Many companies provide only limited feedback to employees, generally in the form of infrequent (and intimidating) performance reviews. Numerous studies, however, show that this is an inefficient approach. According to Officevibe, 82% of employees appreciate both positive and negative feedback, and 43% of highly engaged employees receive weekly feedback. Good feedback practices produce improvements in motivation, performance, and retention, which lead back to your bottom line.
So, how does employee feedback positively impact profitability?
5 Ways Employee Feedback Improves Your Bottom Line
There are five ways in which employee feedback particularly helps improve productivity over time. They are:
Positive Workplace Environment
Regular feedback contributes to a strong company culture and a positive environment. It's important that feedback is constructive and does not entirely take the form of criticism (i.e., make sure your employees don't only hear from their supervisors when something is wrong). Feedback also needs to go in both directions. Not only should you provide feedback to your employees, but you should actively solicit it in return and ensure that employees are comfortable providing it. This means that there should never be any retaliation, even informal, based on negative feedback from an employee. Providing an outlet for anonymous feedback, such as a drop box or surveys can help get more honest results.
A study of bankers in Pakistan showed that employees felt they were more productive if they had supervisor support (43.7% agreed and 38.8% strongly agreed) and good relationships with coworkers (40.8% agreed and 36.9% strongly agreed). Feedback that goes in all directions and is kept positive and constructive supports these good relationships.
This then helps turn your company into an "employer of choice," increasing retention and reducing the cost of hiring, onboarding, and training new employees, as well as supporting institutional memory.
Taking feedback from your employees helps them feel as if they have been heard, and this increases their satisfaction with their job. Research by Oxford University's Saïd Business School showed that workers are 13% more productive when happy. Satisfied workers are also more likely to be engaged and fully present at work, less likely to find excuses to take time off, and less stressed (which also results in less absenteeism).
Because happiness tends to be contagious, satisfied employees create more satisfied employees and help bring new workers into the fold quickly. When everyone is happy and motivated, people have a stronger desire to come into work and to tell others that they like their job.
Employee satisfaction also creates better customer service. When satisfied employees interact with customers they bring that to the interaction and can use what they have learned to ensure that customers feel appreciated and heard. They are also less likely to be stressed by the inevitable complaints.
Honest, constructive, and regular feedback also increases your employees' trust in you, and this increases loyalty. In turn, this lowers voluntary turnover rates. Loyal employees are less likely to leave, and generally only move on if they have a very good reason (such as a family matter requiring relocation).
When they do depart due to a life change or retirement, they are more likely to be willing to give good training and feedback to their successor and very likely to share the job opening with qualified candidates in their own network. They will also assist in networking and referrals for other open positions, resulting in the recruitment of candidates who are good fits for your company culture.
One major problem with traditional periodic feedback, which can be as infrequent as once a year, is that errors go unnoticed. Employees may also find problems or inefficiencies, but be afraid to bring them to their supervisors.
With regular feedback, issues can be fixed quickly, allowing for greater productivity. Mistakes are less likely to propagate through the system. Managers and supervisors need to be willing to hear what employees have to say, and not merely play lip service to feedback.
While wanting to get home after a busy day is understandable, employees should be motivated and engaged. Low morale increases absenteeism, both amongst workers with low morale and team members annoyed that somebody is not pulling their weight.
People with low motivation become distracted by non-work activities and fold under challenge. One study by Gallup showed that highly-engaged business units have a 41% reduction in absenteeism, a 17% increase in productivity, and a 24% decrease in turnover.
Regular feedback helps workers feel appreciated by management, improves motivation and helps reduce absenteeism and presenteeism.
In other words, employer feedback (in both directions) translates to profit. It results in lowered turnover, increased productivity, and fewer errors. All of this means that your company has a stronger bottom line as well as being a much happier place to work.