As a manager, maximizing the return on investment (ROI) of just about everything you do is critical. Making sure the company earns more money than it spends is crucial to your success.
That’s a good reason to implement a continuous performance management system. Doing so will allow you to give employees regular feedback. Research indicates that doing so has a very positive impact on your ROI.
Reducing Turnover Rates
Hiring a new employee can be costly; you need to devote time and resources to training them. If they’re taking the place of a former employee, their performance likely won’t match their predecessor’s right away. This can result in a loss of revenue until the new worker reaches a certain skill level.
That’s why managers need to work hard to reduce turnover rates. One study indicates that hiring a replacement worker when an employee leaves a role can cost as much as 33% of the previous staffer’s annual salary.
According to Gallup, providing feedback and being sure to highlight an employee’s strengths is one of the most effective ways to improve retention. Employees are more likely to remain with a company if they feel their accomplishments are appreciated and are provided with support when they’re struggling.
Constantly Improving Performance
Feedback can’t merely take the form of annual reviews. Surveys indicate that 95% of workers aren’t satisfied with the performance review processes of their employers. Furthermore, 90% believe these processes don’t actually yield any useful information.
Managers should agree. If an employee isn’t living up to their full potential, giving them one opportunity a year to discuss where they need to make improvements isn’t going to be enough to encourage a major change.
On the other hand, offering regular and continuous feedback gives both you and your employees the chance to address issues early. This means their performance will improve sooner rather than later, bringing in more revenue for the company and making the employee feel more engaged.
Your staff are an investment. Engaged employees, who are actively committed to doing the best work possible, offer the greatest return on that investment.
Unfortunately, Gallup reports that 85% of workers throughout the world are not engaged with their work; many are even actively disengaged.
You don’t have to fall victim to those statistics. Polls indicate that communication within the organization boosts overall engagement. Giving both positive and negative feedback lets your workers know you appreciate their efforts and will help them succeed if they are having difficulties in a particular area. The result is a more committed team that will perform much more consistently.
That said, it can’t be stated enough: feedback must be continuous. Employees have made it clear that meeting with a supervisor once or twice a year for a review provides little value. If you truly want your workers to deliver a positive ROI, make sure you’re regularly checking in. Doing so is key to improving your bottom line.