Industry giants like Adobe, General Electric, and Accenture have given up formal annual reviews in favor of providing feedback throughout the year, and startups around the country have followed suit--but is that as effective? Inc. asked Deena Fox, founder and CEO of Brightfox, an HR software and platform that helps companies manage their talent, and Rachel Drori, founder and CEO of Daily Harvest, a frozen-meal company that delivers fresh, healthy meals to those without time to cook, to weigh in on the best way to give feedback. --As told to Anna Meyer
Is the annual review process still relevant?
Deena Fox: Employees typically feel that the annual review process is not fair or objective and dislike that managers make assessments without talking to anyone else in the company. But why dismiss annual reviews altogether because of two fixable pain points?
Rachel Drori: Annual reviews are anxiety-inducing for employees. And for leaders, it's disruptive to have to write thoughtful reviews for each of your direct reports all at the same time.
Can constant feedback be disruptive in its own way?
Fox: I would say that informal does not work at scale. The board of any company is going to want you to be able to tie individual employee performance to business outcomes. And that's nearly impossible if you don't have some objective, structured system.
Drori: Consistent, ongoing feedback is key. This way, employees don't feel like they're being reprimanded or praised for something that happened six months ago.
Do formal reviews discourage proactivity?
Fox: If you have a streamlined, objective process and you're training people and managers to engage in that process throughout the year, then you are going to have happier employees.
Drori: If something isn't working for you, it is your job to communicate that. I like to put it back on employees to manage that relationship and ensure that they are getting feedback that works for them.
Can more casual feedback replace formal reviews?
Fox: No. Employees want structure, and they want to understand how their individual goals and the work that they've contributed tie to their career success and compensation.
Drori: Yes. Creating one "capstone" moment often backfires. It is crucial to use year-end to set goals for the future. When feedback is given consistently throughout the year, the team knows exactly where they stand and can use that to influence future planning.
According to Gallup research published in May, formal processes aren't well received--fewer than 15 percent of employees strongly agree that their performance reviews inspire them to improve--and they're expensive. An organization with 10,000 employees can waste as much as $2.4 million to $35 million a year in terms of lost working hours.