The annual review is dead.
Once a staple in corporate America, the annual review is quickly fading from memory. Maybe you went through your annual review last month and experienced this all too familiar scene:
- Your supervisor fills out the Annual Review form from HR
- You awkwardly sit in your supervisor’s office while they walk through the form
- You wonder why anyone thinks this is a good idea
Some companies still use this unhelpful checkpoint, but many companies are rapidly shifting away from it. Leaders realize the ineffectiveness found in setting goals and giving feedback for 30 minutes every year. Instead, they’re creating a culture of open and ongoing feedback.
And this model works incredibly well. The 2016 Gallup Millennials Survey indicates engagement nearly doubles in every generation when regular feedback is given from a supervisor. "Regular" as defined by the survey means monthly, so fifteen minutes per employee per month may mean a massive increase in engagement and bottom line revenue.
While doing research for my Forbes articles, I talk with a lot of people from a variety of companies. One common theme, regardless of age, industry, or location, is a disdain for the annual review. Nearly everyone brings up feedback without me asking. They see regular feedback as the future of the workplace.
Why it doesn’t work
Constant feedback is normal until your first full-time job. Throughout school, sports, and extracurricular activities, you get clear feedback from coaches and teachers. The steps to get better and the marks for achievement are clear.
But things change upon entering the workforce. Instead of clear and consistent direction for improvement, millennials are shocked to find little feedback and few standards for growth. For most of life feedback was daily, but the “real world” seems to value feedback once per year. How can one really succeed with so little insight?
According to a newly released report from Adobe, people overwhelmingly want change. Over 80% of those surveyed want feedback in the moment instead of aggregated feedback months later. And managers are on board with the change. Two-thirds of those surveyed by Adobe want their company to change the performance review system, compared to 55% of workers.
The impact of social media
The feedback conversation is becoming more common, and social media has indirectly driven this shift. “People share information easily,” says Kris Duggan, CEO of BetterWorks. BetterWorks is a software platform companies use to track feedback, goals and data. Much of life, social media included, revolves around direct and open feedback. But as Duggan says, “going to work without that is jarring.”
Millennials have unwritten expectations about feedback based on social media use. “[Give me] real-time in the moment feedback,” says millennial Michael Lage of Chick-fil-A. “Positive, critical, you name it. I want the same expectations for work as posting to Instagram.”
Fitbit, feedback, and a change at work
“In the last few years with the FitBit craze and Strava (a bicycling app), people are using data and measurement of things,” says Duggan. “People with FitBits take 42% more steps. It’s more of an agile approach.” Agile is a popular project management style based on constantly iterating based on feedback. Many companies practice this style in the management of products and projects.
In today’s rapidly changing world, annual feedback simply doesn’t make sense. Companies of all sizes recognize the ineffectiveness of the annual review and the benefit of constant feedback and goal setting. “We are moving away from annual reviews to flash survey on a quarterly basis,” says Mike Bavaro, VP Talent, Acquisition and Development at Option Care. “Managers are creating action plans with their teams to create quarter to quarter monitoring.”
Technology makes it easier to capture and track feedback. Leaders can see an employee’s feedback history to see if growth occurs in key areas. But ongoing feedback is only useful if it drives actionable change. Otherwise, it’s a new version of the useless annual review.
Use technology for feedback
To say millennials love technology is no secret. In fact, Pew Research indicates millennials are the largest single generation to own a smartphone. Since this generation is so digitally minded, leaders can capitalize on this mindset to engage their desire for feedback.
Companies like IBM, for example, built their own app to capture and leverage feedback for employee engagement. Not all companies are able to build and sustain their own app in-house, so external tools like Betterworks are available. The BetterWorks platform enables companies like CVS and Kroger to provide employee feedback and set performance goals. Instead of setting goals once per year, this platform enables employees to set goals at any time.
Companies who use this tool see a 95% increase in transparency, a 91% increase in alignment, and a 72% increase in engagement. All of those numbers have a direct impact on the bottom line revenue of a company, so the return on investment is huge.
This article was orginally published on Forbes.com.