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Why Businesses are Bad at Employee Feedback
by Daniel Kehrer
June 13, 2024
Female manager speaking with employee

“Common knowledge” has it that smaller businesses with fewer employees have an easier time communicating internally than bigger businesses. But that’s not necessarily the case, according to a recent survey by Clutch, a Washington, DC-based firm that combines traditional business-to-business research with consumer review type services.

According to Clutch’s research, most small businesses struggle with internal communications – especially providing good employee feedback.

That’s a problem because it damages the perception that working with a more close-knit group of workers and managers at a small business or startup is more alluring than working for a big, bureaucratic business.

What this research suggests is that business owners must understand just how important workplace communication is to engaging and keeping good employees. For example, the survey found that half of the employees who do not receive accurate or consistent feedback find their jobs unfulfilling. By contrast, only 18% of employees who do receive accurate and consistent feedback say they are unfulfilled at work.

These results demonstrate what many successful business owners already know – that employees who feel acknowledged and appreciated are more likely to perform better and stick around.

Most Common Types of Feedback

At large companies, verbal feedback is most common, usually provided through a formal review process of some kind. About 57 percent of enterprise businesses use this, while about 37 percent offer informal, ad-hoc feedback. A few use other methods, including online systems, or don’t provide feedback at all.

According to Clutch research, however, small firms and startups offer far less feedback across the board. Only one-third of small businesses say they offer regular verbal feedback. And a troubling 42 percent of small business and startup employees say they receive no feedback at all from their managers.

That’s a big “whiff” by those small businesses and a missed opportunity since feedback and recognition are hugely powerful at keeping people engaged and productive.

What You Can Do

If your business is light on feedback and generally communication-challenged, take immediate steps to install a feedback and recognition system of some type. Formal or annual review procedures are a thing of the past and considered less effective than a process of providing regular, “real time” feedback throughout the year. 

The problem is this: Companies that forego annual reviews aren’t putting an ongoing feedback loop in place. Only about one in four companies say they provide the regular, yearlong feedback employees prefer.

According to Clutch, one of the quickest ways to improve is to offer a more diverse range of feedback and evaluation types and encourage all managers to use them.

The good news is that feedback and recognition are relatively easy to get started. Verbal feedback can begin at any time, and more formal recognition systems can be designed and implemented within a few weeks or months.

Today’s younger workers – including millennials – prefer working for small businesses and startups for a more personalized work experience. But without feedback and recognition, they won’t feel fulfilled and aren’t likely to stay.

How to be Better at Feedback

The Clutch survey also found that – according to employees – small business managers are less adept at providing good feedback than their enterprise counterparts. Employees rated feedback at small businesses to be both less frequent and lower quality than feedback at big companies.

That happens for several reasons:

  1. Lack of time.
  2. Not recognizing a need for improvement.
  3. Failing to provide feedback on the right things.

It’s up to business owners and startup entrepreneurs to establish a culture of providing timely feedback and recognition. This includes offering managers training so they are comfortable with the feedback process. In the end, employees don’t leave jobs or companies they leave bad managers.

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About the author
Daniel Kehrer
Daniel Kehrer, Founder & Managing Director of BizBest Media Corp., is a nationally-known, award-winning expert on small and local business, start-ups, content marketing, entrepreneurship and social media, with an MBA from UCLA/Anderson. 
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