Why Continuous Feedback Is More Effective Than Annual Reviews

This article was originally published in October 2019. It was updated in November 2021 to reflect stats and information about best practices for giving continuous feedback to employees.

Annual performance reviews used to be standard, an annual occasion for providing constructive feedback and giving raises. But, it’s no secret that most employees — and managers, too — dread once-a-year evaluations. 55% of workers say their annual reviews do not improve their performance, and just 13% of employees and managers find them useful. It’s hard to find any benefit to evaluating your employees only once each year.

Lucky for most, the conversation around performance management is shifting. Annual reviews are no longer the preferred method of evaluating employee performance. 82% of workers said their company used annual reviews in 2016 vs. only 54% in 2019.

Annual appraisals are not just unpopular — they’re less effective than continuous feedback methods. Performance management that includes continuous feedback is better at keeping employees engaged and building productive, thriving teams.

Performance Management Evolves

The pandemic led many companies to reexamine their performance review strategies. Some did away with reviews altogether to relieve employees of that stress on top of the stressors of COVID-19. And with much of the workforce suddenly remote, managers needed to check in with their employees more often. As a result, employees began receiving continuous feedback, which one HR professional told the Washington Post “could diminish the need for annual performance reviews.”

Now, as companies examine their processes post-COVID, the shift toward continuous performance management is holding strong. That’s no surprise because we know employees want more feedback: 96% of them, to be exact. 96% of employees also say receiving regular feedback is a good thing. 83% appreciate it regardless of whether the feedback is negative or positive. Since 2018, the number of employees who want monthly feedback has increased by 89%.

Now is the time for organizations to take an in-depth look at their performance management system and ask, “Does our system help the company achieve its performance goals?” If not, it might be time to incorporate continuous feedback into your system.

Continuous Feedback and Employee Engagement

The relationship between continuous performance management and employee engagement has become more apparent as the annual reviews become less common and continuous feedback takes its place. 85% of employees who check in with their managers weekly report higher engagement levels. Among employees who are highly engaged, 43% receive feedback at least once a week.

When employees are forced to wait until their annual review to hear about their performance, lots of time has passed. The feedback they receive is bound to be less relevant and therefore, less effective. Continuous constructive feedback enables employees to course-correct as they work.

Continuous feedback helps form a workplace culture feedback is given daily instead of during one dreaded hour per year. With continuous performance management, employee reviews can function as an engagement tool versus the only method for giving feedback, which helps to establish trust between employees and managers.

Regular feedback at work reduces the pressure typically associated with performance appraisals. Formal reviews can be a time reserved for goal-setting, celebrating achievements, and discussing growth opportunities rather than rehashing mistakes from months prior. Employee reviews can build confidence rather than induce anxiety.

70% of leaders agree that employee engagement is the most important contributor to business success. So, if annual performance reviews aren’t helping you get the most out of your people or increasing their engagement, then it’s not the best system for determining pay and promotion, either. So, should businesses do away with them altogether? How do you replace or supplement them with something that’s both cost-effective and productive?

Continuous Feedback For Continuous Improvement

A key part of performance management is setting goals, determining how to reach them, and measuring progress and success. According to Gallup, setting and reaching goals is a core indicator of employees’ success in their roles. But, if employees aren’t receiving the feedback necessary to improve their performance, businesses can’t expect to see progress in either their personnel or organizational goals.

What’s going wrong?

• Managers aren’t giving regular feedback. With a traditional review structure, managers may not take the opportunity to show praise or offer direction at the moment. By the time they get around to these items at an annual review, they’re likely too far in the past for employees to remember the specifics. Similarly, bringing up an issue from eight months ago is even less likely to carry much weight in performance discussions. Plus, employees miss out on relevant learning opportunities and several months’ worth of performance improvement.
• The people providing the feedback don’t actually manage the individual. It’s not uncommon for reviews to be given by the HR department or upper management — people who aren’t actually working day-to-day with the reviewee. If the person giving feedback doesn’t typically interact with the employee, the feedback is either second-hand or from a skewed perspective. Feedback given in this manner is not usually accurate or productive.
• Managers don’t know how to evaluate performance. Often, managers never receive training on how to assess performance, give feedback, or charter a developmental plan. This can lead to an unproductive conversation where employees feel like they are talking to a stranger rather than their manager.
• You’re trying to squeeze too much into one meeting. Annual performance reviews can have a jam-packed agenda. Trying to cover a full year of performance into one conversation means there’s a lot of ground to cover in a short amount of time. This leads to important topics getting merely a cursory discussion, and critical talking points can slip through the cracks.

What to do instead:

• Address problems and praise in real-time. Performance conversations that happen daily are much more effective and less tense. Continuous feedback provides practical training opportunities employees can apply immediately to their work. Timely recognition for a job well done shows your employees that you’re keyed in and improves engagement. 
• Advise immediate supervisors to use continuous performance management methods. Eliminating annual reviews doesn’t have to be the only answer to improved performance management. Ensuring that employees receive specific feedback from managers regularly — at least once per week — is a big step toward a more effective system. 

• Train managers on how to give effective continuous feedback. Your managers must know how to deliver feedback productively and feel comfortable doing so. Open communication and two-way conversations are an important part of building relationships between managers and employees. So, training management on how to deliver feedback, suggest improvements, and facilitate input is a core aspect of your review process.
• Restructure formal reviews to focus on goal-setting and employee development. There’s still a place for annual or mid-year reviews, but the focus should be reframed. Instead of specific feedback, help employees set goals for their role and understand how their work goals align with business objectives. Managers can also help employees set career goals and create a professional development plan. Focus on more long-term, high-level goals than specific performance measures that are better addressed in real-time.

There are so many upsides to increasing employee feedback frequency. It builds trust, alleviates pressure, and leads to more highly engaged employees. Not to mention, HR professionals using a continuous performance management process at their companies are 50% more satisfied with the process.

By implementing sound continuous performance management systems, employees can expect their daily performance to improve. The feedback they receive will be more applicable to their immediate work. They’ll be able to grow and learn faster. Continuous feedback will allow employees to discuss development, compensation, advancement, and other career goals during performance reviews.

Plus, workers will be able to contribute their ideas more frequently and hopefully see them come to fruition. All of these benefits combined will help employers get the most out of their employees and workers to engage with an organization on a deeper level.

ClearCompany’s Performance Management system can help your company transition to continuous performance management. With our custom solutions, you can build a review system that engages and retains top talent and helps every employee improve their performance. See the difference ClearCompany can make at your organization —sign up for a demo with our experts.