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A practical look at building and implementing your perfect performance management process.

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5/20/2020
3 Types of Employee Review Questions

You’ve been tasked with creating a series of questions for the upcoming performance checkins. If this is the case, you might be asking yourself where on earth to start. Gathering some information about the review and the goal of those questions can help you narrow down your options. Before you begin, determine what type of questions you will ask by answering this one first:

What’s the purpose? Are you seeking information, making plans, or trying to change behavior?

Acquiring Information and Insight

Whether you realize it or not, the questions we ask serve a purpose. Most likely, if you are conducting a review, you are looking to gather information or gain your employee’s perspective on performance. But the right questions can also mitigate business risks by discovering unforeseen drawbacks.

To understand your employee's point of view, and learn what impacted them to perform above or below expectations, ask questions that put them in the driver’s seat. Take note of these examples:

  1. Did you encounter a major challenge in your profession this year? If so, how did you overcome it?
  2. What do you consider to be your biggest accomplishment with the greatest results this year?
  3. Do your own personal goals align with the company’s goals? If not, please explain why.
  4. If you could change anything about your job or upper-management’s job, what would you change and how?
  5. Is there something you would change in the workplace environment?
  6. Is there somewhere in the company that can be more efficient or productive?
  7. Name the obstacles that make it difficult for you to reach your work goals.

These questions reveal the problem-solving abilities of the employee being reviewed. They also give the manager an idea of what their employee considers a priority, which can then be compared or contrasted to management’s ideas.

It is more likely that the person working a job can provide you with the extra, in-depth ideas about the positives or negatives of their function and support. Again, giving them the driver’s seat is a great way to initiate conversations with your employees that they would otherwise not have. Here is where you’ll want to learn the most about shortcomings and areas of improvement.

Planning for the Future

After sharing their successes, how they were achieved, and what challenges they recently overcame, ask questions that point to the future. After all, a healthy performance management program will embrace professional growth and career paths. The following set of questions can help your and your employee structure important future plans:

  1. In what area would you like to receive more training or mentorship?
  2. What skills or cross-training opportunities, if any, interest you the most and why?
  3. Would you like to take on more challenging work and if so, why do you believe you are prepared for it?
  4. What might be your biggest challenge next year and how will you prepare for it?
  5. What other role in this company can you see yourself in, sometime in the near future?
  6. What other role in this company can you see yourself in, in the distant future?
  7. What part of performance review is most important to you: recognition, professional growth, or responsibility?

These questions reveal an employee’s awareness about their surroundings and how well they are being supported. Having proper encouragement will drive your employees to create personal goals and think about the future.

By all means, planning is essential to managing performance in your company and reviews need to produce a clear sense of direction for both management and staff. Get to know how your employees will make the most of next year and what they truly value the most.

Change an Employee’s Behavior

Lastly, when used as a tool for unlocking value in your department, the right review questions can be quite effective motivators. Using questions to incite learning and exchange ideas, is a sure fire way to fuel performance because employees generally wish to succeed. These questions create a unique opportunity to forge potential and build rapport among your team:

  1. Are there any company resources beneficial to you? If not, are there some you feel are needed?
  2. Did you have enough constructive criticism and feedback throughout this quarter?
  3. What results were you least proud of and why?
  4. What can I do to help you better meet your goals?
  5. What disagreement have you had with an employee or coworker and how did you manage?
  6. Are you able to effectively communicate with me or your peers?
  7. What will you focus on the most next quarter to help you develop skills or company values?

For some, difficult questions are hard to ask, but rest assured, this experience improves interpersonal bonding. Employees perform best, when they know that their managers care. Ultimately, these questions that cause behavioral reactions get to the bottom line: is this the right person for the job?

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What is Modern Performance Management

There has been a shift in how organizations think about performance management. You can see it in headlines like these…

Death to the Performance Review

Reinventing Performance Management at Deloitte

Amazon to Drop Dreaded Stack-Ranking Performance Reviews

That said, progress has not been linear and you may also have seen headlines like these…

Lets Not Kill Performance Evaluations Yet

Why Facebook Still Uses Traditional Performance Reviews

Companies That Got Rid Of Performance Ratings Aren’t Doing So Well

So where does that leave us? What is Modern Performance Management?

It’s An Approach Not A Process

In the early stages it looked as if modern performance management would coalesce around a set of best practices, like quarterly conversations, weekly 1-on-1s, or continuous feedback frameworks. But this didn’t happen.

Organizations went in many different directions and most of the bold claims about the end of rankings, ratings, annual reviews and other elements of “traditional” performance management haven’t come to fruition.

Today, years into the performance management revolution we find ourselves in a middle ground. Organizations continue to improve their processes, but they are doing so with a mix of new and old practices.

It turns out there is no performance management panacea. What defines performance management as “modern” is not your process, but your approach.

1. Modern performance management is about starting with your organization’s needs and the needs of your workforce, then building a custom strategy that serves those needs.

That means no more over-stuffed annual reviews that are a big waste of time, but it also means you shouldn’t necessarily take Adobe’s strategy off the shelf and apply it to your organization.

2. Modern performance management is about creating a strategic business operation rather than fulfilling a year-end compliance requirement.

If you are analyzing the needs of your organization and then building up a strategy that drives results for your organization, that’s modern performance management.

Ok, that is a little abstract, so we’ve also compiled a list of themes that help define modern performance management.

Characteristics Of Modern Performance Management

Here are some of the changes we often see when organizations transition to modern performance management. These aren’t all requirements, even pursuing one or two of these changes is sufficient.

Digital First

Digital tools are enabling the transformation. More feedback, more data, more transparency are only possible because they can be achieved with a light tough through technology. Before adding complexity to their processes, organizations are streamlining them through technology. Ultimately performance management needs to be layered on top of the real work of the organization, so it can’t be cumbersome or time consuming.

Development Focused

Traditional strategies focused primarily on rewarding top performers and eliminating under-performers. While that is still a part of modern systems, the focus has shifted to include development. We wrote about this idea here - Accountability vs Growth: Choose a side (or don't).

More Frequent

You can’t talk about modern performance management without talking about increased frequency of feedback. Whether it’s quarterly check-ins, weekly one-on-ones, or continuous feedback, more feedback is what it’s all about.

Rewards Collaboration:

Traditional performance management tended to give everyone individual ratings which did not always incentivize teamwork. Today organizations want to know not only how well you work alone, but how you build up a team.

More Agile

We live in a more dynamic world and organizations want to reward employees who have the flexibility to adapt and perform as an organization evolves. Modern strategies reward both tactical performance and adaptive performance. Read more about that here - Tactical Performance vs. Adaptive Performance: Why You Need Both.

More Fair

Unfortunately traditional performance management is filled with bias. Modern performance management seeks to even the playing field and get to a better understanding of actual performance. It’s no longer just about your manager’s opinion of you for one week a year. Read - The Biases You Must Remove from Your Performance Reviews.

Smarter Data

Finally, modern performance management still embraces data. Even after an initial rejection of ratings and rankings, many organizations are looking for smarter ways to bring data back into their process in order to inform career planning, hiring, and other business decisions. Data gets smarter with better questions, like how Deloitte reframed their review questions to focus on things a manager is a better judge off.

Creating Your Own Process

If you’re ready to embrace a modern performance management strategy, don’t be intimidated by all your options. The right strategy is simply what’s right for your organization right now.

For many organizations the best first step is to streamline their existing process. A well run process that doesn’t waste employee’s time will go a long way as you continue to build out the rest of your strategy. If you’re interested in learning more about how PerformYard software streamlines modern performance management get a demo here.

If you want to learn more about creating your own modern performance management strategy, read our guide

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4/16/2020
A Short Guide to Giving Feedback

Here’s a surprising fact: 92% of respondents to a Zegner/Folkman survey agreed with the statement “Negative feedback, if delivered appropriately, is effective at improving performance.”

Even more surprising was that 57% of the respondents said they prefer negative feedback over positive feedback.

We all want feedback, we just don’t always like how it is delivered. Here are some quick tips to give higher quality feedback that employees will appreciate.

