Project-Based Performance Management: What It Is and How to Do It Well

What Is Project-Based Performance Management And How Can It Benefit Firms?

Managing employee performance is crucial for any organization. But this is especially true for project-centric organizations such as professional services firms, where employees work on various projects with multiple managers, and each individual’s performance is directly tied to the quality of client work, and in turn, the firm’s reputation and bottom line.

Performance management can help firms stay on top of their goals, set clear performance expectations, and provide valuable feedback to associates. But the traditional review process – often used by hierarchical organizations – isn’t measuring up. A survey by Deloitte suggests that 58% of HR execs feel their current performance process is an ineffective use of time.

This is a major wake-up call, since the review process can cost large firms up to $35 million a year in lost time. If professional services firms want to nail their performance management, they need to think beyond annual reviews.

Why is the traditional review process a poor fit for professional services firms?

Traditional yearly reviews are particularly challenging for professional services firms. Associates work on numerous projects throughout the year, which means the HR team has to track down feedback from multiple partners for each employee’s evaluation. This also means that each partner is tasked with reviewing multiple associates and may be asked to recall project details from several months ago.

Aside from being a complicated process, annual reviews are insufficient for firms. By nature, the workflow at professional services firms doesn’t align with a traditional review cycle. When feedback is given once a year, associates can’t apply observations from one project to the next. And while project teams can meet on a regular basis to discuss work, these meetings don’t focus on providing team members with the feedback they need to complete the project successfully.

What is project-based performance management?

Project-based performance management is a two-fold process.

  • The first part of the process involves real-time feedback given to associates based on their performance on each project. An associate might be evaluated when a project is finalized or given feedback as they progress along project milestones. Either way, coaching is specific and detailed, and the feedback and reviews provide a micro view of an associate’s performance on each specific project.
  • The second part of the process involves annual performance reviews which take into account an associate’s performance on every project from that year. All their project feedback is consolidated, and the evaluator looks for patterns, providing a holistic, macro view of an associate’s performance. This yearly review allows managers to track employee progress, so they can help professionals with their career advancement and competency development.

What are the benefits of project-based performance management?

Project-based performance management combines the best of both worlds — offering both a precise and an overarching view of an associate’s performance. Read more on the benefits of this approach below.

Evaluations are more accurate and fair

For all their trouble, performance reviews should at least be reliable. But nearly 90% of HR leaders say their annual review system is inaccurate.

When reviews are conducted at the year’s end, they suffer a significant loss of info. For example, a partner or project manager may be asked to remember how an associate performed 10 months ago. With a foggy memory, the manager will likely neglect key information or provide feedback that’s generic or vague.

Annual reviews are also prone to recency bias — partners and managers are more likely to remember how an employee performed on their latest assignment and use that for their evaluation. This leads to distorted feedback that doesn’t accurately reflect an associate’s performance throughout the year.

With project-based reviews, feedback is logged when project details are fresh. At the end of the year, evaluators have a thorough record to refer to as they pull together an associate’s review. Moreover, this record includes feedback from all the managers and/or partners a professional has worked with during the year — what’s called a multi-rater performance review. This provides an overall snapshot of an associate’s performance that isn’t one-sided or weighted toward recent projects.

Feedback is timely and relevant — allowing associates to course-correct

Timely feedback is more important than ever. With hybrid work on the rise, project-based feedback keeps associates and managers in the loop and aligned in their goals.

Younger workers especially value frequent check-ins — 72% of employees under 30 say they want weekly or daily feedback. As Millennials continue to dominate the workforce, providing real-time feedback keeps professionals engaged, motivated, and willing to stick around. For example, firms that provide employees with feedback on their strengths report 14.9% lower turnover than firms that offer no feedback.

Providing feedback on a project-by-project basis also drives continuous improvement. This is key because only 14% of employees strongly agree that their current review process inspires them to improve. With regular feedback, professionals are quickly made aware of performance issues and can course-correct before running into larger problems. This self-reflection helps associates smooth out their processes and fix preventable issues which decreases performance risk in client work.

Employees receive more frequent recognition

Firms that fail to recognize their professionals may end up losing them. According to one survey, 66% of employees would probably quit their job if they felt underappreciated (this number jumps to 76% for Millennials).

