Patti Dunham, MA, SPHR, SHRM-SCP; Director of Business Strategy, Clark Schaefer Strategic HR

Alisa Fedders, MA, SPHR; Director HR Services, Clark Schaefer Strategic HR

Most people don’t love performance reviews. In fact, according to Leadership IQ only 13% of employees and managers find their performance evaluation system useful. So why do we continue to put ourselves through the annual process? The problem isn’t the feedback itself, but rather the formal, time-consuming way it is delivered, leading many business owners to question whether annual evaluations are necessary at all.

Although not everyone agrees on how, we do agree that performance conversations are necessary to grow and improve. The better approach is a shift toward continuous feedback and a coaching‑based leadership model. Performance management should not be an event—it should be an ongoing conversation that supports development, engagement, and results.

Limits on Traditional Systems

• Annual reviews focus on past performance and do not match the pace of the business. Rapidly evolving work and a look back at performance long after the work was completed is too late to influence behaviors or outcomes.
• Traditional systems lack cohesiveness because of the conflicting individual vs. organizational perspective. The organization is concerned about productivity, retention, and equity and the individual is concerned about their impact, development and rewards.
• Reviews feel personal (because they are). In small businesses, workplace relationships are often layered, including long-term employees, family members, and leaders who grew up in the business. Formal reviews can feel like a threat to these relationships.

Coaching-Based Leadership – What It Means and Doesn’t Mean

Ongoing, timely conversations about progress, priorities, and development are the most valuable form of feedback—and they already reflect how many small businesses operate today. Coaching‑based leadership is just that, but more intentional, shifting leaders from evaluators to coaches while walking the floor and doing regular check-ins. Leaders set clear expectations early at onboarding and use that to anchor subsequent conversations, supporting employees through regular check‑ins, thoughtful questions, and real‑time guidance.

You may be thinking there is no time for this approach, but not making time for feedback is already costing you time. Regular, intentional feedback reduces the need to fix issues later, improves engagement, clarifies expectations, and strengthens alignment between organizational goals and individual performance – all while fostering an atmosphere of trust, transparency, and continuous improvement. A shared‑accountability approach further increases efficiency by encouraging employees to reflect on their progress in advance, making conversations more focused and productive. Technology also plays an important role in supporting the process by reducing administrative burden while capturing key conversations and documenting them—all reinforcing a strong coaching‑based leadership culture. Technology can support this approach by:

• Helping you remember. Tools such as Word dictation and even OneNote will allow you to capture quick notes immediately after a conversation.
• Identifying themes – including strengths, challenges, and goals through AI-assisted analysis from your documentation notes.
• Encouraging consistency by prompting regular, ongoing conversations.
• Supporting balanced feedback by ensuring both positive and constructive inputs are addressed.

Performance management doesn’t have to be a rigid system—it can be a natural part of how you lead. By normalizing regular feedback, documenting key conversations, and simplifying formal processes, leaders create clarity without bureaucracy. When coaching and feedback become part of everyday leadership, performance management shifts from an obligation to meaningful support. At its core, this approach shows your people that you care enough to invest in their success and sends a clear message that they matter.