By Anne Shaw, Contributor
Inside the global offices at Accenture, global management consulting and professional services company, its leadership was quietly planning a revolution. This transformation would impact over 330,000 employees.
The company would overthrow its system of annual performance reviews and instead, switch to a continual feedback model.
“Performance is an ongoing activity, it is every day,” Accenture CEO Pierre Nanterme told The Washington Post in 2015, after the company announced its plans to make the move in 2016. “Nobody is going to wait for an annual cycle to get feedback. Now it’s all about instant performance management.”
In the traditional scenario, managers meet with their direct reports once per year to deliver feedback, identifying high-potential employees and determining where to dole out bonuses and raises.
The issue with the traditional feedback model is threefold. Employees have no time to show improvement, limiting their negotiating power. Managers, too, must wait longer to get what they need from their team members, making significant recommendations at the end of the year. Finally, everyone is at risk of harboring different perspectives until this discrepancy is surfaced at the end of the fiscal or annual year.
Today, progressive companies like Adobe, Deloitte, and Accenture have opted for continuous employee feedback, where managers are trained to provide regular reviews—and they’re not in the minority. The Harvard Business Review reports that 70 percent of global companies are shifting toward this new performance management strategy.
And while there are plenty of benefits when it comes to implementing continual feedback, there are also potential pitfalls to avoid. Here’s a brief look at the opportunities and risk of the continual feedback model.
The Pros in Action
One of the emerging leaders adopting the continual review model is a company formerly known for its annual performance reviews (complete with employee rankings).
General Electric was one of the first major companies to publicly move away from annual performance reviews when it developed a mobile app, PD@GE, focused around providing continuous and flexible feedback.
The app works by allowing employees to set priorities, ask peers for insight, and provide feedback to their colleagues and managers. Employees can also request touchpoint meetings with their manager, so informal reviews can happen at any time.
According to GE Canada’s VP of HR Sonia Boyle, the continuous model—and its associated mobile app—was an important iteration for GE to keep pace in the midst of constant transition.
“GE’s global business exists in an environment of rapid change and does not follow a prescriptive annual performance cycle,” Boyle told the Financial Post in April. For Boyle and her team at GE Canada, the purpose of PD@GE is to foster productive conversations that can help employees develop professionally and further business goals.
The culture of communication enabled through PD@GE has so far inspired real-time feedback, giving employees the opportunity to continuously improve and better adapt to changes on their teams, projects, or business strategies. When speaking with the Financial Post, Boyle also noted that this system requires managers to develop a higher year-round awareness of their employees’ performance and capabilities.
With the development of the app, the compensation structure has changed, too. GE’s internal performance feedback technology allows the company to award its employees based on multiple stakeholder assessments of their performance rather than one manager’s annual review.
According to Dominique Jones, who has spent the last eight years leading the HR function at Halogen Software, “When performance management is fully integrated into your business, it is adaptive, not prescriptive, allowing [companies] to quickly align employee commitments to business aspirations.”
For Jones and other enterprise organizations, the year-round system allows for a more personalized and collaborative feedback loop. And when it comes to the technology that enables this paradigm, Jones said that it transitions everyday talent management from those who sit in HR to the people who are working in the field–the managers and their employees.
The Risks
While the continual feedback model may be helpful in wrangling updated, 360-degree feedback, it doesn’t come without risks.
According to Andrew Lessard, a product marketing manager at Economic Systems Inc., a management consulting firm, “poorly implemented performance management programs can lead to detrimental organizational outcomes.”
One such outcome is the potential to diminish employee morale. From where Lessard sits, when ongoing performance management lacks an organized system, feedback is more likely to be reactive than proactive. This could result in managers only communicating to employees when they’ve done something wrong.
To avoid creating resentment toward management, he stated, managers should be trained to offer a healthy mix of constructive and positive feedback to better motivate employees.
Similarly, Michelle Brown, a professor of human resources management at University of Melbourne, argued that feedback positively impacts development and performance only up to a certain point. If feedback is given too often, she said, it can overwhelm and confuse employees, producing a negative effect on their performance.
The key is to help managers find the sweet spot. This means developing their performance management skills in a way that encourages them to do more than “the traditional ticking of a box, agreeing to a statement about an employees’ performance.”
Organizations that plan to take advantage of ongoing employee feedback are more likely to do so successfully when they go into it fully understanding not only the benefits they’re likely to gain, but also the potential pitfalls of the continual model. Only then can companies select the best employee feedback technology—perhaps one with artificial intelligence for faster data processing and the ability to drill into segmented user groups—and train their managers to march confidently toward this new approach.