Positive Feedback

Don’t Wait: Positive feedback has the greatest effect when it’s immediate. There usually isn’t much prep or investigation needed before delivering positive feedback, so just go for it, don’t wait.

Be Meaningful: Reserve recognition and positive feedback for great performance. If you start celebrating mediocrity it will cheapen all the other recognition you’ve given in the past. That doesn’t have to mean less positive feedback, you can find things to celebrate big and small.

Give Details: Positive feedback should be more than just a celebration. Focus on what went right and why. That way we can feel good AND learn from our successes.

Do it Publicly: Public recognition can amplify the impact of positive feedback.

Delivering Negative Feedback

Be a Coach: It’s easy to point out what’s wrong, it’s much harder to show someone the path to what’s right. Engage around solutions and employees will be much more interested in hearing from you.

Focus on the Work: No one wants to be judged on their character, and frankly we shouldn’t be doing that at work anyways. Frame your feedback around the work and what’s going wrong, not around perceived character flaws. For example: don’t say “you’re unorganized,” say “you’re forgetting to call people back, and that’s a problem.”

Provide Examples: Negative feedback can become contentious, so be prepared with specific examples. Concrete examples will help make your feedback real for the employee. When we hear something negative our natural reaction is to recoil, bringing specific examples will help mitigate that.

Follow up: Negative feedback isn’t about calling people out, it’s about helping them develop. So plan to follow up on all negative feedback and discuss progress.

When Not to Give Feedback

When Failure Says It All: Sometimes failure is all the feedback people need. There’s no need to pile on when someone is already devastated by a failure. Pick them up and move on.

When You’ve Lost Patience: When you can’t control your emotions, you’re not giving feedback, you’re having an outburst.

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4/7/2020
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Creating a Modern Performance Management System

Modern performance management is overwhelming. There are more options than ever before and the hardest part can be knowing where to start.

Introduction

Modern performance management is overwhelming. There are more options than ever before and the hardest part can be knowing where to start.

Should you do OKRs like Google? Or maybe quarterly check-ins like Adobe? Or does Deloitte have it right with project-based reviews?

At PerformYard we’ve helped hundreds of organizations create custom performance strategies that are just right for their needs. In this guide we combine our approach to designing a new process with all our favorite resources from around the internet.


Here’s what you’ll learn:

 

What is Modern Performance Management

Performance management has changed, and you’ve probably seen the headlines...

But maybe you’ve also seen headlines like these…

So what’s going on? Is there a new “right” way to do performance management? And what is it?

Modern performance management is more about your perspective, your focus and how you execute your process than it is about specific tactics. There are high profile tactics out there like continuous feedback, weekly 1-on-1s, OKRs, and quarterly check-ins that have become synonymous with modern performance management, but you shouldn’t just take these things off the shelf and apply them to your organization. You’re not Adobe or Google.

Modern performance management is about starting with your organization’s needs and the needs of your modern workforce, then building a custom strategy that serves those needs.

It’s about creating a strategic business operation rather than fulfilling a year-end compliance requirement.

That’s a little abstract, so here are some more concrete ways that performance management has changed. (We also included a long list of examples from real organizations at the bottom of the page.)

Digital First: Digital tools are enabling this transformation. More feedback, more data, more transparency are only possible because they can be achieved with a light tough through technology. Before adding complexity to their processes, organizations are streamlining them through technology.

Development Focused: Traditional strategies focused primarily on rewarding top performers and eliminating underperformers. While that is still a part of modern systems, the focus has shifted to include development with accountability. We wrote about that very topic here - Accountability vs Growth: Choose a side (or don't).

More Frequent: You can’t talk about modern performance management without talking about increased frequency of feedback. Whether it’s quarterly check-ins, weekly one-on-ones, or continuous feedback, more and more frequent feedback is what it’s all about.

Rewards Collaboration: Traditional performance management tended to give everyone individual ratings which did not always incentivize teamwork. Today organizations want to know not only how well you work alone, but how you build up a team.

More Agile: We live in a more dynamic world and organizations want to reward employees with the flexibility to adapt and perform as an organization evolves. Modern strategies reward both tactical performance and adaptive performance. Read more about that here - Tactical Performance vs. Adaptive Performance: Why You Need Both.

More Fair: Unfortunately traditional performance management is filled with bias. Modern performance management seeks to even the playing field and get to a better understanding of actual performance. It’s no longer just about your manager’s opinion of you for one week a year. Read - The Biases You Must Remove from Your Performance Reviews.

Smarter Data: Finally, modern performance management still embraces data. Even after an initial rejection of ratings and rankings, many organizations are looking for smarter ways to bring data back into their process in order to inform career planning, hiring, and other business decisions.

Here are some of our favorite articles on Modern Performance Management:

The History and Science of Performance Management

How Much is Bad Performance Management Costing You?

What is Modern Performance Management?

4 Common Reasons Performance Management is "Broken"

 

Choose a Purpose for Performance Management

Modern performance management has a business purpose. So if you are designing a new strategy you need to start with its purpose.

The challenge is that not every organization will have the same purpose and you really should choose just one or two to start. So how do you choose?

Diagnosing your organization’s needs:

Choose a purpose for your modern performance management strategy by understanding the needs of your organization and your workforce.

For helping to decode the type of organization you have and it’s performance needs we love the “Organizational DNA” framework from PWC-

Learn about the 7 types of organizations and where you usually find them by industry and company size.

Then…

Take the short survey to get a sense of what type of organization you are.

Choosing a purpose:

Once you understand what your organization needs, choose the primary purpose of your new system. Every organization may be a little different, but here are the 5 most common types of strategies we see.

Accountability

This is the most traditional approach, but it still makes sense in the context of modern performance management. Systems that focus on accountability evaluate employees against standards. The most common examples would be a sales quota or a competency based system.

These systems can work very well when employees know what is expected of them and are highly motivated to achieve the standard. This tends to be organizations with well-defined roles, many people in those roles and measurable results. It also helps to have a large pool of qualified candidates to fill vacancies.

Development

Development focused performance management is having it’s day! Popular tactics like weekly 1-on-1s, continuous feedback and engagement surveys fall squarely in a development focused performance management strategy.

A development focus works well for knowledge workers, team based work, or employees with a lot of self-direction. If your employees see their job as “just a paycheck” you’ll either need to change their mindset before using a development focus.

Recognition

One of the most common complaints about informal continuous feedback strategies is that employees don’t know where they stand. That’s why many companies embrace recognition. Your most driven employees likely embrace some level of competition and have aggressive personal goals.

Recognition is best for organizations with highly motivated employees with opportunities to promote from within and room for some variable compensation.

Alignment

Alignment embraces the idea that you don’t need to manage people’s performance, you need to get out of their way. If you can clearly articulate what needs to get done, your employees will get after it and make it happen.

This approach is best for flat organizations with highly distributed decision making and information flows. Hierarchical organizations are just naturally better at alignment and don’t need as much help. Flat organizations need a way to get everyone moving in the same direction.

Values

This focus brings the organization’s values off the wall, and into conversations between employees. The goal is to increase self-awareness within the context of the values, with the hope that when employees embrace the values the results will trickle down to every element of performance.

Best for organizations that see toxic cultures as the cause of many of their performance issues. Sometimes public sector organizations can find themselves in this category.

For further reading on the purpose of performance management check these articles:

The Purpose of Performance Management: 5 Options

Does Your Performance Management Process have Purpose? These 9 Companies Do.

 

Elements of a Performance Management Strategy

Once you have a vision for your modern performance management strategy it is time to turn it into a process.

This can be daunting but we find it’s easier if you break things down to the building blocks. There are many specific tactics you can consider (like these 5 Modern Alternatives to Annual Performance Reviews) but in the end all of them are just variations or combinations of three things… Reviews, Goals, and Feedback.

Reviews (or check-ins or a structured, longer-term and scheduled thing)

It doesn’t matter what you call it, what we find is that even the most forward thinking processes still include some structured meeting or form that takes the long view and happens at regular intervals. This could be a quarterly check-in, semi-annual performance discussions or even annual reviews (yes there is still room for annual reviews in modern performance management).

