Creating a Positive Feedback Loop in Your Business (With Examples)

A positive feedback loop is an important tool that companies use to improve processes, products and services. By ensuring feedback loops are in place, companies are better positioned to make smart decisions to improve overall profitability. Learn the benefits of positive feedback loops and the steps needed to start one in your own organization.

 

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What is a feedback loop?

A feedback loop is the process of using employee or customer feedback to improve company processes or products and services. At its core, a feedback loop is when the outputs of a system are used as inputs. In other words, any feedback your company receives can be applied to create some type of improvement, whether to internal processes and structure or to the products and services that the company offers.

 

Difference between positive and negative feedback loops

The main difference between positive and negative feedback loops is that a positive feedback loop in business is the process of gathering employee feedback, while a negative feedback loop focuses on collecting customer and client feedback.

 

Now let’s dive a little deeper into these two types of feedback loops:

 

A positive feedback loop occurs when a company listens to the constructive feedback or complaints of employees, with the end goal of improving processes, employee satisfaction and the company’s internal structure. Gathering employee feedback is valuable because the company can use that information to better the overall culture, which can boost workplace satisfaction and decrease employee turnover. Not to mention, improving employee happiness and engagement can lead to increased productivity and profits.

 

In a negative feedback loop, the company uses customer feedback to improve products and services. Because negative feedback loops oftentimes bring to light customer dissatisfaction concerns, this type of feedback loop can have a positive outcome. Overall customer satisfaction and loyalty is likely to increase, and customers often feel valued because their feedback resulted in positive change.

 

Benefits of a positive feedback loop

Employers and employees alike can benefit from positive feedback loops, as businesses take employee concerns and use them to improve workplace processes, operations and even company culture. Beyond helping employees feel that their opinions and needs are important to the company, companies can also benefit because positive feedback loops allow them to make improvements to the workplace that can increase profitability.

 

Here’s a closer look at some of the primary benefits a positive feedback loop can offer both employees and employers:

 

  • High productivity and profitability: When employees see that their feedback is taken seriously and creating change, they feel valued. Employees who feel valued are generally happier, engaged and more productive, which can make a positive impact on the company’s overall profitability.
  • Employee satisfaction: Similarly, when an employee feels that their opinions really matter to their employee, they’re more likely to enjoy their role and stay motivated to do great work. 
  • Open communication: Employees who feel comfortable going to their managers with questions or concerns — knowing their feedback will be taken seriously — builds strong working relationships and creates a culture of transparency.
  • Increase retention: When employees feel their opinions matter and that constructive criticism initiates change, they feel safe to communicate their honest opinions.

Ultimately, a positive feedback loop in business has the potential to create a happy workplace and culture that inspires loyalty, increases retention and drives business growth.

 

Related: How to Reduce Employee Turnover

 

Examples of positive feedback loops

A positive feedback loop for your company can be a formal process where you actively seek feedback from employees, or you could have an informal, ongoing process where employees can submit feedback anytime.

 

Here are a few examples of what positive feedback loops look like in the workplace:  

 

As an employer, say you receive feedback from your employees that they don’t feel united because of an environment of unhealthy competitiveness. A way to address this concern and unite your team could be by suggesting that every employee shift their focus to a few shared goals, and assigning each individual a specific task or project.

 

While it’s fairly easy to see how a positive feedback loop can be transformative when you’re addressing a toxic work environment, it can be a bit more challenging to see the value it brings when you already have a positive environment. However, it can still add value.

 

For example, studies show that professionals who feel a strong sense of purpose in their jobs are happier in their work. Naturally, employees who are happy and have a sense of purpose are going to feel more connected to their company and are more likely to be productive and produce high-quality work. Recognizing this, you could have a goal of increasing the sense of purpose in the workplace. 

 

Start by asking employees what value they bring to the world and what they believe are the unique elements of their work and their company. By asking these questions of all stakeholders and employees, you’re better able to get a complete view of what your unique skills are as a company. With this information, you can identify a corporate mission, values and purpose, and then identify specific actions needed to make those visions a reality. 

 

Related: Employee Satisfaction Surveys: What They Are and Why They’re Important for Your Business

 

Steps to create a positive feedback loop

There are 10 basic steps you can take to implement a positive feedback loop in your company:

 

1. Hold quarterly meetings with employees

Speak with team members individually each quarter to learn about their career goals and what skills they would like to develop. Find out how you can help them grow. During this meeting, ask them for feedback on the company and culture as a whole and if they have any suggestions for improvement.

 

2. Identify pain points

Every positive feedback loop should start with research and an assessment of what the pain points generally are. Based on the demographics of your employees, company structure and types of responsibilities that your employees have, your feedback loop should help you better understand your team and their abilities, from technical knowledge to soft skills.

 

Then, identify which areas are the greatest pain points for employees. For example, if your company frequently launches new products for consumers and works under tight deadlines, you may want to create a feedback loop that explores productivity levels, how your employees are managing stress or even how confident they feel about their creative thinking skills.

 

3. Gather information 

Use surveys, conversations and team meetings to maintain a strong understanding of your employees’ experiences. When sending out surveys, use non-judgemental, scale-based questions for 90% of the survey. By asking employees to rate on a scale how they feel, you can better identify trends among your team. For the remaining 10% of the survey, provide open-ended questions where you ask them to go more in-depth about their experiences. 

 

Or, consider using 360-degree feedback, a process where leaders or employees can receive confidential feedback from those who work with them. This is where around eight to 12 people fill out an anonymous feedback form that asks questions about the individual’s workplace competencies. While these surveys are often used to help employees better understand their strengths and weaknesses, managers and leaders can also use them to better understand their own performance. 

