Employee engagement is directly dependent on the feedback they receive. Managers give feedback to employees to alter their behavior and develop them. But when the feedback is given with much delay it leads to no or minimum impact or change in behavior. Various surveys have indicated that regular constructive feedback improves employee engagement and in turn enhances organization’s productivity,

Organizations need to focus on employee engagement to improve profitability because:

  • Employee engagement is directly proportional to the constructive feedback they receive.
  • Constructive feedback is the best way to motivate employees and increase their productivity.
  • If employees are not engaged with the organizational goals, they tend to leave their job for a better opportunity.
  • Lack of employee engagement can lead to increased costs for the organization in terms of time, efforts and resources.
  • Profitability of an organization is directly related to employee productivity which in turn is directly dependent on employee engagement.

Organizations operate with the aim to be more profitable but the same cannot be achieved if the most important resource i.e. humans is not managed well. Employee feedback and engagement can go a long way to increase profitability of an organization. A continuous, 360 degree and technology oriented system can help organization improve productivity and profitability with minimum efforts.

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A continuous feedback system is the backbone of effective communication within an organization. Specific, timely, and constructive feedback can help under-performing employees improve their performance; top employees feel more engaged and prevent problems of under-performance for the company.

Employee feedback is the process of giving constructive suggestions to employees by their supervisor, superiors, managers or peers. Like any other relationship, the employee-company relation relies on a continuous two-way communication.

Traditionally, feedback was given annually or at the most bi-annually. However, they would prove to be too late and would cost the company time, money and resources. If feedback is given as and when needed, it could save the organization cost on time, effort and resources. Various studies have borne out this critical importance and impact of timely feedback.

In fact, stats show that 96% of employees want to hear regular feedback rather than only at quarterly or annual meetings. It is also impossible for mangers to remember each and every feedback for their subordinates for a year before conveying. When focus is on the year by-gone and not recent events, it results in unfair review process for the employee.

Did you know that 45% of HR leaders feel that for performance appraisal based on annual performance reviews are not accurate?

When employees better understand their job, they will perform better and hence increase the overall productivity of the company. A company with enhanced productivity of the workforce becomes more profitable.

A recent survey found that organizations with highly engaged employees tend to have 21% higher productivity and achieve 22% greater profits. And all this can be achieved with a 360-degree performance management system that emphasizes on an all-round and continuous feedback approach.

Companies, whether they are small, medium and large can take advantage of a regular, systematic and technology driven employee feedback system to enjoy the following benefits:

1) Improved Productivity

Feedback when given at shorter frequencies helps employees course correct and move progressively towards their goals. Such opportunities are unlikely to materialize in an annual review setup as it tends to become more of a post mortem of employee performance with little chance of bringing about a change. Shorter review frequency coupled with weekly/monthly conversation opportunities drive employee performance helping achieve organizational objectives.

Employee Productivity

2) Open, Free Flowing & Multi Directional Communication

Effective feedback ensures that the communication is a two-way street. Not only should managers be able to give feedback to their direct reportees or subordinates but employees should also be able to share feedback with managers, though the mechanics to facilitate the same needs to be designed differently to be more effective. A study shows organizations where managers received feedback on their strengths showed higher profitability by 8.9%.

Employees show increased productivity when provided with constructive feedback and the same is true for managers too. This indicates that the overall organization’s productivity is enhanced by using regular 360 Degree feedback mechanism.


3) Customized Employee Developmental Plans

Every employee has a unique set of skills and behaviors. This means that one-size-for-all approach cannot be deployed for professional development of employees. By providing an open culture for regular feedback, businesses can put employees in the driver’s seat for their own development aligned to organizational priorities. Encouraging employees to seek feedback after completion of sizable projects or other important deliverable will ensure that right directions are provided to the feedback seeker. This leads to higher motivation and productivity.

Employee Development Plan

4) Enhanced Employee Engagement

Employee feedback is directly proportional to employee engagement. In fact, a survey found 72% of employees consider recognition as a valuable factor to increase engagement. Incidents of such positive feedback fueled by recognition provide an opportunity to acknowledge & appreciate employees for their efforts that contribute to the organization’s success.

