If you asked for a ranking of awkward situations in the workplace, the “annual performance review” would appear at the top for many of us. Every year, millions of managers and employees sweat over seemingly endless bureaucratic forms. They are uncomfortably rating each other in countless categories – ticking boxes and handing out meaningless stars – with the goal of defining promotions, new job titles, and maybe a salary increase. Performance reviews (or “appraisals”) are almost unanimously seen as tedious, uncomfortable and awkward exercises.

In fact, recent research shows that a whopping 86% of organizations are unhappy with their “performance management” system. At the core, three problems prevail:

  • Lack of honest, constructive feedback: The hierarchical structure of performance reviews makes it difficult and awkward to be honest – hardly anybody wants to damage the career of a colleague by being too critical. Unfortunately, constructive criticism that helps us grow therefore often remains concealed.
  • Recency bias: Due to the infrequency of reviews, it is often difficult to remember relevant feedback. Managers tend to focus on the past few weeks, thereby creating a strong (and often unfair) “recency bias”. On the flipside, employees are left in the dark regarding their performance for long periods of time. Unsure where they stand, they are at risk of becoming demotivated and less productive.
  • Lack of development focus: Most importantly, the main goal of performance reviews in many organizations is the determination of career progress, the endowment with job titles and the occasional salary raise. Personal development and discovery of potential is merely a by-product.

The last point shows that an outdated performance management system is only the tip of the iceberg – underneath lingers a much deeper problem: At times of accelerating technological change and automation it will be more important than ever for employees to continuously learn new skills and adjust to a radically changing workplace.

Millennial employees – who will make up more than 50% of the global workforce by 2020 – have already recognized this: According to a recent study by PWC, more than 50% say they want “very frequent” or “continuous”, development-oriented feedback. A more feedback- and learning-oriented culture will be crucial for companies to succeed in this environment.

We are convinced that this demands a new and very different approach to performance feedback. With Leapsome, we’re building a platform for continuous, development-oriented peer feedback. Our approach is defined by:

  • Ownership by the employee: The employee is able to request feedback from anyone, regardless of hierarchy, for a more holistic and balanced perspective. Automatically aggregated key insights about personal strengths and development areas are directly (and if desired: only) channeled to the employee. At the same time, managers are able to make better people decisions by catching up on feedback they have given over longer time periods.
  • Real-time feedback: Once or twice a year is not enough. Feedback is given whenever the need arises and becomes a regular part of the communication culture. Giving feedback is recognized as something helpful, not as something awkward. Smart nudges help to balance feedback and make sure that digital feedback triggers actual, real-life conversations.
  • Continuous learning: Driven by aggregated insights, a smart feedback system must ask “so what?” and propose just the right learning material for every employee to help them continuously build a stronger skill set. Complementing this, aggregated team analytics help managers to better understand and effectively coach their teams.

We’re very excited to be working with the first group of companies and are looking forward to an exciting journey ahead, transforming feedback from an awkward procedure into a simple and fun enabler of continuous learning.

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