 

Many companies might reserve this strategy if they believe there is a leadership concern, but by using annual 360-degree feedback, you can create a feedback loop. This shows employees that you are committed to listening, making positive changes in the workplace and providing quality leadership.

 

Be intentional about gathering information, specifically from new hires. Consider using written questionnaires distributed by your HR department on an employee’s first day at work or during the onboarding process. Ask the employee to turn the questionnaire in by the end of the week as a way to evaluate their experience. Encourage them to be candid about their first week and let them know you value their feedback.

 

Some questions you may want to ask include:

 

  • Have we given you all the resources you need to do your job effectively? If we haven’t, what other resources would be useful?
  • Would you make any changes to the onboarding process? If so, what?
  • What do you enjoy about the job so far and what would you like to change?
  • Do you feel comfortable going to someone with questions? If so, who?
  • Do you feel like you’re valued as a team member?
  • Do you get along well with your team?
  • Is there anything you don’t understand about the job or company? 

Remember to continue communicating openly with your new hires throughout the first 60 days of their employment.

 

4. Analysis

Once you collect feedback, it’s time to analyze it. Write down the employee feedback you’ve received and compare it with your company goals, values and mission. Based on that feedback, determine whether your company is meeting the vision that you have for it or whether you need to make changes.

 

The process for managing feedback — whether positive or negative — is critical. It’s important to have a system in place for sending feedback to the right person who can both evaluate it and create a strategy for how you will respond. To do this effectively, you may need to have technology in place designed to collect and store feedback, and a formal process in place for evaluating it.

 

5. Establish a culture of listening

While the formal process of soliciting feedback is important, you should also establish a culture of listening. If your employees feel that they can safely voice their concerns or criticisms without fear of reprimand, then they’ll be more likely to express feedback in the future. In general, employees need to understand that they are heard and that their employer takes their opinions and concerns seriously. 

 

By establishing a culture of listening, employers can have a big impact on retention, productivity and even innovation. It’s important to spend time training leaders on how to ask questions and actively listen when their employees are speaking to them. This training should be treated as an important part of the process of onboarding new managers.

 

Related:  7 Effective Skills to Help You Become a Better Leader

 

6. Speak to your team daily

Managers can show employees that they value their needs by checking in regularly and asking if they need help or support. Asking these types of questions builds trust and increases the likelihood that they’ll be honest and direct.

 

7. Appoint an employee advocate

Another way to encourage employee feedback is by appointing an employee advocate, a person all employees can go to with their grievances. In return, the employee advocate will pass negative feedback along to the appropriate manager.

 

8. Train your direct managers

A company’s strongest connection to its employees is through direct managers as they have the greatest impact on employee engagement. They also play a big role in how their teams view the company overall. For this reason, it’s important to spend time training and developing direct managers so that they nurture employees as well as reflect the behavior and culture you want to create within the company.

 

9. Act on feedback

You want your employees to continue giving feedback (whether positive or negative) and to feel valued by the company. This means that they must see action taken based on their feedback. A good idea is to start with the greatest pain points at the company. The first changes you make should be based on that feedback if you want for greatest positive impact. 

 

Related: What Does “Good Management” Even Mean? 

 

10. Communicate your changes

Communication is critical. Sharing changes with employees — changes made as a result of employee feedback — shows your team that you’re listening and actively problem-solving. Not only that, there’s a greater chance your workers will continue giving honest feedback because they know you’re listening. All of this can have a big impact on morale, productivity and company profitability.

 

How to evaluate feedback loops

Positive feedback loops help promote a culture of mutual trust and transparency, increasing morale and encouraging retention. In order to assess the effectiveness of your positive feedback loop (and understand steps you can take to enhance it), it’s important to gain more insight by evaluating some key measures:

 

1. Evaluate the impact on key business priorities

By acting on the feedback that you get from employees, you should see measurable differences in performance. That could mean:

 

  • Increases in tasks completed daily
  • Better quality of work
  • Completing projects in less time than projected 
  • Exceeding company goals
  • Improved ROI when comparing labor costs to profitability
  • Better customer service 

Identify the key metrics that are most important to your business and evaluate how they changed after you made the changes.

 

To gauge employee satisfaction levels, you may also want to look at:

 

  • Employee attendance and how it shifted after making changes
  • How retention rates changed after making the changes
  • Decrease in mistakes 
  • Increase in positivity among teams 

Even if you don’t see a significant change in company performance metrics right away, look for signs of increased employee morale. If you see signs that employee satisfaction has increased, you can feel confident that you will see an improvement in company performance over time since morale, productivity and profitability are closely linked.

 

2. Examine the speed of the feedback loop

The faster you’re able to gather feedback, analyze it and turn it into direct action, the faster you can impact employee satisfaction and morale. Examine whether there are ways you can shorten the feedback loop and act on concerns more quickly.

 

3. Ask for feedback

Another way to evaluate the effectiveness of your feedback loop is to ask directly. You can use an anonymous survey to gauge your employees’ satisfaction level after the changes were made. Ask whether they feel their needs were met or whether there’s more that can be done. You can also use this approach to gauge their overall job satisfaction. Use a scale to have them rank how they feel after changes were made and whether they feel more positive towards the company, culture and their managers as a result. 

 

In addition to an anonymous survey, have direct managers ask for individual employee feedback to determine how effective they felt the experience was and what, if anything, they would like to have been done differently.

 

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Last updated: Nov 30, 2020