dramatically enhance organizational agility, employee engagement, and overall performance.
But making this move is not without its challenges.
HR teams may face:
- Slow adoption and cultural resistance
- Issues with integrations
- Data overload
- Keeping engagement high
Below, we’ve explained these challenges and provided tips on how to overcome them.
Slow adoption and cultural resistance
The challenge:
Employees and managers accustomed to annual review cycles may be skeptical of more frequent feedback processes, perceiving them as additional scrutiny or workload.
The solution:
Overcoming this challenge requires a thoughtful change management strategy.
Start by clearly communicating the benefits of real time performance management to all stakeholders, emphasizing how continuous feedback can lead to personal growth, career development, and a more dynamic work environment.
Encourage leadership to model the desired behaviors by actively participating in the real time processes.
Issues with integrations
The challenge:
Real time performance management relies heavily on technology to facilitate ongoing feedback, goal setting, and performance tracking.
Finding the right platform that integrates seamlessly with existing systems and meets the organization's specific needs can be daunting.
The solution:
Before selecting a technology solution, define your performance management objectives and requirements clearly. List out the tools you want it to integrate with such as your HRIS and Slack.
Involve key users in the decision-making process to ensure the chosen platform is user-friendly and aligns with your organizational workflows.
You may also want to pilot the technology with a small group before a full rollout to gather feedback and make necessary adjustments.
Data overload
The challenge:
Real time performance management introduces more performance data than you’re used to having.
Without proper filtering and analysis, this influx of information can become overwhelming, making it difficult to identify actionable insights.
The solution:
Choose a software that offers analytics and reporting capabilities to help sift through the data and highlight areas requiring attention.
Keeping engagement high
The challenge:
Initial enthusiasm for real time performance management can wane over time, leading to decreased participation and engagement with the process.
The solution:
Make sure the system you put in place integrates with tech your employees use every single day like Slack or Microsoft Teams. That way they can get reminders to engage with the process by updating goals, sending feedback, scheduling 1:1s and more.
Don’t Just Manage Performance, Enable it in Real Time with Mesh
It’s time we banish ineffective, infrequent performance reviews and give our people what they need—real time feedback and direction to fuel their development, and ultimately improve their performance.
With Mesh, you get all of the features you need to:
- Streamline and embed feedback processes in your people’s day to day (thanks to nudges)
- Improve the quality of that feedback with AI suggestions
- Identify, monitor, and improve capabilities across employees
- Get insights into employee sentiment that will inform your HR strategy
- Align individual goals to the priorities of the business
- Create more meaningful and regular interactions between employees and managers
Sign up here to receive a personal demo of the Mesh platform. We’ll show you how powerful it can be to enable performance in your organization.
