Performance Review vs. Continuous Feedback: Find the Best Approach for Your Team

Traditional performance reviews have long been a staple in the workplace. Scheduled evaluations, often annual, provide structured opportunities for reflection and growth. But is there a better way?

A survey found that only 5% of managers and 8% of organizations are satisfied with their current performance review process.

With this in mind, HR teams are now integrating a more consistent approach to performance management to develop and manage their talent: continuous feedback.

Are you torn between using performance reviews vs. continuous feedback to evaluate your team's progress? 

Well, you don't have to choose! 

Our article will help you: 

• Discover the advantages and disadvantages of each approach.
• Help you determine the most effective strategy for your team's unique needs and aspirations. 

We've also included best practices for integrating the two for better performance management in the modern workplace.

🔁 What is continuous employee feedback?

Continuous employee feedback is a performance management method based on an ongoing process of providing regular, real-time input and guidance to employees regarding their performance, strengths, and areas for improvement. 

Unlike traditional performance appraisal systems that typically rely on annual or bi-annual evaluations, continuous feedback emphasizes frequent communication and collaboration between employees and their managers, peers, and even subordinates.

"Continuous feedback focuses on helping employees grow in their roles by providing them with continual opportunities to reflect on their work and areas they could improve." Max Benz - Founder and CEO at BankingGeek.

💡 There are multiple advantages to adopting continuous feedback in your organization. We discuss them in our separate resource: 8 Benefits of continuous feedback.

👌3 Main advantages of continuous feedback

Offering real-time insights

A vital advantage of continuous feedback is the real-time insights it offers employees. 

Instead of waiting for months to address performance issues, employees can receive real-time feedback to improve performance immediately. 

Imagine waiting a year before letting an employee know about performance issues. Not exactly efficient. 

Essentially, the continuous feedback approach ensures you waste no time addressing what requires improvement.

Creating a growth mindset among employees

When employees receive regular feedback on their performance, they can better identify areas for improvement and work towards enhancing their skills and knowledge. 

Employees can see their progress and understand how to improve by receiving positive feedback and constructive criticism regularly.

When managers provide valuable feedback regularly, employees can easily adjust their goals or take on extra training to help them achieve them.

By incorporating employee feedback, team members seek skills for career development that will ultimately benefit the company.

Improving engagement

Since continuous feedback allows managers and employees to address pain points regularly, it improves the quality of interaction between managers and employees. 

Continuous feedback also helps to build trust between employees and managers, creating a culture where people feel supported and encouraged to take risks and try new things.

As a result, managers are more likely to trust their team members, making them grow and improve in a healthy environment.

📈 What is a traditional performance review process?

A traditional employee performance appraisal, also known as an annual performance review or evaluation, is a formal system organizations use to assess employees' job performance, usually yearly. 

The primary purposes of the traditional performance review process are to: 

• Evaluate employees' achievements. 
• Highlight employee strengths. 
• Identify areas for improvement. 
• Provide feedback. 
• Inform decisions related to compensation, promotions, and professional development.

Traditional performance evaluations involve assessing an employee's performance against specific goals using relevant performance metrics. It's one of the most common performance management approaches and is a benchmark for promotion or compensation decisions.

👌 3 Main advantages of the traditional performance review process

Ensuring a structured approach to feedback 

Traditional performance reviews typically follow a structured process that includes a set of performance metrics and a formal feedback session with a manager. 

This structure ensures consistency and fairness in evaluating employee performance. As a result, employees clearly understand areas where they have excelled and areas where they need to improve.

Helping identify top performers for rewards and recognition

Traditional performance review allows companies to identify top performers based on competence and skills, assisting organizations in rewarding high-performing employees accordingly.

Since this performance review approach often involves direct evaluation sessions, managers can easily decide who meets the metrics. 

This approach makes implementing policy choices about pay raises, promotions, and other company perks convenient.

💡 For example, the traditional performance appraisal can represent the basis for defining a 9-box grid in your company.

Identifying areas for improvement (and further training)

Companies can use traditional performance reviews to identify and address performance issues. 

By providing employees with feedback and guidance, organizations can help them improve their skills and performance, leading to better outcomes for both the individual and the organization.

