As you head into the conference room for a QBR (that is, a Quarterly Business Review) with your most important client, your PowerPoint deck is pristine, your team has triple checked the metrics, and you have met nearly every goal for the quarter. Before you can even begin, though, your client says:

“Look, you’ve done a decent job the past few months, but that first campaign missed the mark on what we’re trying to convey about who we are now to our audiences.”

You might not say it out loud, but you’re probably thinking, “Well, that would have been nice to know three months ago, before we followed that campaign with two similar ones.”

Imagine how much worse you’d feel if this was an annual review and you’d been running off-the-mark campaigns all year. If, as a small business owner, you still rely on annual performance reviews to provide feedback to your own staff, then that’s how your employees likely feel.

Annual Reviews Are Outdated — Here’s Why They No Longer Cut It

When managers wait all year to give employees constructive feedback, everyone loses. The employee can’t use that feedback to improve, the manager doesn’t actively address what’s needed, and your business misses out on a more engaged, productive worker.

Plus, depending on your management style — and especially if you prefer to avoid confrontation — when you rely on annual performance reviews, you also risk allowing two very different realities to take hold:

  1. your perspective of your employee’s performance and
  2. their perspective of how they’re performing.

This situation is a breeding ground for performance review surprises. No one wants to receive them, and — let’s be honest — they’re not the most fun news to deliver either.

If you’re still on the fence about calling it quits with annual review systems, consider this: Disengaged workers negatively affect overall productivity, so this is no minor problem.

One way to engage your employees without spending a dime on new workplace perks is simply asking your managers to provide consistent, ongoing feedback.

Feedback Strategies to Complement (or Replace) Annual Performance Reviews

We’ve just dressed down a decades-old management practice — one that companies of all types and sizes rely upon to make important talent management decisions. We wouldn’t leave you without some solid ideas about what to do instead.

Use these three guiding principles as you craft an improved performance management strategy that works for — and supports — your company’s culture:

  • Aim to provide continuous, year-round feedback.
  • Focus on fostering actionable discussions between managers and employees (rather than doling out ratings).
  • Ensure that the feedback relates to employees’ development.

To cover these bases in your performance management strategy, consider including the following tactics.

1. Train your managers on how and when to offer real-time feedback.

Providing regular feedback won’t come naturally to everyone — even your feedback-seeking millennial managers. When you request that your managers provide feedback to their employees more often, give them guidelines on how and when.

  • If they have only a few direct reports, suggest they hold weekly one-on-one meetings. During these meetings, they can cover the nuts and bolts like workload and deadlines, and also use time to touch on employees’ goals and where they can improve. Managers can also provide time for the employee to ask questions.
  • For managers with larger teams or project-focused work, ask them to try project wrap-up meetings during which they provide feedback to the entire team and allow team members to share feedback with one another. The manager can then offer a time slot sign-up for individuals who want to discuss their performance one-on-one.

With time, your managers will grow more accustomed to observing employee behavior and performance, and they’ll become increasingly comfortable using those observations to deliver employee feedback.

Once you notice this evolution, suggest they move to real-time feedback. Giving employees in-the-moment feedback will help enable them to continuously improve.

2. Foster mentorship.

Use conversations around performance feedback as a segue into mentorship. Encourage your seasoned employees to consider what they have learned over their careers and how they can share this with employees who haven’t been in the workforce as long. You may even consider implementing a formal mentorship program.

Mentorship programs are not only for large employers like Google and Boeing. Your small business has much to gain from creating and strengthening these particular relationships. The act of mentoring reinforces important feedback loops and can benefit both the mentor and the mentee — as well as your organization.

3. Conduct “stay interviews” with your top employees.

Are there any employees on your roster whose resignation could incite thoughts like, “What on earth are we going to do now?” Invite them to a “stay interview” to help keep from ever having to schedule their exit interview.

Focus these sessions on two main things: why the employee stays with your company and what could lure them away.

To be effective, your employees must feel safe sharing their thoughts frankly, so explain to them why you want their feedback — to see how you can better support their specific career goals and to understand how your company can generally improve as an employer.

Once you’ve used their feedback to make positive changes, which shows sincere interest in their happiness at work, do you think they’ll be as likely to entertain another job offer?

If your annual performance review process can’t go away overnight, that’s fine. Maybe it shouldn’t, yet try to ensure that it doesn’t remain the one-stop shop for all formal and informal feedback.

Your workforce will perform at higher levels and be more engaged when your employees understand what you expect from them, how they’re currently doing, and how they can continue to improve. All of which will benefit from receiving your — and your employees’ — attention more than once a year.