Small companies are swapping performance-based reviews with a less formal approach

Business Insider

6 hours ago

Small businesses are replacing annual performance reviews with continuous feedback.
Continuous feedback can improve workflow efficiency and foster an innovative workplace culture.
This article is part of " Culture of Innovation," a series on how businesses can prompt better ideas.
Targeted feedback, such as annual or quarterly reviews, is essential for employees' growth. However, if it's too infrequent or inconsistent, it could hinder employee performance.
With that in mind, some small businesses are replacing performance-based reviews with continuous open feedback, or sharing feedback regularly so employees can consistently learn and improve.
Leaders at small businesses told BI that this type of consistent evaluation system can alleviate employees' daily challenges, speed up their workflows, and create innovative environments where employees feel comfortable sharing new ideas.
Continuous feedback can take different forms
Continuous open feedback methods can vary across companies.
Scott Goldberg, the managing director of Carve Communications, a Miami-based PR company, told Business Insider that his company uses individual and personalized check-ins for its nearly 20 employees. This approach focuses on positive reinforcement, preventing employees from feeling like they're "constantly being evaluated or scrutinized," Goldberg said.
"Most of our staff are junior and midlevel employees hungry to learn, grow, and evolve," Goldberg said. "They're very receptive to feedback, and we've heard from nearly all that they prefer real-time, ongoing feedback rather than formal review meetings."
Goldberg said they started with monthly check-ins based on custom goals and expectations from senior leadership documented for each staff member. The frequency evolved into quarterly or twice-a-year check-ins, depending on each employee's needs.
Goldberg said that creating a direct line of communication to the senior leadership team has helped employees "forge mentor relationships to learn and grow in a positive, constructive format."
Sarah Schmidt, the president of Interdependence, a Chicago-based PR and strategic communications firm, told BI she uses real-time feedback with her workers.
"Annual reviews felt absurd. Why wait six months to fix something you could solve in six minutes?" she said.
Schmidt formalized the review process at Interdependence when she joined the firm about four years ago. The process involves twice-a-month coaching check-ins, which are guided by relevant projects and key performance indicators.
Schmidt, who has managed teams for over 12 years, said that employees might be skeptical of a continuous feedback style, especially if they're used to annual reviews. But if it's done right, everyone wins, she said.
"Continuous input requires discipline," Schmidt said. "We trained our leaders to deliver bite-sized, actionable notes instead of saving up. Today, the most common praise we hear is, 'Leadership feels like a partner in my growth,' which is music to my ears."
Ongoing feedback can pay off
Tim Duba, the cofounder of wellness company Protekt Products, said that ongoing feedback can help reduce the fear of being wrong, which can impact employee collaboration.
"When feedback is constant and normalized, people stop being precious about their ideas," Duba told BI. "We don't care where a good idea comes from. We care if it works. Mistakes aren't failures here — they're data points."
He said that using this approach at Protekt Products led the company to bring manufacturing and fulfillment in-house, which one of his employees had suggested. This type of change can be costly and risky, he said, but open communication allowed employees across the company to adjust to the change collaboratively. He said the business move has set the company up to triple its growth in 2025.
Duba said continuous feedback also gave employees clarity and eliminated guesswork, creating a "more organized, decisive, and focused" work culture.
"Trust builds quickly when you know your strengths and weaknesses, and your teammates do too," Duba said. "We move faster because people know their lane and how to win in it."
At Interdependence, the idea for an AI training and certificate program came about from a junior staff member's suggestion in a coaching chat.
"Leadership greenlit a two-week training sprint; now it's a firm-wide curriculum that upskills every team member and helps us work smarter, faster, and deliver for our clients more efficiently," Schmidt said.
Building better work habits
Schmidt said that if overhauling a feedback system seems daunting, start small and focus on quick exchanges. She suggested starting with a simple cadence — like 15-minute check-ins every other week — and identifying one or two "wins," followed by actionable next steps.
She also recommended recording important meeting notes in a shared document to make the employee's progress visible. "The system sells itself once your team sees results in real time," Schmidt said.
Duba said other small businesses should consider adopting an open feedback style sooner rather than later.
"If your leadership team isn't willing to be challenged, you're not ready — but if you are, you can't afford to wait," Duba said. "There are a hundred reasons your business might fail. Don't let culture be one of them."