Why do many companies still do this?

  • Fairness - It creates a set of standards for employee performance discussions and decisions that are going to happen with or without these reviews.
  • Transparency - It takes the discussions and decisions about employee performance and brings them into the sanitizing light of day.

We’ve written much more about this idea here - In Defense of Performance Reviews.

Goals

Goals can be found across the different types of performance management strategies. The difference will be what the goals are for, their terms, how often they are checked in on and the form they take.

Accountability Goals - Goals will often be role based, like standards of performance for that role. A sales quota is an example.

Development Goals - Here goals often take the form of professional development and tend to be a little looser. They are more about agreeing on a direction than reaching a specific degree.

Alignment Goals - Goals are at the heart of an alignment strategy. They may even make up the bulk of your process. Goals should have some way of cascading across the organization and should be dynamic enough to shift with the needs of the organization.

Feedback

Feedback is all about putting into action the ideas and intentions from reviews and goals.

Feedback can take many forms. You could instill a culture of continuous feedback that exists without strict systems, or you can formalize a process of feedback with required weekly one-on-ones.

You can also encourage regular recognition or require a few moments of recognition from each employee every month.

How you bring all this together will depend on your goals and your organization. We asked four HR leaders how they think about balancing an effective strategy with both structured and unstructured options:

Balancing Structured Reviews and Unstructured Feedback

Whatever you decide, remember to keep it simple, lightweight and focused on a clear purpose.

Read more about the fundamental elements of performance management here:

The Building Blocks of Modern Performance Management

 

Why it Needs to Be Easy for Employees

Once you have a purpose and layed out a process it can feel like you’re almost done. BUT, the most important step still remains, you MUST make everything easy for your employees.

Read more about 5 relevant product design principles to keep in mind when designing your process:

Approach Performance Management Like a Product Designer

Every step should be scrutinized, every task you assign an employee should be questioned. Modern performance management is more complex and more frequent, the only reason it works is because it is digital first.

Performance management software streamlines and automates the large administrative burden of pulling off a modern strategy. If you ask your employees to do that work they will rightfully decline.

Software allows employees to focus only on the value creating activities, like self-reflection, conversations with managers, and planning.

To learn more about the importance of keeping things easy, read:

First, Take Back Your Time: Before adding complexity, streamline.

What is Performance Management Software

How To Choose Performance Management Software

The Most Important (and Overlooked!) Features to Consider When Selecting Performance Management Software?

 

How to Evolve Your Performance Management Process

Lastly, plan to continue to work on your process. Improve it, expand on it, evolve.

Just please don’t throw it all away and start again whenever a new trend comes along.

We have a lot to say about this topic, but honestly no one explains it better than Jon Stein in his article for First Round’s blog - Betterment Tested Three Performance Management Systems So You Don't Have To.

And read this case study on our customer Colorado Health Foundation.

For additional insight check out:

Why You Should Iterate On Your Existing Strategy

Should You Test Your Performance Management Process?

 

Examples of Modern Performance Management

So what are the world’s leading companies doing? Here is a long list of examples from big name brands and several smaller organizations that you may have more in common with.

Case Studies

Spoor Bunch Franz | Accounting Firm | 50 Employees

Semi-annual reviews, monthly feedback, and additionally custom cycles for departments, roles and new employees.

Five Star Technology | IT Services | 140 Employees

Quarterly check-ins with broad 360 reviews that are qualitatively coded around the company’s six core values.

J2 Interactive | IT Integrator & Developer | 150 Employees

Quarterly conversations with annual goal-setting and a year end review to summarize performance.

InvestiNet | Receivables Management | 100 Employees

Four types of goals with weekly check-ins make sure everyone’s work is aligned and that they’re living the company mantra of “never settle for the status-quo.”

The Colorado Health Foundation | Foundation | 60 Employees

A quarterly conversations process with annual goal-setting, a simple year end review, and lots of flexibility.

More Examples

How Does Amazon Do Performance Management?

3 Approaches to Performance Management: Google, Betterment and IBM

How Does GE Do Performance Management Today?

How does Facebook do Performance Management

Performance Management at Tesla: What we know.

How Regeneron Built Their Performance Management System

How Does Uber Do Performance Management?

How Does Asana Do Performance Management?

How Netflix does Performance Management

Deloitte's Radically Simple Review

 

 

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3/26/2020
How to Write a Self Review

Self Reviews or Self appraisals; to some, they feel like an oxymoron, and to others, they create an opportunity to reflect on past achievements.  But for many, they are a necessary tool used during employee performance review time.

Why Write Self Reviews

As tedious as the entire appraisal process can turn into sometimes, the self evaluation portion actually serves a useful and important purpose. 

Self-appraisals are meant to engage an organization’s workers in the evaluation procedure.  Instead of just being the recipient of feedback, employees are given a voice in the process.  They’re also believed to help employees plan for future development goals, as well as open communication channels for performance related issues.  Let’s face it, in self evaluations, accountability starts with you, and that’s exactly the effort behind them.  

How to Write a Good Self Review

We’ve established the importance of the self-appraisal, but there are several key elements of writing a good one that’d be wise to consider.  Writing a self-appraisal can easily become a struggle if you don’t know what to say. There are questions you must first ask yourself, and then there are topics you’ll really want to cover with your manager.

What You Should Think About

Before you start, ask yourself some questions.  What has been the biggest challenge in your position thus far?  How can you do any of it differently? Do you have real strengths worth highlighting?  How might the work environment affect this? Lastly, what do you want to achieve from this job and how are you motivated to do so?  This is meant to dive into key components of what a self-appraisal should cover.

What You Should Address

1 Your Accomplishments

This is not the time to be shy or humble.  Be proud of what you’ve done and support it with facts.  Holding back your value just makes your achievements less visible to your employer.  You might be asked to rate yourself with certain performance measures, or you might have to specifically describe accomplishments and their effect.  Either way, compare the experience to writing your resume - make it attractive but honest.

Gather the data.

It is important to discuss your accomplishments while supporting them with facts.  “I saved the company money by reducing costs” is vastly different from “I saved the company 13% by renegotiating contracts with our current suppliers.”  Quantitative data speaks for itself!

Align yourself with the company.

Remember to talk about yourself through the perspective of your team and boss.  Unless it affects them, it’s not as relevant to the overall picture. Were there any goals your manager or team were striving to reach over the past year and how did your efforts contribute?

2 Your Mistakes

Everyone makes mistakes.  It happens to the best. Learning from mistakes is probably how they became the best.  Don’t tear yourself down, but be honest and take ownership. Sometimes there aren’t easy answers to the problems we face at work.  The goal should not be to call attention to the failures, but to display your willingness to grow from them and reach solutions.

Impress with solutions.

Rather than disguise your weaknesses with a cliche such as “I’m too ambitious”, truthfully address any areas that need improvement.  Not only is self-awareness is a desirable character trait, your managers pick up more than you assume! Each weakness should have an action point attached to it and be sure to let your organization know how they can help.

Ask for anything you need to improve.

In order to get what you’ll need, you must be willing to ask for it.  After discussing your mistakes and possible solutions, make a pitch. Are there educational opportunities available?  Does the potential to cross-train exist? Conferences, certifications, or taking on projects outside of your comfort zone show your employer that you’re eager to learn.  

3 Your Goals

Once you’ve essentially outlined the pros and cons of the past year, set new goals on your self-appraisal.  This will be the most meaningful part of the process. Professional goals can be categorized into two groups; what you want to achieve in your current position, and goals you have for professional advancement.   

Get a Second Opinion

Getting a second opinion doesn’t seem conventional for an appraisal, but since self-appraisals are only one-sided, it is common to bounce your ideas off of coworkers, family, and trusted colleagues.  They can help you check for errors and make sure your tone is appropriate.  

Advice from your coworkers might also remind you of things you’ve overlooked.  Maybe you worked on a project where you thought you messed up, but a team member has objective opinions that differ.  Overall, it can’t hurt to run your self-appraisal by someone who’s known you for a long time.

Who do Self-Appraisals Benefit?

