Most employers use an annual appraisal process to motivate staff, but not many have asked whether this is the best way to assess staff. However, the annual appraisal process is no longer considered to be the best way to motivate, rather, real-time feedback on a quarterly/monthly basis is. Why? There are 4 main reasons to drop annual appraisals in favor of real-time feedback
1. With annual appraisals, staff and managers have often forgotten the details around performance – since it happened such a long time ago – meaning that the appraisal often contains inaccuracies. But with real-time feedback, the information is fresh and much more accurate.
2. With annual appraisals, you have to wait an entire year to formally praise your staff for good effort and performance, meaning that your staff can feel unappreciated. But with real-time feedback staff receive more instant recognition for good performance and are more engaged.
3. Also, with annual appraisals, you have to wait an entire year to formally address poor performance issues, by which point the issue has often reached crisis level, whereas real-time feedback would have enabled you to correct the issue while it was small and avert a crisis.
4. Research shows that companies who do appraisals on a quarterly basis receive 31% greater returns from their appraisals process than those don’t and firms who do monthly feedback have an even better ROI.
The benefits of real-time feedback over annual appraisals are clear and it’s no surprise then that up to a third of companies – including the likes of General Electric – are ditching annual appraisals in favor of real-time feedback on a quarterly or monthly basis. We urge all employers looking to optimize their performance management process to do the same.