Managers can identify employees' strengths and weaknesses and suggest the necessary training to help them succeed.

🆚 Performance reviews vs. continuous feedback

Let's explore the pros and cons of both methods to help you make an informed decision for your company.

Performance reviews: Pros

• Formal evaluation of performance: Performance reviews provide a structured and standardized way to evaluate an employee's performance over a set period. This approach allows for a clear and objective assessment of the employee's job responsibilities, accomplishments, and areas for improvement.
• Goal setting: These reviews include goal setting for the next period, which allows employees to understand the expectations of their role in the organization and align their personal and professional goals with the company's objectives.
• Provides a basis for compensation and promotion decisions: Performance reviews offer managers the necessary information to make informed decisions about employee compensation and promotion.
• Helps to identify training and development needs: Performance reviews help managers identify their employees' training and development needs, which can improve employee skills and performance.

Performance reviews: Cons

• Time-consuming: Performance appraisals can be time-consuming, causing employees to neglect other important tasks that managers and employees must complete.
• One-time event: Performance reviews are a once-a-year process, making it difficult for employees to address performance issues immediately or for managers to track progress over time.
• Inaccurate representation of employee performance: Since performance reviews usually happen annually, managers and employees must reflect on a year's worth of work. But relying on memory can lead to an incomplete or inaccurate picture of an employee's performance.
• Demotivating employees: ​​Employees may feel disengaged from the performance review process if they have little input or control. If the review is focused solely on the manager's assessment, without any opportunity for self-evaluation or discussion, it may feel like a one-way conversation, leaving the employee disengaged.
• Biased feedback: According to a survey by Accenture, almost two-thirds of employees do not believe performance ratings accurately and objectively reflect their performance. Unclear rating scales, untrained reviewers, and undocumented processes influence your reviews' objectivity. 

Continuous feedback: Pros

• Timely identification and resolution of performance issues: With continuous feedback, employees and managers can address any performance issues as they arise rather than waiting for an annual review to discuss them. As a result, you enable more timely resolutions and prevent minor issues from becoming more significant problems.
• Continuous improvement: Continuous feedback allows for ongoing monitoring and improvement of employee performance, leading to better performance and productivity.
• Better employee engagement and satisfaction: Employees feel more engaged and valued when they receive regular feedback, increasing job satisfaction.
• Increased flexibility in the performance management process: Continuous feedback allows for a more dynamic and flexible performance management process instead of the more rigid and formal annual review process.
• Better team performance: Continuous feedback allows managers to track the team's performance continuously, which can help identify any issues or opportunities for improvement and adjust accordingly.

Continuous feedback: Cons 

• Lack of structure: Continuous feedback may lack structure and can be less formal, making it challenging to evaluate employee performance objectively.
• Overwhelming: Continuous feedback can overwhelm employees when it's not constructive and actionable.
• May not be suitable for all employees: Continuous feedback may not be appropriate for some employees who prefer less frequent feedback.

Here's a summary of the pros and cons of both methods.

Key similarities

• Aim: Both performance reviews and continuous feedback aim to evaluate and improve employee performance.
• Feedback: Both methods involve managers' feedback to help employees understand their strengths and weaknesses.
• Goal setting: Both approaches involve goal setting, which helps employees align their personal and professional goals with the company's objectives.

Key differences

• Timing: Performance reviews typically occur annually, while continuous feedback is ongoing.
• Formality: Performance reviews are typically more formal and structured, while continuous feedback is more informal and flexible.
• Feedback scope: Performance reviews usually focus on past performance and evaluation, while continuous feedback focuses on current performance and provides real-time feedback.
• The specific context for performance reviews: Performance reviews may be more suitable for organizations with a hierarchical structure where managers have less time for regular feedback. Plus, performance review processes are more appropriate for job roles that require specific skills or knowledge and are less dependent on daily performance.
• The particular context for continuous feedback: More suitable for smaller organizations, where employees have closer relationships with their managers and can receive regular feedback in a more informal setting. It is also perfect for short-term projects or customer-facing roles, allowing for real-time performance monitoring and actionable feedback.

🏆 7 Best practices for implementing both approaches in your workplace

Even companies that go all in with continuous feedback still perform performance reviews, resulting in a more comprehensive approach to performance management. 