Maybe your company doesn’t currently administer self-appraisals as part of their annual evaluation.  But, here’s an idea, it’s extremely helpful to have one anyway. By practicing some of the methods mentioned above, you could create excellent talking points for your regular appraisal.  It can be quite advantageous to have the added input from coworkers, as well as mindful knowledge of your strengths and weaknesses.

Self-appraisals, done ever so often, are also a good way of avoiding pressure from annual meetings on the matter.  Sharing your ups and downs throughout the year keeps your manager cognizant and available. In this way, self-appraisals have become very popular, as they promote employees to monitor themselves and self-correct.  However, as you can see, they’re an extremely useful tool for employees themselves.

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3/19/2020
Approach Performance Management like a Product Designer

We geek out over performance management process. For us, and many other HR professionals, it is what we get paid to think about. But! that is not the case for most (almost all) employees at your organization.

For most employees performance management is a distraction. And worse it doesn’t do anything for them. Employees are paid to do their job, and HR asks them to stop doing their job for this other thing they feel has no value.

There’s no use arguing it, this is the reality every HR department faces when they try to introduce new performance management initiatives. Most employee’s first thought will be, “how big of a waste of time is this going to be?”

It is our job, HR’s job, to change this narrative, to prove people wrong, to justify our initiatives. We can’t lean on the fact that we’ve been given authority, we should be winning over employees, not forcing things on them.

The Product Designer Mindset

The first step is taking on a new mindset. We should be designing our performance management processes for our employees. We should start thinking of them as customers we want to win over, and start thinking of ourselves like product designers.

The product designer framework is helpful because there is a tremendous amount of existing research into product design, customer experience, and service design that we can lean on. Even if it isn’t a perfect analogy we think it’s a valuable one and we think it’s always a good idea to learn new lessons from experts in other fields.

Relevant Principles from Product Design

Solve real problems | Start with needs

It’s amazing how many organizations have only a vague understanding of why they’re running a performance management process. Start by understanding the needs of the organization and the needs of your employees.

Print them out, put them on the wall, read them out at the start of each meeting. If you stay true to these needs it will bring great clarity to the design process.

Do less | Simplify | Choose better over more

Focus your efforts on one thing. It is better to do one thing really well than to do many things poorly. Even if your ultimate goal is the most far-reaching performance management process in history, start small.

HR needs to build up trust and buy in from the organization, and you do that by knocking each new thing out of the park. Impress your employees with the first thing you introduce and they’ll be ready to jump on board with the next thing.

Be easily understood | Be intuitive | Minimize cognitive load

Have you ever heard this in a meeting? - “oh they’ll be able to figure it out…”

Expecting someone to “figure it out,” is a huge taboo in product design, but it is extremely common everywhere else. Yes, it’s true that employees will mostly be able to figure out how to navigate that cumbersome process. The problem is that they’ll be frustrated, uncertain, tired and just “over it” by the time they get there.

Making it easy matters.

Good design is as little design as possible | Be unobtrusive

The process should almost disappear. Employees should spend all their time on the value creating aspects of the initiative, and none of their time on the administrative/process aspects.

One classic example of this is when review forms contain a section where the employee just copies down their personal information, like name, ID number, job title etc. The organization already has this information! Why are they wasting the employee’s time to copy it down again?

Stay thorough to the last detail | The last 10% is the hardest | Fit and finish matter

Details matter. Getting this right is about more than the questions on your forms, choosing quarterly vs annual check-ins, or deciding the number of peer reviews to include. A great performance management system is about all the little details.

How clear and concise are your emails? When and how will you remind employees to complete reviews? Where will employees see what is expected of them/left to do? How do you encourage managers to leave more feedback? How do employees know what an effective goal looks like?

The Takeaway

Changing the narrative around performance management, and getting buy-in from employees should be HR’s responsibility.

We can’t rely on our authority we need to win employees over with great design. Let’s learn something from the product design community and start wowing our employees.

If you’re interested in further reading, here are two fun product and experience design books to get you started:

The Design of Everyday Things by Dan Norman

The Starbucks Experience: 5 Principles for Turning Ordinary Into Extraordinary by Joseph Michelli

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3/10/2020
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Alternatives to SMART Goals

SMART is great, but it has become cliched. Many people assume they know what it means without ever thinking very carefully about it. That said, the science behind SMART is as relevant as ever.

The majority of the great discoveries on goal setting came from Professors Edwin Locke and Gary Latham. After two lifetimes of research these men partnered on a seminal book released in 1990 that summarized the science of effective goal setting. It is called “A Theory of Goal Setting and Task Performance.

The book is full of insights and well researched ideas, but it doesn't have any catchy acronyms. Here is what the professors say about setting effective goals regardless of the methodology or acronym you choose.

The line between success and failure should be crystal clear

Great goals don’t leave any room for interpretation. There should be no ambiguity in what accomplishing the goal will look like. This is because corporate goals are a form of communication, they are about two or more people agreeing on a shared destination. If the goal isn’t clear it may not be aligning everyone in the same direction.

Additionally, unclear goals can have a negative impact on persistence. People will reinterpret an ambiguous goal to make their life easier just when things start to get hard. The S, M, and T in SMART all relate to having unambiguous goals.

Goals should be challenging

A person should see their goals as difficult but achievable. This leads to the greatest efforts. When we believe we can achieve a goal but know it will be hard, we feel energized and excited about the prospect of succeeding at something meaningful. Conversely if we don’t see the goal as difficult we won’t be inspired by it, and if we believe a goal is too difficult we can become overwhelmed by it and give up before starting.

Note that all of this is about perception. Great leaders often convince the people around them to believe in audacious goals they might never have tried on their own.

We must be committed to our goals

Part of the power of goals is that they focus our attention and increase our persistence. We are more likely to follow through when things get difficult if we’re trying to accomplish a goal. However, this is only true if we’re committed to that goal.

Organizations drive goal commitment in many ways, but the best option is to inspire employees to believe in the importance of their goals. When NASA was shooting for the moon, no one had to post the junior engineer’s goals on the bulletin board to keep him committed to the mission.

We should have the necessary skills

How much a goal impacts our performance is partly related to whether or not we already have the skills to achieve the goal. Goals are great at driving persistence, but they are not as good at driving creativity and learning. The impact on performance of a goal will be moderated by how capable we already are at achieving it.

The more we know about how to achieve a goal, the greater the impact goal-setting will have on our performance.

Effective goals need control systems

Goals can be too effective. They can become so motivating that they drive your employees to cheat.

That is why it is important for goals to come with control systems. It is not enough to achieve our goals, we must achieve them in the right ways. Effective control systems include a strong culture, well-articulated expectations, or oversight.

Whatever framework you choose, be sure that your goals include the scientific fundamentals of effective goal setting. Locke and Latham have much more to say about goals in their book, it's worth a read.

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The Purpose of Performance Management: 5 Options

Performance Management is a big idea. We’re talking about improving the performance of every employee at your organization.

How do you even begin to tackle something like that? At PerformYard we believe the first step should be defining your purpose.

If you are developing a new performance management strategy you’ll find yourself pulled in many directions. Someone on your team will push for OKRs, another person will tell you about the weekly 1-on-1 process they read about, and still another will recite the adobe quarterly check-in case study.

The best way to evaluate all the ideas that will be thrown your way is to start with a clear sense of why you’re developing a new strategy and what you’re trying to achieve.

Choosing a purpose is one part of designing a modern performance management system. For everything else you need to get started read our full guide here.

Choosing a Purpose

We’ll get to the five purposes quickly, but it is important to mention this first. You can’t do all five!

Maybe you can if you’re already crushing 3 or 4 of them and you want to layer on a new initiative, but most of us aren’t there.

It is very important to focus with a new initiative, and so you should choose one or two from the following list. Kick those out of the park first, then layer in others.

So how do you choose?

One purpose will tend to be better fit and have a bigger impact depending on the type of organization you manage. So think about your organization along the following lines, and then map your needs to the best purpose for you.

Decision Rights - How and by whom are decisions made?

Information - How does knowledge move around your organization?

Motivators - What drives your people to perform?

Structure - What are the lines and boxes that connect people?