Some statistics that show employee feedback has a direct relation with performance and profitability:

  • Companies with higher employee engagement have 21% more profitability
  • Companies with high employee engagement saw 37%% less absenteeism
  • Companies that invest in regular employee feedback have 14.9% lower turnover rates than those where employees don’t receive any feedback
  • 69% of employees agree to working harder if their efforts were recognized
  • 80% of employees preferred on-the-spot recognition over formal reviews


Employee Engagement

To better understand a feedback system, let us look at the various feedback types in an organization:

Praise or Positive Feedback

Praising your employees or giving them positive comments on their work or performance is shown to have a positive impact on their behavior and future performance. Positive comments lead to self-confidence and self-efficiency which enhances motivation and improves performance.

Recognition of employee efforts is a great example of positive feedback.

As per a survey by PwC, nearly 60% of employees surveyed on feedback wished for daily or weekly feedback.


Constructive Feedback

Feedback that is information specific, focused on key issues and observations is known as constructive feedback. Constructive feedback is specific to the issues an employee is facing and by sharing their observations managers can help the employee resolve the issue and improve his/her performance.

63% of Gen Z surveyed prefer to receive timely and constructive feedback throughout the year. (Source: prnewswire)

Constructive Feedback can be divided into four categories:

  • Positive Feedback: Observations on what the employee did right in the past and should continue in the future contribute to positive constructive feedback.
  • Positive Feed-forward: When feedback is directed to change or improve future performance or behavior its part of positive feed-forward.
  • Negative Constructive Feedback: Comments that focus on correcting unsuccessful past behavior or things that shouldn’t be repeated in the future comprise negative constructive feedback.

92% of respondents agreed that when negative feedback is delivered appropriately, it is more effective to enhance performance.

  • Negative Feed-forward: When feedback is focused on any behavior that should be avoided in the future, it relates to Negative Feed-forward.

Teams where the manager focuses on the weaknesses of the team are 26% less likely to feel engaged.

Continuous Feedback

Below is a list of effective Feedback tools that modern organizations should use: 

Social Recognition

Recognition when done socially has a multiplier effect on the employee being recognized and other employees who are becoming part of this social celebration. Such appreciation reinforces the employee behaviors and translates that to habits when done repeatedly. Social recognition helps break organizational silos and helps in sharing positive feedback on the click of a button.

Agile Performance Reviews

When employee performance is reviewed at shorter frequencies (monthly/quarterly) it gives manager the opportunity to share feedback for timely course correction towards employee goals. This timely feedback benefits both the employees on his goals and the organizational productivity.

Real Time & Continuous Feedback

Organizations that invest in technology driven continuous feedback-based performance management perform better for multiple reasons. It provides both the manager and the employee the opportunity to interact at shorter frequencies. Such frequent conversations minimize the friction usually associated with annual performance reviews and becomes more developmental focused over the course. It helps Line Managers become better People managers who can influence greater productive outcomes.


Check-ins are another popular tool used by successful and modern organizations where managers are able to give feedback on employee’s qualitative assessment.

Incident Management

Incident are a form of feedback that are not necessarily shared with employees but act as a feedback journal for Managers to reflect back on all incidents recorded for an employee for a holistic review.

360 Feedback

This is a modern tool for organizations to effectively assess an employee for competencies. Its advantage lies in its ability to take feedback from all dimensions of an employee’s existence in the workplace. The feedback could be gathered from seniors, peers, subordinates and even external stakeholders like customers. This is a very powerful medium for all around assessment of an employee.

Did you know that 58% of companies believe performance management process is not an effective use of time?

Managers who don’t provide adequate performance feedback cause at least 24% employees to leave their job. This in turn results in extra cost on new hires for the organization. (Source: Globenewswire)

Lack of engagement can impact the overall profitability of an organization by increasing costs and decreasing motivation of employees and their productivity.

81% of employees will consider leaving their current job for the right offer, even if they are not actively seeking new opportunities. While 68% of employees feel encouraged to do their job if they receive accurate and consistent feedback. Low employee engagement costs companies around $450 to 500 Billion each year.

(Source: Hays, Clutch)


Employee engagement can be achieved through constant interactions and steps to motivate them in the right direction.  Annual reviews are outdated and have been recognized to be detrimental to employee engagement. Organizations today need Agile, Continuous and 360 degree based performance management systems that allow consistent, timely, constructive and positive feedback to the employees. According to recent reports, employees are 3X more engaged when their managers maintain regular communication.

To be more profitable, businesses need to focus on increasing employee engagement through real time, continuous and 360 degree based digital feedback systems. Improved engagement leads to enhanced productivity which in turn increases the profitability of an organization. Not only that, but organizations which focus on improving employee engagement have better customer ratings, lower employee turnover, higher quality of workforce, increased productivity and less absenteeism.

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