Project-based feedback encourages firms to recognize associates for a job well done at regular intervals throughout the year. Notably, this recognition is well-timed rather than doled out at the end of the year when employees have grown discontented.

Frequent positive feedback improves company culture and boosts morale and engagement. It also helps professionals learn what they’re doing well and why they should keep doing it. Recognizing employees can be as simple as expressing gratitude for great work — the key is showing appreciation more than once a year.

Associates aren’t blindsided by their reviews

Annual reviews can leave associates blindsided by feedback they didn’t anticipate. With no warning signs present, these evaluations can come across as unfounded. A Gallup study revealed that less than a third of employees strongly agree that their reviews are fair or accurate.

With a project-based review process, key issues have already been brought up throughout the year so annual reviews don’t come as a surprise. In case of any concerns, managers can refer to performance patterns throughout the year, helping associates see the fairness and accuracy of their review.

This is critical because an unjust review can leave an associate ready to walk out — 85% of employees say they would consider quitting after an unfair annual review. Evaluations that feel out of the blue are demotivating for associates. But consistent feedback throughout the year helps associates understand what’s expected of them and prepare for upcoming reviews.

How to create a project-based performance management process

Incorporating project-based feedback is a game-changer — but it’s a gradual process. Here are a few steps to getting started.

1. Help your team understand why project-based feedback and reviews are worth it

For staff, transitioning to a project-based review process can feel like a chore. After all, partners and managers are being asked to learn a new system and provide more feedback than they’re used to. To help your people get on board, take time to connect them to the “why.”

Put simply, educate managers on the benefits of real-time feedback. Let them know that more frequent feedback will save them time and effort on annual reviews (one study suggests that managers spend up to 210 hours a year pulling together performance reviews!). Do more than talk — show partners and managers evidence that their feedback is working by providing examples of associates who have improved with coaching.

2. Use technology to make the process easy for everyone

Project-based feedback and reviews have clear benefits, especially for professional services firms. But getting set up can be a challenge. A single associate might work on dozens of projects throughout the year with various partners. This makes it nearly impossible for administrators to manually handle the feedback and review process for dozens or even hundreds of professionals. More importantly, if the process is not quick and easy enough for partners, managers, and associates, they might not participate at all.

Firms can look into performance management technology solutions designed specifically for professional services. An important criteria for this solution is the ability to pull in existing project data from your billing/time-tracking systems. For annual reviews, you can automatically download all the projects a professional has worked on throughout the review period. This digital data minimizes paperwork and lays the groundwork moving forward. For project-based feedback, you can easily set up feedback triggers after an associate has worked a certain number of hours or has completed a project.

Your system should allow data to easily flow between annual reviews and real-time project feedback. Some firms choose to pull in all the real-time feedback collected throughout the year, while others only grab the feedback history for critical projects — for example, projects with a minimum number of logged hours. Come review time, evaluators have access to all relevant feedback, creating an efficient and seamless process.

3. Run a pilot test — and adjust as needed

To get your team familiar with the project-based feedback system, allow them to take it for a test run. The system should be intuitive and easy to navigate for all staff members. During the testing phase, note where users need guidance and train accordingly or make adjustments.

Importantly, the system is highly customizable, so allow your staff to have a say in how it operates. Encourage the managerial team to share their suggestions — for example, what forms should be available and what the fields should say. You can also ask associates for their input on matters that affect them, like the frequency of feedback.

4. Coach your people on giving or receiving feedback

Finally, take time to coach your team on the best practices for giving and receiving feedback. Depending on your firm’s needs, there are courses and resources to help guide your staff.

For example, a popular method is Bruce Talgan’s FAST feedback model, which describes how firms can implement feedback that is frequent, accurate, specific, and timely. There’s also the Situation-Behavior-Impact Feedback Model, developed by the Center for Creative Leadership. This model emphasizes providing constructive feedback through finding solutions and avoiding blame. Determine which approach fits best with your firm’s needs, and use it to guide your team.

Transform your performance management process

Want to get started with project-based performance management for your firm? We can help! vi by Aderant’s performance management solution is used by hundreds of professional services firms to help their professionals improve their project performance. With our software specially tailored to your needs and our team of dedicated experts, you can have this system up and running in 30 days. Talk to us to find out more!