Why Is Employee Feedback Key To Business Success?

From product to service focuses, from B2B to B2C and everything in between, employee feedback is critical for business success. But you can’t stop there. Understanding why employee feedback leads to better businesses and the best practices for employee feedback management are just as important. So, let’s run through the basics of how to understand and manage employee feedback for business success.


How important is feedback in the workplace?

There’s a reason the Toyota Production System was so revolutionary, it was centered around finding problems early in the process and resolving them before they ended up in final products. Employee feedback is a bit like that, it’s a way for you to gather data, make better decisions about managing your employees and running your business, and address potential issues early on.

So instead of waiting for customers to complain about your cars, or for your employees to start leaving your company because you’re not addressing their concerns, you need to learn about and react to problems as soon as possible.

What is the employee feedback cycle?

Employee feedback can’t be a one-time event. To be effective, it needs to be regular and cyclical. That means gathering feedback, analyzing it, taking actions based on it, and communicating those actions to your teams all on a regular schedule. That schedule and frequency is vital because a Pulse Survey found that “28% of employees report that feedback is not frequent enough to help them understand how to improve.”

Imagine trying to learn to play a complex game but only getting feedback once every few months. In that context, infrequent feedback sounds a bit absurd, but it’s been normalized in most workplaces and so goes unnoticed. This is why you need a regular cycle so employees know that their feedback is taken and responded to frequently, allowing them to improve and feel more listened to.

Understanding the importance of employee feedback

What does all of this add up to? Employees who give and receive regular feedback are more engaged, motivated, and simply perform better. Managers also have better awareness of the dynamics, strengths, and weaknesses of their teams, allowing them to make better management decisions. It’s the building block of a virtuous cycle of awareness and improvement for teams and organizations.

How employee feedback affects your business objectives

Motivation, efficiency, and performance are all great, but truly appreciating the impact of employee feedback requires understanding how it relates to specific business objectives.

Lack of feedback is expensive

Often, managers will respond to poor employee morale or dysfunctional teams with some combination of greater perks and team-building. Often, these end up being an expensive combination (not to mention the costs of poorer overall performance as already mentioned). Going back to the car analogy, this is like recalling vehicles instead of identifying and handling problems in the factory. It’s cheaper to use employee feedback early on instead of trying to deal with disgruntled employees later.

Lack of employee engagement translates into lack of motivation

Most of us have had a “dead-end job” at one point or another, but sometimes a more prestigious job can feel just as demotivating. Often, managers will assume that an employee understands the value they bring to the team. Often though, motivation issues can hide under the surface and gradually chip away at engagement and productivity.

However, with regular engagement, managers can get ahead of these problems. When employees have frequent times to give feedback and discuss how they feel in their work, they’re far more likely to voice and address motivation issues. Plus, they’re more likely to feel valued, listened to, and motivated to begin with.

Good feedback means good communication

You can’t forget that the process of creating an employee feedback cycle goes beyond the one-on-one relationship between a manager and employee. It helps to create a culture of openness, feedback, and continuous improvement. So, instead of infighting, jockeying for position, secrecy, etc. and all the accompanying costs and headaches, you can have a more open and effective organization. 

In this era of data-focused organizations, a culture of openness and communication also translates into a situation where it’s easier to gather quality data about your organization. You can feel more confident in the accuracy of internal interviews and surveys, so you can make better decisions with confidence.

How to manage employee feedback

Much like with data, you don’t want to simply gather as much feedback as possible and worry about what to do with it later. You need to be ready to analyze and understand all of that feedback so you can use it to make quality decisions. To do that, you need a combination of HR and statistical experience which comes from extensive experience in managing employee feedback. So consider whether you have the resources necessary to manage that feedback before you begin gathering it.