This framework comes from a great little book called Results: Keep What's Good, Fix What's Wrong, and Unlock Great Performance, check it out if you’d like to go deeper on diagnosing the performance needs of your organization.

The 5 Purposes

Ok let’s get to why you’re here. But don’t forget that you should be thinking about choosing the right purpose for you, not how you can do all five!

1. Accountability

This is the old standard, and while it has fallen out of favor in recent years, it absolutely still has a place.

Performance management systems that focus on accountability evaluate employees against standards. A classic example would be the sales quota.

These systems can work very well because employees know what is expected of them and are highly motivated to achieve the standard.

What the standard is and how it is established is very important. It helps to have many people at your organization performing the same well-defined role. For example with 15 sales professionals doing the same job you can begin to standardize what level of performance is and is not acceptable.

Beyond setting the level of performance it is also important to determine how you will measure performance. Unfortunately, there is rarely a straightforward way to measure high-performance, so we rely on metrics that are just indicators. We must choose these indicators carefully to prevent people from gaming our system.

There are many examples of accountability standards gone wrong.

Public school teachers “teaching to the test” is one. Some school districts are heavily incentivizing teachers based on their students test results and so teachers focus more on the test than on the thing the test is designed to measure.

Another example is the Wells Fargo fake accounts scandal. Bank employees were so fearful of getting fired for not opening up enough new accounts that they began to open fraudulent accounts to keep their jobs.

With the right system and the right employees we believe there is still a place for accountability focused performance management.

Best for:

Organizations with well-defined roles, many people in those roles and measurable results. It also helps to have a large pool of qualified candidates to fill vacancies.

How it can go wrong:

Employees could be tempted to game the system as we see with “teaching to the test” and the Wells Fargo scandal.

2. Development

Development focused performance management is having it’s day! Popular tactics like weekly 1-on-1s, continuous feedback and engagement surveys fall squarely in a development focused performance management strategy. The idea behind a development focus is that employees don’t need to be forced to perform, they want to perform well and just need to be developed.

The increasing need for agility, creativity, teamwork, self-direction and other totems of the modern workplace have all made it difficult to effectively apply accountability standards. Which has increased the organizations taking on a development focus. Additionally, a tight labor market for many roles has led organizations to eliminate any sources of employee dissatisfaction. Being rated and ranked is not something most of us enjoy so moving away from accountability is a way to appease employees.

However, while development focused performance management is spreading, it has always been an important part of the professional services industry. For these firms, turning college students into high-paid advisors is part of the business model. Structured training and regular development conversations are the status quo.

It is important to note that just because development focused performance management is popular, does not mean it’s for everyone. It tends to work best for employees who have a lot of intrinsic motivation to improve their performance. This could be due to competition for career advancements like in professional services, it could be due to a desire to develop skills like in tech or creative work, some combination, or something else entirely.

If your employees don’t live for their work, and think of their job as just a paycheck you’ll either need to change their mindset or not use a development focus.

One more note on development. It is not the same thing as learning management. You don’t need to have very structured training to run a development focused strategy. Google famously gave employees “flex-time” to pursue their interests at work. This is a development focused tactic that had no top-down direction at all.

Best for:

Knowledge workers, team based work, or employees with a lot of self-direction.

How it can go wrong:

Employees need to be intrinsically motivated to improve their performance. We often see tech companies struggle to build sales teams because sales lends itself to an accountability/recognition focus, while many tech companies embrace a development focus with their engineering teams.

3. Recognition

One of the most common complaints about informal continuous feedback strategies is that employees don’t know where they stand. CEB conducted research on organizations that had dropped ratings and rankings. One employee in the study shared the following:

“I have these great conversations where I thought they were providing feedback, but it was like me reading my horoscope. I only found out the truth about my performance when I didn’t get a raise. If I had gotten a score I would’ve had more clarity.”

Your most driven employees likely embrace some level of competition with their peers and also have aggressive personal goals. These employees want to know if they’re on the right track, they want to know if they are achieving their goals.

Deloitte recognized this in their performance management redesign. In the HBR article about their new performance management strategy they say,

“We began by stating as clearly as we could what performance management is actually for, at least as far as Deloitte is concerned. We articulated three objectives for our new system. The first was clear: It would allow us to recognize performance, particularly through variable compensation.”

The result for Deloitte was a short four question manager review, with three of the questions designed to recognize top performers, and one designed to call out low performance. In short they were:

  1. I would award this person the highest bonus. [Disagree to agree scale]
  2. I always want this person on my team. [Disagree to agree scale]
  3. This person is ready for promotion. [Yes or No]
  4. This person is at risk for low performance. [Yes or No]

Deloitte did other things with their performance management strategy as well, but their primary focus was to recognize, compensate and promote their highest performing employees.

Recognition for high performance can backfire, especially if it involves extreme compensation. You could find yourself rewarding the most unscrupulous of your employee's, which is a big part of what took down Enron. If you don’t set guide rails, extremely driven employees might do whatever it takes to win, even if that means committing fraud. This usually happens when the rewards start to become extreme.

Recognition can also fail if the act of recognition feels empty. If you’re putting up an employee-of-the-month plaque, and your employees don’t respect or care about the honor, then your recognition efforts will fail.

The form of recognition needs to let employees know they are achieving their personal goals. For some organizations, employees personal goals and work goals are just harder to align.

Best for:

Organizations with highly motivated and driven employees, opportunities to promote from within, and room to give some variable compensation.

How it can go wrong:

Extreme recognition can lead to extreme, and maybe even fraudulent, behavior from your most driven and unscrupulous employees. Empty recognition or recognition for things your employees just don’t care about won’t have much of an effect.

4. Alignment

Alignment embraces the idea that you don’t need to manage people’s performance, you need to get out of their way. If you can clearly articulate what needs to get done, your employees will get after it and make it happen. This is the realm of goals and OKRs.

Jon Stein of Betterment, wrote a fantastic post for First Round Review on how he thinks about performance management. First he says you must “start with the why.” You already know we love that. Then he lays out his three goals for an effective system:

  1. Create clear lanes for your team to run; and align your structure key and processes to achieve what needs to get done.
  2. Empower employees to run as well and as fast as they can in the right direction by providing the right context.
  3. Define measurable goals to hit in a way that makes it clear to everyone what they're supposed to be doing every day.

There is nothing in these three objectives about holding people accountable, developing employees or recognizing achievement. Jon Stein is laser focused on alignment through clearly articulating goals and expectations. (to be fair I’m sure Betterment does many of the other things on this list, but with this initiative they were focused on alignment.)

Stein eventually arrived at a very effective system, but it took some trial and error to get there. One of the greatest challenges was setting goals in an uncertain and dynamic environment. How do you both 1) tell employees what they should be doing but 2) don’t micromanage or overprescribe, leaving them room to run and adapt.

This is one of the most common downfalls of systems that focus on alignment. It is very hard to set great goals. When alignment systems are done poorly, they don’t give everyone room to run in the right direction, they strangle action and encourage odd behavior.

One example from the Betterment case study was what happened when they introduced team goals. The teams became aggressively siloed and even competitive with each other because everyone was focused not on company success, but on team success.

Best for:

Flat organizations with highly distributed decision making and information flows. Hierarchical organizations are just naturally better at alignment and don’t need as much help. Flat organizations need a way to get everyone moving in the same direction.

How it can go wrong:

Whatever you measure will improve, but it can be hard to know what to measure. There is no simple measure for high performance.

5. Reinforcing Values

So what if your employees are all naturally accountable, pursue their own development, are happy with their level of recognition, and know exactly what to do… is there any performance management to do?

At the Stanley Clark School, a K-8 institution in South Bend, Indiana, the Head of School Melissa Grubb went with another approach. Her focus was on instilling a set of values in every employee. She wrote about her process for Gibson’s blog.

The idea is to bring the organization’s values off the wall, and into conversations between employees. At Stanley Clark teachers reflect on 6 questions and 30 statements before having a regular conversation with their manager. The goal is to increase self-awareness within the context of the school’s culture.

