The leadership strategy that's more valuable than performance reviews
Having been on both sides of the table—as employee and manager—I can confidently say that no one looks forward to annual performance reviews.
As an employee, you might find yourself bracing for critiques and rehearsing defenses. Maybe you're asked to rate your own performance and feel unsure whether to play it humble or confident. And that's before you even start combing through an entire year's worth of highs and lows.
Employers are likewise tasked with the time-consuming exercise of digging through months of work for each employee.
But the real issue isn't just that annual reviews are stressful—it's that they're often ineffective. They can leave employees feeling frustrated and disengaged. Meanwhile, organizations continue to waste time on systems that do little to meaningfully improve performance or support career growth. Some even rank employees, pitting them against each other in a race that completely undermines the spirit of collaboration. I know that kind of atmosphere would not work for my company.
Today's employees want something different: timely, ongoing feedback that helps them improve in the moment. It's not just a more psychologically gentler approach—it also delivers results. In fact, the percentage of U.S. companies using annual reviews dropped from 82% in 2016 to just 49% in 2023, according to the Society for Human Resource Management. It's no doubt due to the benefits of real-time feedback. Here's a closer look at some of those advantages.
Real-time feedback accelerates improvement
Imagine you're a line cook in a restaurant. You've been preparing a dish from the spring/summer menu the same way for months. Then, in September, your sous chef informs you that you've been leaving out a key ingredient all along. The feedback comes too late to matter—you're already moving on to the fall menu.
Delayed feedback, in short, is unhelpful.
'Annual reviews are too infrequent for the cycle of work today in most enterprises,' says James N. Baron, a professor at Yale School of Management. 'Goals negotiated at the beginning of the year have often become obsolete and irrelevant by the end-of-year review.' That's why more and more organizations are shifting away from annual reviews.
Timely feedback allows employees to adjust quickly. Baron advocates for real-time coaching, in which managers work directly alongside their team members. When leaders stay close to the work, their feedback is immediate and actionable. But when they're removed from day-to-day operations—when they're too far from the trenches—they can't possibly understand where employees need to improve.
At AstraZeneca, managers adopted a more hands-on coaching approach. Four years later, the company saw a 12% increase in core coaching capabilities and a 70% boost in managers' confidence in leading meaningful coaching conversations. Ongoing feedback makes the coaching process more effective and manageable for managers as well.
Frequent feedback boosts motivation and morale
As my company's workforce increasingly includes millennial and Gen Z employees, I've seen a steady rise in the desire for continual feedback. While younger workers are sometimes unfairly labeled as overly sensitive, in my experience, they welcome constructive criticism, especially when it helps them grow and move closer to their career goals. Companies that want to attract and retain top talent are taking note.
Regular, informal check-ins offer another advantage: They turn feedback into a dialogue rather than a one-sided annual monologue. This helps employers better understand their employees' career goals and collaborate on aligning those goals with the company's broader objectives. These conversations shift from sources of dread to wellsprings of motivation.
Simply put, ongoing feedback helps keep people on track, ideally in a direction that serves both their personal development and the company's success.
More feedback, less fear: Shifting the tone of evaluation
In the annual review process, there's often a performative element in which leaders feel compelled to balance praise with critique, regardless of what's warranted by the actual employee's performance. Whether it's delivered as a compliment sandwich or a straight-up list of pros and cons, the experience can leave employees feeling dissatisfied and deflated. The mere word 'feedback' from a manager can trigger an employee's threat response, flooding the brain with adrenaline and making it harder to process and act on what's being said.
In contrast, when feedback is given regularly, it tends to be received more positively. Employees view it as less threatening and more helpful. Over time, frequent reinforcement and recognition lead to greater engagement and performance.
As CEO of my company for nearly two decades, I can attest: It feels good to give positive feedback. Over time, it creates a virtuous cycle: You start looking for moments to commend employee performance just as much as you look for ways to help them improve.
The early-rate deadline for Fast Company's Most Innovative Companies Awards is Friday, September 5, at 11:59 p.m. PT. Apply today.
ABOUT THE AUTHOR
Aytekin Tank is the founder and CEO of Jotform and the author of Automate Your Busywork. Tank is a renowned industry leader on topics such as entrepreneurship, technology, bootstrapping, and productivity More
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