The traditional system of annual performance reviews is no longer the best option for the modern workplace. Teams and leaders now understand the value of collaboration on all levels instead of solely relying on top-down communication. Small businesses of all kinds need to analyze their approach to performance management and adapt their culture to current expectations.

Making changes to your company’s performance management practices is a great way to invest in your talent and get the best possible results from each employee. Just as agile HR techniques are essential for finding A+ talent, a similar kind of agility should be utilized for performance management purposes. Yearly feedback has been proven to be an outdated method, but many businesses continue to use this approach because they don’t know a better way. 

Move to Continuous Feedback

Continuous feedback is the most popular and effective alternative to the annual review, which gives employees the chance to give and receive more targeted feedback. The performance management revolution has stopped viewing evaluation as a one-off event and started approaching this process as part of the regular workday. It turns out that employees actually desire more feedback, not less. 

Employees appreciate having a voice in the feedback process, and peer feedback is often just as helpful as top-down evaluation. More and more businesses are moving to continuous performance management and leaving traditional strategies behind.

Work with a PEO

Professional Employer Organizations, or PEO, help small businesses keep up with industry trends. Your PEO will work with you to promote engagement and develop a performance management solution that works for your company.

These organizations have the experience and resources necessary to implement a new system while dealing with any challenges that come with the changes. If you don’t have a PEO, consider looking online for a performance management application that will facilitate more open communication.

Focus on Employee Recognition

Employees are more motivated when they feel that their efforts are recognized by the rest of the team, so it’s important to prioritize programs that reward strong performance. Recognizing employees doesn’t necessarily have to mean awarding with a tangible prize, although that can be a great tactic.

By showing appreciation for your employees, you’ll play a large part in raising motivation and productivity levels across the board. Everyone desires to feel seen and valued, and by continually voicing your acknowledgments in real-time, your workplace will begin to adapt into a culture of appreciation. 

Improve Your Company Culture

Performance review practices are an important element of your company culture, but creating a successful work environment is a large-scale process. Adopting continuous performance management can help lay the foundation for more efficient HR practices and a more communicative workplace.

Changing your company culture can make you a more attractive option for the best talent and increase employee retention. A strong culture gives everyone a voice in company decisions and establishes shared values that motivates everyone in your organization.

Annual performance reviews are inefficient and one-sided compared to continuous performance management, and small businesses should be examining their practices to adapt to the needs of modern employees. These ideas will help you start developing better performance management strategies that work for your entire organization.