“You’re warm🥵. No, you’re cold🥶. You’re hot now.” Do you remember the Hot or Cold game you would play with your friends during recess? Those were the days, weren’t they? Now, if you look closely at your childhood, you would see that even as kids, we depended on feedback to perform well. That is, WE NEEDED SOMEONE TO TELL US HOW WE WERE DOING. We knew that without guidance (feedback), we were walking blind. 

Now we will take into account a similar equation when it comes to workplace performance management.

The paradigm of performance management is not black and white anymore. Companies are no longer restricting themselves to performance reviews as the only method of providing employee feedback. Organizations like IBM, Microsoft, and Dell have already recognized the necessity of overhauling their people processes by abandoning performance reviews. 

But the million-dollar question is, are the new methods showing any results? 

A Gartner study revealed that brands saw a 10% dip in their employees’ performance after abandoning performance review ratings. Companies also witnessed a 6% dip in employee engagement after removal. 

Simultaneously, employee feedback is a broad and complex area, and it’s not a one-stop-shop approach that brands can incorporate. When companies are replacing their traditional performance review practice, they need to find an alternative that actually works for them. 

Since feedback is essential to learn as well as improving, the theory of continuous feedback can be the solution here. It involves conversations on the working performance of the everyday tasks assigned to the workforce. Managers can give feedback to their employees for the daily tasks and set goals with the team. The managers can also offer suggestions to improve performance in real time. 

The Never-ending Battle Between Continuous Feedback and Performance Review
So, without further ado, let’s review the strengths and weaknesses of Continuous Feedback and Performance Review to understand which strategy works the best. 

Employee Performance Review: Strengths💪🏻

  • Employee Benchmark

Performance Reviews can be concluded into ratings of numerical value. For instance, an employee can be rated 3= Satisfactory or 5= Exceeds Expectations based on their performance. Such a method can give the HR leaders an overview of the organization’s performance. With that, ratings also enable employees to review how they performed individually and compared to their team.

  • Combat Bias

Managers often tend to treat their employees unequally. Affinity bias can lead to a preference towards one employee and aversion/dislike towards others. This can hinder the way managers give employee feedback to their teams. However, a performance review ensures that the entire workforce receives feedback equally and supports regular feedback distribution. Nevertheless, reviews provide a basic level of feedback that employees need to work on their skills. 

  • Rewards and Recognition

For most HRs, formulating a robust system of rewards, recognition, and compensation upon performance is a complex area. But with the help of performance review, HRs can base the rewards and compensation system on the KPIs of the employees. It makes compensation fairer while motivating the employees to perform better every time. HRs can also train the managers on how to give feedback correctly to the employees that would later help in performance review. 

Employee Performance Review: Weaknesses 👎🏻

  • Reduce Teamwork

While HRs can find this system time-saving, it often compares employees to one another in an unhelpful way. With the existence of bias among managers, ratings can get subjective too. Since performance review is mainly linked to compensation, an employee might miss out on rewards due to unreliable ratings. On top of that, achievements based on team effort cannot be judged fairly through performance reviews. 

  • Demotivated Employees

A Gallup research stated that merely 14% of employees get inspired to improve from performance reviews. Performance reviews are mostly highly critical, which can stress the employees for their job security. Managers do not get time to have one-on-one individual employee reviews, which stresses the employees even more. Moreover, annual or half-yearly reviews lead to a lot of gap and uncertainty on improving performance. 

  • Inconsistency

Some managers take a critical approach while rating their teams, while others are a bit more lenient. However, the HR won’t look into the different management styles of managers while reporting the performance of the workforce. This can lead to misunderstanding how an employee is performing, and it also demotivates the employees. Inconsistent and improper ratings can reduce an employee’s trust in the performance review system and their manager. 

Continuous Feedback: Strengths💪🏻

  • Employee Growth

Ongoing employee feedback is essential for driving discussion around employee development and growth. Adopting a continuous feedback framework helps employees take ownership in meeting and setting personal goals. Such opportunities encourage the workforce to seek development or training opportunities that will provide value to the company. 

  • Actionable Insights

Continuous feedback emphasizes delivering actionable suggestions and eliminating any room for bias. Managers can use real-time feedback instead of waiting long to evaluate performance issues. On the employee side, they can use this feedback to refresh or course-correct their goals without wasting their valuable time. Moreover, tools like OKR platforms make collaboration and exchanging feedback easy, accurate, and timely. 

  • Boosts Engagement

A continuous feedback model is an excellent method to make employees feel valued. It helps them understand their standing and put more effort into achieving their goals when they feel recognized. Organizations prioritizing real-time feedback are experiencing better employee engagement as it promotes autonomy and transparency, something crucial for the Gen Z and Millenial workforce. Frequent constructive and positive feedback also records the employees’ recognition and development throughout their careers in the organization. 

  • Better Relationships

Giving consistent feedback engages employees as well as retaining the best resources by providing them ownership. Around 60% of employees would prefer recognition and feedback over a compensation raise. Feedback is a valuable channel that builds a strong relationship between the organization, managers, and employees. Therefore, a continuous exchange of feedback makes employees feel more authentic and natural in the workplace, establishing trust and uniting the workforce.

Continuous Feedback: Weaknesses👎🏻

  • Oversaturation

Although feedback is vital and helpful, it can get overwhelming if not delivered correctly. Various tools draw data from different sources like testimonials, time-tracking systems, project management software, and more. It can be challenging to sort through an array of information and formulate productive employee feedback. 

  • Incorporation

An organization, especially at an enterprise level, might feel it is time-taking to implement a continuous feedback system. This is especially true for managers who have to give a lot of time to demonstrating and encouraging a healthy feedback culture at the team level. Besides that, organizations must find the best tools to foster a seamless and transparent employee feedback culture. Such a cultural shift would also require buy-in and budget from leadership. 

 So, Which One Should You Choose? 🤜🏻🤛🏻

Enterprise or medium-sized brands can incorporate performance reviews. It will work as an extensive data pool for HRs monitoring compensation and succession planning. Industries requiring high-level accountability can profit from implementing a formal structure like a performance review. It allows employees to be more responsible and take full responsibility for their performance, thereby making performance management their priority.

Whereas continuous feedback is beneficial irrespective of the organization’s size. Informal and regular feedback is appreciated by employees more openly than formal criticism that’s tied to compensation. This creates a culture focusing more on elevating employees’ growth rather than pressuring them to meet their goals. Both managers and employees can adopt feedback as a framework. Employees also get to give feedback to their managers, peers, and the organization.

You still need a trusted partner to map your team's performance journey no matter which path you choose, wrky.ai is here to help!

Also check, how employee feedback can drive employee engagement in the organization: read here