The values/expectations are well articulated, and target issues that Melissa has recognized as vitally important to a great school culture. The hope is that if employees embrace these values the results will trickle down to every element of performance.

To get this right it’s so important that your values are well articulated. This means more than short ambiguous slogans. Values should be turned into practical expectations that everyone can understand.

Some examples of Stanley Clark’s 30 statements are:

  • Situations usually improve when I am part of them.
  • I am usually pleasant to be around.
  • I control tone well in both written and oral communications.

Additionally, your process should focus on self-reflection and conversation with others. Cultural values can’t be reinforced just by checking boxes on a form.

Finally, be sure your values are being informed by the actual values of your organization. If values are established top-down and employees don’t buy in, you will have just built a big waste of time.

Best for:

Organizations that struggle with toxic cultures. Some public sector organizations fall into this category.

How it can go wrong:

It’s hard to know what cultural values to emphasize. If you get it wrong employees will resent the process and consider it a useless exercise.

What’s Next?

Once you’ve decided what matters, it’s time to build your process. Evaluate every performance management tactic with the lens of “does this advance our purpose?”

Don’t let your process become bloated. If you keep it simple and focused you will have much more success getting employees to adopt it.

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2/26/2020
How Netflix does Performance Management

Netflix's no-holds-barred approach to HR has gained the attention of many, both good and bad. This is because they’ve succeeded not only in retaining prime talent, but also in achieving a high-performance culture.

The methods Netflix applies could be called radical, but they address challenges that all organizations face. Here are four common performance management challenges and how Netflix overcame them.

Challenge #1 - Do as we do, not as we say.

According to Netflix, leaders and managers need to live and breathe company values into everything they do. Your mission statement and company values are not supposed to just sound nice, they’re supposed to be displayed throughout the work of your employees.

Posted on Netflix’s famous culture deck, is a stark comparison between a list of Enron’s company values and photos of their leaders in handcuffs. They go on to state that Enron’s values weren’t truly what was valued there. Netflix wants to strictly reward and promote employees that demonstrate their values and let go of those who don’t. It’s that simple, but it’s a big deal.

Challenge #2 - Annual evaluations are 1 year late.

Several years ago, Netflix revamped their performance management by completely doing away with annual performance evaluations. Annual reviews were irrelevant one year later, consequentially meaningless, and they felt like a waste of time.

Instead, Netflix opts for a 360 degree review procedure. The reviews are regular but informal. In this new procedure, employees are advised by their colleagues on what they should stop, start, or continue. The reviews began anonymously at first to avoid awkwardness, but since then, they shifted to signed feedback and later face-to-face 360 reviews. Opting for full transparency, Netflix believes people can handle anything, as long as they’re told the truth.

Challenge #3 - Needing the Dream Team

Despite ditching formal evaluations for the 360 degree review process being bold enough, Netflix makes the reviews public. In fact, employees are encouraged to give one another blunt feedback with the purpose to provide ongoing opportunities for improvement. Their belief is that in order to build a dream team, an organization must “ foster collaboration, embrace a diversity of viewpoints, support information sharing, and discourage politics.” This can’t be done without hiring well.

The desire is for one entire dream team versus a few small groups spread out throughout the company. Managers use what they call a “keeper test” to build their team. Essentially, they’re asked to question “Would you fight for that employee?” The end goal is to give ownership of building great teams back to managers.

Challenge #4 - Understanding the Full Context

Netflix wants their employees to think independently and be able to make decisions on their own. The leader’s main job at every level is to provide clear and complete context to create autonomous thinkers. With the right information, employees are given the confidence to make great decisions.

Former Chief Talent Officer and co-author of Netflix’s culture doc Patty McCord says “The best managers figure out how to get great outcomes by settling the appropriate context, rather than by trying to control their people.” It’s important that managers at Netflix don’t try to control their staff, rather provide the framework to get the best results out of them.

How do employees feel about it?

It seems that getting fired is never really far from your mind, if you work at Netflix. The keeper test in itself is not always a source of comfort for employees. Managers also say it makes them feel pressured to fire people or “risk looking soft.” According to Glassdoor, the culture of fear is actually one of the most frequent cons. Many employee reviews mention the highly competitive environment makes work-life balance difficult to achieve. Other cons focus mostly on the transparency of the 360 review process; learning the details about why someone was let go or watching the politics carried out after uncomfortable feedback is made public.

So how is it that they maintain a seemingly average score? What are the pros that make working at Netflix a positive experience? Most reviewers seem happy about the perks; free lunch, free coffee, flexible schedules. However, the most resounding pros listed repeatedly are compensation, freedom, and responsibility. Netflix’s theory of responsible people thriving on freedom really works here and the employees seem to love it.

Can the Netflix approach work for you?

At Netflix they hold strong to the belief that if you talk simply and honestly about performance on a regular basis, you can get good results. Opting for full transparency is certainly not for everyone. Employees chime in on the company’s path, price increases, logos, literally everything. But can this work for any organization? McCord’s own advice would tell managers to think like business people and ask “what’s good for the company?” Then, implement those strategies, because when a company is at the top of its game, the people and their morale are also.

More Inspiration

Netflix is not the only organization going its own way. These days most great organizations are thinking critically about performance management and coming up with innovative new solutions. Here are a few more examples to help inspire your own strategy.

How Does Uber Do Performance Management?

Deloitte's Radically Simple Review

How Does Amazon Do Performance Management

How Does GE Do Performance Management Today?

3 Approaches to Performance Management: Google, Betterment and IBM

How Does Facebook Do Performance Management?

Performance Management at Tesla: What We Know

How Regeneron Build their Performance Management System

How Does Asana Do Performance Management?

And if you're ready to take the next step, check out our guide to creating your own modern performance management process.

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1/14/2020
The Purpose of Peer Reviews in 360s

The 360 peer review is a professional feedback process that invites a group of coworkers to provide feedback about a fellow employee's job performance. It can be described as a type of appraisal that offers a unique perspective on the person’s skills, competencies, and even their personal temperament.

Similar to other types of review systems, the objective of a 360 peer review stays the same; to measure an employee’s work performance. However, this type of feedback also results in giving employees a better understanding of how their work is viewed in the total organization.

360 degree feedback is not limited to a standard rater setup, such as your direct report. Instead, it allows you to use multiple raters such as peers, supervisors, subordinates and external raters like clients or vendors, to leave feedback on an employee.

What Purpose do Peer Reviews Serve in Performance Management?

You may ask yourself “but why bother gathering all the extra data?” Put into practice by many well-known companies, 360 peer reviews can be quite useful if implemented correctly. Here’s a breakdown of how they can help:

1. Professional Growth

After bringing together the group ratings, an employee or management can identify a starting point for development of new skills. The 360 feedback is often used as a benchmark within the employee's development plan.

It can be used in addition to an annual performance review or upon request when looking to cross-train, transfer, promote, etc. Ultimately, the employee being rated discovers their potential to perform at a higher level as well as opportunities to grow professionally for future assignments.

While professional growth is most important to the employees themselves, employers are responsible for providing an environment in which employees are encouraged and supported in their growth needs. Multi-rater feedback can provide excellent information to an individual about what they can do to enhance their career.

2. Personal Development

Depending on how you coordinate 360 peer reviews, the results can often help identify personal blind spots of an employee’s behavior and the impact they might have but never notice. While the results are designed to assess broader strengths and weaknesses, they also let the employee know how his/her coworkers view the significance of their performance.

The combined reviews create a balance among all the different perspectives (instead of getting only the manager’s point of view) which gives an employee a better idea about their behavior and talent.

This new, improved perspective is valuable enough on its own, but a great 360 review will also combine the feedback with the employee’s goals in order to create a road map for self-development.

3. Team Development

A 360 peer review is an approach that can help team members work more effectively together. Understanding how others view your strengths and weaknesses not only creates an awareness of how to best work with others, but it also improves communication among team members.

Furthermore, because teams know more about how their own members are performing, a 360 peer review makes the employees more accountable to each other. They will eventually have to share the input provided on each members’ performance which is central to team development.

