Juggling a multitude of responsibilities as a small business owner can quickly become overwhelming and exhausting. Among these, providing continual one-on-one feedback to employees is often one area that easily ends up neglected. Even managers with the best intentions find that carving out time and resources for such a task can be burdensome. Instead, companies have relied on a widely accepted practice of evaluating performance with an annual review.
While professional development is crucial to retaining workforce and improving overall business strategy, the good news is that it need not be as complicated as once touted.
What the Research Shows
The latest research proves that the formal annual performance review system, endorsed by traditional business owners, may not be as helpful as historically thought. In fact, researchers are suggesting that structuring frequent and informative feedback sessions is more impactful, less time consuming, and provides more accurate performance results.
From an employee standpoint, surveys have continually proven that employees voice frustration with the performance review process. They cite displeasure in a “numerical” rating system as well as a sense that reviews were often as much about the rater’s perception versus the employee’s actual performance. Studies show that even high rated performers are often left feeling as though the process is unfair and that all employees are less motivated when rated relative to others.
Forward Momentum
Numerous companies such as Dell, Adobe, and Microsoft have already forgone annual performance reviews and adopted a system that includes more consistent and timely feedback. Small business owners can learn from these changes and adopt a system that meets their individual needs. By focusing on introspective and prompt feedback, businesses supply employees with a roadmap for promotion and development opportunities.
The Disadvantages of Annual Performance Reviews
Included in the multitude of research are examples of some of the following ways in which traditional annual performance reviews fall short in their effectiveness.
• They lack a structure of regular feedback. In this way, both constructive and positive feedback is often not delivered in a timely manner. Opportunities for improvement are regularly omitted and well as occasions for positive reinforcement. Both can leave employees at all ends of the performance spectrum in the dark on where they stand.
• It is difficult to judge a year’s worth of an employee’s work and contributions at one time. Organizing and summarizing an entire year of performance also requires an enormous effort on both the employee and manager’s part.
• Traditional annual reviews tend to focus on high performers and low performers. By virtue of this process, employees who are in between the high performers and low performers have a higher chance of being overlooked. This can lead to noticeable decline in employee satisfaction as such employees feel their contributions are seemingly excluded.
The Benefits of Employee-Directed Feedback Sessions
Revamping the somewhat antiquated annual review system may take time. But by being diligent in making employee evaluation a priority, a company benefits with an increase in employee satisfaction. Employees who feel validated and effectively coached on a routine basis display a more pronounced sense of ownership and commitment to the company. They take their role more seriously and feel empowered to make informed decisions.
Informal one-on-one sessions can be just as competitive and effective as the conventional annual performance review system. Below are examples of how ongoing feedback can revitalize a business:
• Emphasizing accountability through timely conversation. One-on-one feedback allows for managers and employees to stay in contact and to give real time input on how to improve results or maintain outstanding performance. This process highlights employee strengths and provides a chance for growth.
• Allows employees more participation and self-control over the review process by being inherently more self-reflective vs. data driven. This also lends a collaborative feeling to the sessions instead of being fully led and dictated by a manger.
• Eliminates unnecessary numerical ranking and a feeling of inequity. Generally, monthly one-on-one sessions allows managers and employees to clarify goals and ensure they are on the same page with work objectives and responsibilities.
Making the Transition
For businesses that aren’t quite ready to make the complete transition from annual performance reviews to monthly feedback sessions, a hybrid plan is always an option. Integrating more frequent and formal meetings between managers and employees is one way to begin the process of instilling such change. Keep in mind that feedback sessions need not be tedious or prolonged. Reserving quality and consistent time with employees is more important than the quantity of time.
By making this investment, a business sends the message that their employees’ professional development and satisfaction are valuable and that high standards of performance are expected.
Measuring employee performance in a way that is productive and intuitive gives a business a leading edge in retainment, employee satisfaction, and in consistent delivery of results.
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