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Why Continuous Performance Management is Critical for Project-Based Businesses


The 2020 global pandemic disrupted the workforce, but even before COVID-19, there were already a vast number of changes taking place in the workforce.

Over the last decade, we have had a flood of new generations of ambitious Gen Yers and Zers, who crave more feedback, entering the workforce. Company structures had also altered – many companies were transitioning from the typical hierarchical company structures to matrix/helix structures. Moreover, remote, hybrid, and flexible work were also starting to be implemented – 3.4% of the US population worked remotely full-time before the lockdowns according to a February 2020 study by Flexjobs.

With the pandemic, there was further acceleration into the future of work. Forced lockdowns and the switch to fully remote work served as a looking glass for employers. Many problems that were previously creeping under the radar – such as lack of feedback, inefficient check-ins, once-a-year reviews, and unclear expectations – got exposed and the spotlight fell onto HR. It became clear that the current way organizations managed their people’s performance desperately needed to change.

Frankly even before the pandemic, traditional performance management systems were ineffective, frustrating, and too rigid. In the our dynamic marketplace, traditional performance management systems have become even more useless. Leaders need a new way to track and encourage high performance, particularly with the younger generations who are craving more feedback. This is particularly true with project-based businesses whose operating models necessitate continuous feedback (in fact, implementing more frequent feedback checkpoints which has been a trend in performance management in the last few years).

Continuous performance management in project based businesses


Why Project-Based Businesses Need Continuous Performance Management to Be Successful

Project-based businesses are matrix/helix-based business – employees can be constantly switching from project to project and from team to team. Often, employees are not even staffed on the same project as their performance manager at all. In these structures, assessing employee performance can become a nightmare. If managers have little to no contact with their direct report throughout the year, how can they accurately assess them?

Short answer, they cannot.

Traditional performance reviews are inaccurate. Once- or twice-a-year reviews are plagued with biases (recency bias, halo bias, central tendency bias, etc.). In matrix/helix organizations, these biases can become amplified as managers do not have that visibility into their direct reports every day performance and therefore cannot accurately assess them. Only continuous, 360 feedback can be used to accurately assess employee performance. Managers must be collecting continuous, 360 feedback from their direct reports colleagues and peers in order to create a fair and accurate representation of their performance over the review period. Moreover, because employees are often working across multiple teams and projects, it is almost impossible to remember anything. 360 feedback needs to be documented and stored so that managers can have access to that feedback be able to analyze it for performance reviews.

Project-based businesses need to implement performance management systems that work for their agile operating model.


Revamping Employee Performance Management

For project-based businesses that are thinking of implementing continuous performance management, we list some important points to keep top-of-mind.

1) Ongoing feedback conversations, 360 feedback, and timely recognition

By the nature of the operating model, employees could be working with the same team members for months or switching from team to team or from project to project. They need real-time feedback from project managers/team leads and their peers (aka 360 feedback)! In fact, notable firms such as Bridgewater and McKinsey have embedded this culture of 360 feedback within their company’s DNA. ”The Dot Collector” is one of the tools Bridgewater uses to facilitate its infamous culture of “radical transparency” and McKinsey consultants often talk about the continuous feedback rituals at the company.

When implementing continuous, 360 feedback, the importance of a performance management solution that collects and aggregates real-time feedback cannot be overstated. One study found that nearly 66% of managers wish they had a better way to collect feedback from their team and peers to assist with performance discussion. If managers used a performance management solution to store feedback, it could be used as performance data that would allow them to make better decisions about their talent. Important decisions such as who to promote, who to terminate, and compensation need data to support them. Having data to back these decisions up- instead of “gut feelings” can save managers and employees headaches down the line. There are many modern performance management solutions on the market, each with its own quirks and angles. We recommend finding a solution that caters to your company structure and culture.

2) Focus on agility

Agile organizations are able to absorb and adapt to the challenges of the markets today. These organizations focus on rapid iteration (rapid cycle of thinking and doing). One- to two- week sprint meetings are a common practice in agile organizations (including many project-based businesses) whereby teams create, adapt, and complete short-term goals/milestones very quickly. Of course, these goals should be SMART – specific, measurable, achievable, relevant, and timely (SMART).

Full transparency of information is crucial when working in rapid cycles – every team member should be able to access the information they need. We recommend a robust performance management software can help track, manage and hold employees accountable for meeting their goals and objectives.

3) Formal discussions around compensation and incentives

While we have discussed the problems of once or twice a year reviews, we want to highlight that formal quarterly, bi-annual, or annual check-ins still have their place in performance management. These formal discussions should be used to better understand employees’ motivations and what they want longer term. These conversations can also be used to discuss compensation and incentives that can engage and motivate employees (including extra days off, the opportunity to broaden job responsibility, monetary rewards, and gifts). Knowing what incentivizes and motivates employees is critical, especially when retaining talent is such a high priority for project-based businesses.


Traditional performance management systems do not work for these new generations, old work structures, and our dynamic workplace. If companies want to attract, engage, and retain top talent, particularly the new generations of ambitious Gen Yers and Zers, they need to implement continuous performance management systems that work for this modern age. It’s time to not only reimagine performance management – it’s time to act.

If you are looking for a performance management solution that was made for project-based businesses, check out Pavestep!

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