“Feedback culture”: those two words might paint a nice picture, but what is that picture really worth? And how can you figure out what it means for your business?
Put simply, a great feedback culture is a work culture where employees are actively encouraged to give each other feedback on a regular basis. Importantly, this feedback should be both positive and constructive; learning-oriented rather than disciplinary; and multi-directional rather than exclusively top-down.
There’s a wealth of evidence supporting the benefits of feedback culture on business, whether we’re talking about a small start up or a corporate giant like Google. One thing is clear: a culture of healthy feedback fuels employee engagement, and high employee engagement boots employee retention and productivity.
If it’s broke - fix it
Old feedback systems relied on the annual performance review to tell employees how they were doing. In the 20th century, this approach worked (or didn’t, some would argue). But in an age that pivots on rapid communication and information exchange, circumstances have changed dramatically. Job requirements are continuously being revised, meaning that employees need to learn faster; project periods can be much shorter; and our workforces are increasingly dominated by millennials who are eager for professional development. In these respects, once-a-year feedback talks are outdated. People struggle so much with the annual performance review that…
- 95% of managers are dissatisfied with it
- 210 hours are being spent on performance management by managers each year
- ...and it turned out there isn’t even any correlation between individual annual performance ratings and business results!
Enter continuous feedback
Some companies, like Deloitte and Adobe, began to take note. They decided to scrap annual performance reviews in exchange for something more regular and less clunky: a culture of regular feedback in the workplace. That decision yielded positive results. In fact, recent studies show that regular feedback brings
- Employee turnover down by 59%
- Absenteeism down by 41% (saving 20% in payroll costs)
- Individual performance up by 39%.
- Leadership effectiveness up by 71%
And as well as improving the well-being of employees across different company levels, continuous feedback fosters employee engagement, leading to
The impact on profit is real
Let’s look at some simple calculations and example figures. Say you had a company with 200 employees making an average of €50,000 a year; your annual revenue is €15m and your turnover rate is 25%. If you invest in creating a strong feedback culture, you could reach roughly €6M in savings and productivity gains… still think it’s just another nice-to-have?
With the global workforce facing big changes in the next few years, retaining, engaging and developing employees is a priority. 90% of leaders agree that an engagement strategy has an impact on business success, and it’s the real innovators who are already working on that strategy.
A healthy feedback culture is not a luxury - it’s an investment in your company’s productivity. For more information, read Leapsome’s blog post on how to successfully implement feedback culture at work.