4. Improved Customer Service

Probably one of the most important uses for a 360 peer review, is to improve your customer service. Here, an employee receives valuable feedback about the quality of their product or service, usually in a process that involves an internal or external customer. This type of feedback is used to enhance the quality of the employee’s output and reliability of his or her service or product.

5. Performance Reviews

Lastly, 360 peer reviews come in handy during annual evaluations. This purpose is mostly administrative as the results of the feedback are used for performance management. The reviews are generally shorter and focus mostly on competence and skills for an employee's current job.

Several studies have shown that the use of 360 degree feedback has helped improve performance because the employee being reviewed gains a different perspective of their work. This makes sense because, unlike technical skills, business skills lack immediate, built-in feedback. It is difficult to know if you’re succeeding without input from other sources.

What are the Pros and Cons?

The two most popular arguments in favor of 360 peer reviews are increased self-awareness and freedom from the views of your boss.

Taking a look at the several purposes of 360, it is easy to see that one of the greatest benefits overall is an increased self-awareness. It is a perfect design for a company with a growth mindset and strong teams. With the added benefit of being valued across a larger organization, employees can really begin to take ownership of their performance, career paths, and goals.

The two most argued disadvantages are the potential for unreliable data and the focus on employee weaknesses versus strengths.

Especially in large companies, 360 survey participants responsible for providing feedback can be on completely different pages when it comes to evaluating the performance or behavior. While one rater thinks a great job is a 5, another rater could consider a great job a 4, but they both agree that the job done was “great”. This presents a challenge to the employer trying to develop performance standards.

Secondly, are the raters rating someone they’ve worked with for many years, or their brand new boss? Are they trained, knowledgeable, or experienced at rating performance? Are the reviewers venting frustration or providing inappropriate commentary? Even if such cracks are not present in the system, there might be highly specialized skills that raters do not understand. It is difficult in this scenario to gain a full picture of performance.

When it comes to highlighting an employee’s weaknesses more so than their strengths, one can easily create a negative culture. Due to the nature of 360 feedback, managers and executives are often forced to examine an employee’s weaknesses more closely than their strengths. This quickly creates a great deal of resentment on the job and it’s a downward spiral from there.

Who Benefits Most from 360 Peer Reviews?

It is clear that individual employees reap the greatest reward from a peer review undertaking. Not only does it help them to grow in different ways, it helps them to work better across the organization and with others. However, the added time and documentation required to support a survey-like assessment can require extra planning and resources.

We recommend that somewhere between 12 to 24 month intervals are most appropriate for repeating a 360-degree feedback process. This allows people to work through their development and action plans to create change.

Keep in mind that 360-degree feedback is not equally useful in all types of organizations with all types of jobs. Using this as a tool for appraisals is not always job based, and will eventually require education and training. Seeing as 360’s are extremely effective when used as a development tool, consider using it at the end of a project or if you want to provide coaching or succession planning.

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12/20/2019
3 Ways to Improve your Performance Review Forms

When performance reviews are faulty, it is easy to recognize that change is necessary. Yet finding the solution may not prove to be so simple. You might find yourself caught in a routine of trying every new strategy, but this can make things worse. Safeguard yourself from this common mistake by improving your forms in 3 easy steps:

#1 Keep Them Short

If you’re in HR you’re already dealing with a great deal of paperwork. Don’t over do it with ineffectual and tedious review forms. The key here is to balance the depth and frequency of the review process.

Deloitte has found that a large part of the review process is actually useless. When redesigning their performance management system, it was noticed that managers were being asked to answer an awful lot of questions about their employee’s abilities in different skill categories. Yet research has shown that people are horrible at rating skills, which means these sections of the review were probably generating meaningless data.

For example, these types of questions are almost always guaranteed on a review form: “How well does this employee live up to the company value of ‘Be Genuine’?” That is a well intentioned question but unfortunately it creates data that never gets used. In fact, that data should probably never be used because it is likely meaningless as well.

All of the questions that weren't serving the needs of their quantitative review were removed from Deloitte's form.

A Raise or Promotion?

During this overhaul, Deloitte wanted to develop a way to categorize employees when deciding upon their compensation or promotion.

The team looked at their current review process which involved extensive ranking discussions and a long review form. The form also involved many skill-focused questions, which again caused their current process to be overly inefficient when trying to recognize these two needs.

The original goal of the lengthy forms was to create a way of scoring and identifying employees. Once classified, the data would be used across the organization to make decisions about promotions and compensation. For Deloitte, the quantitative feedback gathered about their teams is particularly important because they do not use their structured reviews as a way to force team leaders into managing. Instead, managing the team is left up to the manager.

So how did they minimize their forms while maintaining the original intent? It brings us to our second tip. Ask easy questions.

#2 Ask Easy Questions

Keep it simple and ask what you really want to know.

Don’t beat around the bush, try to be too clever, or do complex analysis of multiple questions. Chances are just asking one solid question will do. For example, I could ask you about the smokiness of the pepperonis on your pizza, the gooeyness of the cheese, and the crunch of the crust. Or I could just ask “did you like your pizza?”

One of Deloitte’s famous “simplifications” turned out to be their decision to ask managers if they want to have an employee on their team again. It seems quite feeble but their prior strategy was for managers to first rate employees on several characteristics, then analyze those answers and assign the employee a rating. Their old system was just a more complex method of reaching the same basic result.

Ask questions that can be answered.

Sounds too easy right? Indeed, but reviews are infamous for asking managers to score employees on things like impactfulness. How will your managers know what a “3” versus a “4” is in impactfulness? It is necessary to either give them an especially thorough training on how to answer your questions, or ask questions they already know how to answer.

You can ask the reviewer the following two questions in order to receive the same input/feedback: “Do you think the reviewee should be promoted to management?” or “Score the employee 1-9 on the following six qualities of a manager.” One is much easier to answer.

#3 Focus on the future:

If you have a once-a-year process that emphasizes financial rewards and punishments, whether you mean to or not, you’re focus is holding people accountable for past behavior rather than improving current and future performance. Asking the right performance review questions at the right time is crucial.

Check-in.

Touching base with your employees on a regular basis makes reviews more of an ongoing process that shifts the focus forward. They can motivate and modify performance, adjust goals or recognize employees in actual time instead of reflectively.

Ask questions that look ahead.

Secondly, ask questions that invite the employee to look ahead. Rather than asking what their biggest strength is, you can ask which one of their personal strengths will be most important in the coming year. Another example is asking “what serves you the most while working on this project” instead of “are your strengths being maximized here?” As you can see, specific, engaging words leave no room for ambiguity.

Be present.

Lastly, make sure you are present. Don’t just review mechanically. In order to affect future behavior, you must work with your employees in real time. Uncommon, but truly effective questions such as these make a big impact; “Have you been given enough feedback to adequately work on this?” or “What feedback or training do you think would have better prepared you for this challenge?” Employees need to know that when all is said and done, their performance reviews are making a difference.

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11/26/2019
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A Manager's Guide to Performance Appraisal Meetings

Performance review meetings can be stressful. It can feel like you're gearing up for a confrontation -- but maybe it’s not as hard as you’d think.

We brought together an approach that can help anyone have more effective performance meetings. If you’re looking to feel more confident and comfortable while having better, more productive conversations with employees in your upcoming performance review meetings, here is where to start.

How to structure a meeting

Set the tone and agenda

The goal of the performance review--and what you should make clear from the beginning--is to talk through what is working and what isn’t, with the purpose of helping the employee, the manager, and the company achieve their goals.

The employee should understand that the purpose of the meeting is to establish what they can and should do to succeed going forward.

Share upfront how you intend to structure the meeting. As you'll see we believe in starting with goals, moving to strengths and ending with a conversation on improvements.

Start with goals

Yes, you read that right. While it might seem more natural to finish with setting goals for the future -- we submit that discussing goals first will help to better frame the rest of the performance review conversation.

Establishing the employee’s goals should help set up and inform the entire discussion of strengths, accomplishments, and ways to improve.

If you understand an employee's motivations it will make the later discussions about improvements more fruitful. Rather than saying, "I'd like you to be better at X," you will be able to say, "I think if you get better at X it could go a long way at helping you achieve your goals of Y."

