Best Practices for Switching from Annual Performance Reviews to More Frequent Feedback


As a busy HR leader, implementing the change from annual performance reviews to more frequent feedback is easier said than done, but an engaging performance review process is critical to driving job satisfaction and employee engagement. Paychex HR Coach Elizabeth Watson shares some key steps to making frequent feedback the norm in your organization.

The shift to a more frequent cadence of performance feedback is one of many changes being driven by younger generations in the workforce. According to data from Gallup, only 19 percent of Millennials say they receive routine feedback from managers and only 17 percent say the feedback they receive is meaningful. This lack of more frequent feedback could be causing Millennials to feel unfulfilled in their jobs thereby possibly impacting business success. A study by Clutch revealed, of the Millennials whose managers do provide accurate and consistent feedback, 72 percent find their job fulfilling compared to only 38 percent of those whose managers do not.

As a busy HR leader, implementing a change of this significance is easier said than done; but an engaging performance review process is critical to driving job satisfaction and employee engagement, especially for Millennials and now Gen Z. Here are some key steps to making frequent feedback the norm in your organization:

Step One: Evaluate Your Current Performance Review Process
Are employees surprised by what they’re hearing in performance reviews? They shouldn’t be. Unclear expectations and unexpected feedback can be a sign that managers may not have been checking in enough. If there is too much time between conversations, recency effect can come into play as managers tend to reflect exclusively on the good work or mistakes made in just the past few weeks. This means that potentially great work gets overlooked and some problem areas are never addressed. Every team is different, but often real-time feedback helps employees establish good habits rather than needing to break bad ones down the road.

Another aspect of the performance review process to evaluate closely is how employee progress is measured. Often, when reviews are completed infrequently, managers can inadvertently judge their direct reports against one another. One shining star can make other solid workers seem subpar and one problematic employee can make it easy to ignore the challenges of their colleagues. More frequent feedback can help employees and their managers set timely goals and milestones by which to measure their performance and help avoid this comparison bias.

A challenge many businesses face in reviews is a lack of motivation from both managers and employees to participate in the process. Ideally, everyone should feel energized by performance reviews and feedback, empowered to make progress toward their individual goals, and contribute to achieving team and company goals. To accomplish this, reviews should center on the development and coaching communications rather than criticism, positioning employees to be more successful and helping them understand why their contribution is valuable.

Step Two: Communicate the Change to Your Employees
When switching from an annual review process to more frequent feedback, there may be some initial assumptions that the new way will be more time-consuming. Therefore, it is important to communicate the benefits and the correct way of transitioning to this method. Ultimately, the goal of frequent, effective feedback is to drive engagement, loyalty, and satisfaction among employees. When done right, performance reviews are a valuable asset to the organization and not just a “check-the-box” exercise.

If your annual performance review process has traditionally been tied to promotions and raises, you’ll want to communicate carefully around how this shift impacts the timing of pay increases and the benefits of separating the two. When reviews are connected to salary, feedback often freezes when wages do. Not only do employees not receive raises during this period, but they also stop receiving acknowledgment that their work is valued. As a result, engagement may plummet. The elimination of an annual review reduces those formal expectations around feedback and creates more open dialogue between managers and employees.

Step Three: Implement the Right Tools
The tools used to facilitate employee feedback, goal setting, and progress towards those goals should be flexible and based on employee needs. Employees may require a different approach based on level of experience, their role within the company, and the type of work they do, among other factors. However, there are several common tools that can help optimize the review process overall. A learning management system (LMS), for example, can be customized based on the types of training employees need at the time – both hard skills for their job duties and soft skills such as communication and professionalism. Through the LMS, employees can take development into their own hands and managers can easily track employees’ progress toward training milestones.

To ensure they’re basing feedback on the most accurate information possible, managers should keep an activity log. A simple tracker of employee activity (including both highs and lows) helps managers deliver quality, timely feedback and content-rich examples that are specific to an employee and their goals and not based on comparisons to colleagues. Additionally, this record helps maintain the proper look-back period when doing quarterly or monthly reviews, for example.

When making the switch from annual performance reviews to offering more frequent feedback, be sure to emphasize the benefits to the company, managers, and employees alike. Remember that any change in process requires time and training to fully and properly implement. But in the end, employees may be more engaged and satisfied with their job experience and retention and productivity should improve as a result.


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