What we call performance management was first introduced in the 1970s, following the dawn of scientific management. Performance management emerged when it was discovered that worker satisfaction drives efficiency — the beginning of an emphasis on workplace happiness. But by 1992, 20 percent of companies were satisfied with their performance review systems, and in 1997, that number dropped to 5 percent.

Millennials say they want more feedback. Click To Tweet

Performance reviews were built for a workplace where output was easily quantifiable and workers could be evaluated on the same scale. Today’s knowledge workers bring talent and adaptability that cannot be evaluated in the traditional way. Millennials say they want more feedback, and research of all generations shows ongoing feedback improves engagement and motivation, an important driver of performance at today’s top companies. In a modern business, real-time feedback is the solution to fixing the broken performance management system we’ve used for years.

Deloitte, GE and Accenture are among organizations that recently overhauled their performance management programs. Some choose to remove annual reviews completely, while others complement annual reviews with real-time feedback so the once-per-year meetings are more effective.

Ongoing feedback improves engagement and motivation, an important driver of performance. Click To Tweet

The advances in technology mean knowledge workers are always on. Remote working and teams collaborating across regions means employees increasingly rely on digital communication tools. The fluid nature of digital communication is in stark contrast to long performance review cycles. Real-time feedback aligns with the way employees access information today.

Here are five key benefits of real-time feedback.

1. Promotes Ongoing Learning

Real-time feedback creates opportunities for learning and improvement. A culture of feedback allows managers to recognize top performers and provide course correction early. This way, employees get immediate feedback and can improve more quickly. It’s a lightweight format of learning and development that fits into their existing work flow.

2. Removes Recency Bias

Real-time feedback helps limit recency bias during employee evaluations because it tracks employee accomplishments throughout the year. By celebrating and saving wins in the moment, they are less likely to be forgotten many months later.

A failed project that takes place immediately before the review cycle also should not detract from an employee’s overall performance. Collecting data throughout the year ensures managers are evaluating the employee in context.

3. Increases Utility of Competencies

Role-based competencies or company values can be affirmed through real-time feedback. A company may identify risk-taking, teamwork, leadership or integrity as values to emphasize in the organization.

Real-time feedback enables peers and managers to recognize those attributes in employees. These softer skills are often forgotten alongside technical expertise but an effective workforce requires development of individuals as team members and leaders.

4. Drives Goal Progress

For companies that use OKRs or agile goal management, real-time feedback helps support engagement. Recognition from peers or managers serves as a reminder of individual goals. Constructive feedback helps employees stay on track with the goals they’ve agreed upon with their manager.

5. Shifts Focus of Performance Reviews

Feedback does more to improve performance than costly reviews — but the transition is not always easy. Many companies do reviews with real-time feedback, or monthly check-ins with real-time feedback. With ongoing feedback collected throughout the year, reviews are less susceptible to recency bias. Using real-time feedback enables each of theses methods to benefit from reliable data.

Employees know what to expect at review time because they’ve been getting consistent feedback from their manager, so there are no surprises or anxiety. Because feedback is spread throughout the year, less time is wasted on reviews.

transition from annual reviews