More and more organisations are ditching annual performance appraisals and formal performance reviews. The traditional performance review methods are no longer effective and probably have not been for some time. Many organisations have decided that these traditional methods of appraisal have no relevance to today’s work and are suggesting that the system of annual performance reviews is broken – the intention behind the process is good, but the results are costly and disappointing. Research has found that 95% of managers are not happy with their company’s appraisal process and almost 90% of HR leaders don’t believe the process provides accurate information.
Traditionally the annual performance appraisal has been conducted primarily with the organisation’s interests in mind. Instead of starting a productive discussion about how to enhance people’s performance the reviews caused disruptions and demotivated team members and managers. This type of thinking is out of place in the modern workplace. Many organisation’s are discovering that the review process needs to be about both the employee and the company. In the ongoing competitive search for talent, potential employees are looking at factors like culture and values, the quality of leadership and opportunities to grow.
While many organisations believed they were coaching employees through the traditional method of appraisal, they were really just giving one-way feedback about work-related performance. This would lead employees to distrust the feedback they would receive and approach their reviews with apprehension.
The overall aim of an organisations performance management system should be to provide on-going coaching and feedback to employees with the aim of developing and improving performance. This means that employees must receive regular feedback about their performance in relation to their own goals and the opportunities that present themselves. This continuous feedback loop creates a real time awareness of what employees are doing right and how they can progress to do better.
This allows managers to provide more moments of insight, more on-the-spot, effective coaching conversations that allow for better learning and development. Managers have the opportunity to address small problems when they arise, before they become more complicated. It also gives them the chance to address any bad habits and help shape employee behavior on the spot. There are many clear benefits to replacing he annual review with ongoing coaching reviews and feedback.
- Improved Engagement
One of the biggest benefits of creating a culture of continuous feedback is increased engagement. 27% of employees strongly agree that when they receive meaningful feedback, it helps them to do their work better. Employees have a need to be valued in their workplace, continuous coaching and feedback fulfills this desire.
- Increased Productivity
When employees are constantly receiving feedback on their work, they are constantly seeking out new ways to improve. This desire is not just to improve on performance, but also to improve on productivity. Creating a continuous feedback loop can help push employees to try a new course or to keep going to achieve goals they are running into difficulty with. The feedback lets employees know their manager is paying attention to the work they are doing and are invested in helping them progress.
- Decreases Attrition
A lack of constructive feedback can lead employees to seek out new opportunities elsewhere. Good constructive feedback should take into account the employee on the receiving end and also their skills, competencies and the work they are doing.
- Provides an Accurate Account of Performance
Documented continuous feedback can show a clear trajectory of performance. It should provide a representation of an employees work over a certain period of time – which should be more accurate as it is more frequent than the twice a year traditional performance appraisal. It is possible to see where employees are excelling and where they may be struggling. But most importantly when an employee’s feedback has stagnated it creates an opportunity to challenge employees with new learning or tasks for growth.
Coaching and continuous feedback can benefit all employees. It can help employees who are struggling see where they can improve, and it can help good employees challenge themselves and become better. The idea behind creating a continuous feedback loop is to constantly suggest improvements and changes that help the employee and in turn help the organisation. Even if organisations still decided to stick to one formal annual review, creating a loop of continuous periodic feedback can make it easier for managers to make performance related decisions.