A great example is Cisco, hailed #1 in the "2022 Fortune 100 Best Companies to Work For" list and #3 in the "World's Best Workplaces" list. 

Their secret?

Weekly and future-focused one-on-one check-ins for sharing feedback and a "performance snapshot" to get a holistic picture of employees' performance regularly. 

They use technology to measure valuable data, harness each individual's strengths, and develop actionable feedback. As a result, they have effectively built solid teams across verticals and regions.

💡 Want to replicate a performance review process like Cisco? Check out our CISCO performance management case study.

Here are five best practices for implementing performance reviews and continuous feedback in your organization. 

Set expectations and communicate them

Communicating expectations helps your employees understand their goals and the skills required to meet these expectations. 

Clear expectations will help employees save time, maximize resources, and reduce possible errors. Clear communication also makes it easier to identify specific growth requirements.

Encourage employee ownership 

When setting development goals, prioritize giving employees some ownership and autonomy. 

Tip: You should aim to build confidence and help your team members take responsibility for their results.

Offering workers the required resources to deliver on their tasks is an excellent strategy for building a lasting company culture. You will enable them, not micro-manage them. 

Use objective measures for measuring performance 

As a manager, you should use objective measures to assess employees' roles and performance.

Utilizing impartial tools for measuring achievement can help reduce or eliminate personal biases, ensuring you derive factual and accurate data from employee performance.

Share regular feedback (formally & informally) 

Your goal is to encourage open communication and feedback within the organization. In this feedback culture, employees feel comfortable providing and receiving constructive input from their peers, subordinates, and supervisors.

Making feedback appear natural and unforced gradually becomes a habit among managers and employees.

Train managers and employees

Giving and receiving feedback are skills like any other, so you should not skip training them. 

Both managers and employees can benefit from such training. 

So ensure you train managers and employees to give and receive effective feedback, conduct performance reviews, and set appropriate goals.

💼 Read our complete guide on How to improve managers' giving and receiving feedback skills.

Link feedback to employee growth

Use the insights gained from continuous feedback and annual performance reviews to create personalized development plans, addressing employees' unique strengths and areas for growth.

Your goal will be to make sure that feedback is not only evaluative but also developmental.

DEVELOPMENT plan handraiser

Tip: Offer performance coaching to help your employees skyrocket their performance. 

Coaching helps you keep in touch with your team members and equally measure employee performance. 

With performance coaching, you can optimize your employees' growth by offering experiential instructions.

Recognize employee achievements

Another way to follow up is to inform employees when they make valuable contributions. By expressing your appreciation for the job, you help them understand the effort and approaches to retain and the ones to dismiss. 

Integrating these principles with care is important because loyal employees are hard to come by. Therefore, it helps to incentivize loyalty, however possible. 

Here are some tested ways to incentivize loyalty:

• gifts;
• rewards;
• bonuses (e.g., when an employee reaches a milestone, such as ten years' employment).

Tip: Make your performance review seamless by automating employee feedback conveniently. 

🕵️‍♀️ The importance of performance management in the workplace

An effective performance management strategy can:

• Aligns employee goals with organizational objectives. 
• Identifies strengths and areas for improvement. 
• Help identify training and skill gaps and areas that require additional training.
• Improve staff morale, which improves performance and productivity.
• Aids in making informed decisions about promotions, compensation, and talent development.
• Help with task management, task delegation, and workforce planning.

💡 Are you looking to boost your company's performance management? Check out our guide on how to create high-performance management for your company.

➡️ Create the feedback system of your dreams with Zavvy

Performance reviews are a crucial component of performance management. 

Still, they should not be the only tool to assess and improve employee performance. 

By combining performance reviews and continuous feedback, you can create a comprehensive performance management system to let employees grow and develop in their roles. 

And ultimately drive better business results.

At Zavvy, we recognize the value of people as a company's most valuable asset. So, we create software solutions that offer practical approaches for growing your people and your business.

With our feedback software, you can streamline regular check-ins and provide support immediately. Combining those insights with your performance review cycles results in a more efficient and effective performance management system.

📅 Schedule a demo to see how, together, we can create a performance management system that drives success for your organization.