Also, if you uncover greatly misaligned goals at this point, it is important to address those first. If you want an employee to be a future leader, but they're just here to count time until their art career takes off, then that will change the rest of the conversation.

Discuss accomplishments

Give employees a chance to advocate for themselves first. This will also help you better understand what the employee believes is high performance. Again maybe there is misalignment there.

Frame any accomplishments with the "why" it matters to help place them with their impact on the team and organization. This will help focus the discussion when it's easier so that when the topic turns to weaknesses the tone has already been set.

For example, an employee could tell great jokes around the water cooler, and everyone could agree it is a great strength, but when we focus on the why, it puts the jokes in their rightful place.

Address strengths as they are brought up, reinforce the ones that you feel matter for the organization. Push back if the employee fixates on accomplishments that you don't believe are as impactful.

Stick with perceptions and hard facts, don't label. The truth is you can't know who the employee is as a person, all you know is your own perceptions and facts. Even if your label is correct, you can't prove it. Conversations about labels quickly degrade into unwinnable arguments.

Always push for concrete examples. Don't let your employees list off a bunch of perceived strengths without backing them up. Strengths are only as valuable as the accomplishments they generate.

Discuss improvements

When discussing improvements, it’s important to give the employee a chance to be self-aware and bring up their own ideas for improving. Employee will be much more likely to receive constructive feedback, and walk away from a review fully bought-in to making necessary improvements if they raise the idea initially.

Like accomplishments, always frame improvements with the “why” -- how the employee’s increased, optimized performance ties in to their impact on their team or company. Giving concrete examples is also a helpful tool in this portion of the review, in order to avoid misinterpretation.

Big, abstract concepts such as “leadership” leave plenty of room for confusion and uncertainty. In our post on delivering criticism that employees appreciate, we suggest that identifying specific issues and focusing on specific solutions helps to engage employees around finding a solution as well.

Finally, close out the meeting by negotiating a plan and a timeline to revisit improvements. It doesn’t hurt to also reaffirm the employee’s strengths and achievements, especially your good performers. Make it clear that your intentions behind criticism and feedback are to clarify expectations, to provide direction for the coming year, and to help the employee move from good to great.

Conversation do’s and don’ts

Do:

  • Come prepared. Obtain and bring the necessary materials and data to already be well-informed about the employee’s performance, strengths, and achievements before the conversation begins.
  • Be direct, factual, and detail-oriented. An honest conversation paves the way for effective performance reviews. Instead of sugarcoating the review for poor performers, use the face-to-face interaction to call for improvement. Be intentional to point out work-related behaviors that you want the employee to stop, start, or continue.
  • Listen intentionally. Ask questions and make sure to allow the employee to share his or her thoughts, views, and perceptions of their own performance. Understand that change can be jarring for employees, and remain calm if emotions become heightened.

Don’t:

  • Wait until the formal review. If you’ve observed performance issues in an employee, make sure you’re maintaining an ongoing system of feedback and communication so that there are no surprises in the performance appraisal.
  • Confuse the job for the person. Your conversation during performance reviews should be focused on an employee’s overall work performance based on specific, job-related criteria--not their attitude, personality, or character. Focus on the job, not the person.
  • Focus on negative behaviors. Be sure you’re engaging around solutions, not just pointing out problems. Employees want feedback that propels them in the right direction, and chances are they wish to play just as big of a role in finding solutions as you.
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11/21/2019
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How Does Uber do Performance Management?

You’ve used the service or at least heard of it. Uber is everywhere. They’ve made many newsworthy moves over the past decade, not just by shaking up the taxi industry, but also by how they’ve handled internal matters such as performance management and employee relations.

How They Manage Their Contract Drivers

One unique aspect of Uber’s business is their relationship to drivers. Drivers can sign on to work or sign out at will. The Uber platform manages the workforce algorithmically, using incentives like surge pricing, ratings, and extensive online training content.

After every Uber ride, the rider rates the driver and vice versa. These regular performance ratings have a real impact on both the driver’s and the rider’s ability to continue to use the platform.

It’s simple, but this regular measurement has a major effect. It’s often called the “observer effect.” Our behaviors change when we know we are being observed.

Uber has created an automated performance management system. It’s like a robot manager. Here’s what that looks like in more detail.

Goals

First, they set goals and clear expectations. How so? When a new driver registers with Uber, they are provided with extensive rules on how they’re expected to perform. This includes very specific ways your account can become deactivated (aka you get fired).

Feedback

Second, the continuous feedback process at the end of each Uber service takes care of monitoring performance and measuring key performance indicators. While ratings have their issues, very frequent ratings from many different people will balance out any biases that might exist in a smaller sample. Although there are some types of biases that can’t be eliminated.

Reviews

Third, there is at type of performance appraisal. Most companies do this once per year but this looks different for Uber contract drivers. If your driver rating ever drops below 4.6, you’ll be dismissed, whereas if you have consistent high ratings, you get a VIP status with additional benefits. This sounds a bit like a continuous rank and yank. Eliminate the worst drivers and reward the top performers.

Performance Management for Everyone Else

Uber’s former performance management system relied heavily on a standard ranks and ratings process but after some of the recent scandals they’ve done away with it.

Uber has a new strategy they call the “T3 B3 process.”

T3 B3 stands for “top three bottom three”, and it asks employees to list their top three qualities or strengths and bottom three areas that need improving. Goals are then derived from these answers and entered into a system which can be accessed by everyone; employees, managers, top executives, etc.

Uber prefers this collaborative review process over the old one because it focuses on development rather than past behavior.

Feedback is given formally and frequently and it gets categorized into positive reinforcement or constructive advice.

Although they believe that positive reinforcement is the key to improvement, constructive advice is necessary for making adjustments. Managers check their feedback ratios on a weekly basis and try to keep them balanced.

In addition to the individual goals around job performance, Uber also has employees set citizenship goals. Employees can create goals for doing good for someone else inside or outside the company.

The “doing good” could be anything from pro bono work, or helping out your fellow co-workers, Uber drivers, or Uber customers.

Why the switch to T3 B3?

Uber’s traditional performance review focused too much on employees' past behavior rather than future capabilities, and having gone through many changes over the past few years, it was time for a brighter outlook.

Employees complained that the old process was subjective and lacked communication which enabled managers to get away with their biases. With minimal feedback, it felt like they were simply being told “this is what you’re good at, this is what you’re bad at, and here’s a score.”

What do Uber Employees Say?

Leadership at Uber claim that their current performance management system promotes a celebration of people, but what do employees say?

Some have noted that “the culture at Uber is excellent” with a “fast paced environment and very low stress levels.” They also believe that “colleagues are what make this place great; very friendly coworkers who are intellectual and hard working.”

Their biggest complaints were over navigating the constant change of leadership and priorities.

Online reviews also show that employees love all the perks like free lunches and flexible time off, but almost everyone complains about the challenge of growing within the company, something that seems to have made a large impact from the previous culture.

So what about the contract drivers? what do they think? They love the independence and freedom the Uber platform affords them, but would like to see better benefits, something that is challenging to provide when you’re set up as a contract worker instead of full time staff. Driver comments online also show the frustration of wearing down their vehicles, and the unexpected costs they incur.

Uber has done a lot of interesting things to manage performance, is there anything that might work at your organization?

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11/13/2019
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What is Management by Objectives

What is Management by Objectives?

Management by objectives is a system for improving employee performance where management and employees jointly create objectives.

According to the theory, having employees offer input on goals and action plans is a way to encourage higher performance and commitment. The idea was first outlined by Peter Drucker in his 1954 book, The Practice of Management. Drucker pointed out that employees often lose sight of their objectives because of an “activity trap”. When we get too involved in our current activities, we forget the original purpose. With MBO we jointly agree on common identified goals, which helps to eliminate the activity trap and keep us focused and aligned to our goals.

How does MBO work?

MBO is a results-driven strategic approach to goal setting. The process begins by defining specific objectives through shared discussion, then collaboratively deciding on how to achieve them in sequence. This would allow managers to pace work accordingly and create a more productive environment. As a result, employees see their own accomplishments as they complete each objective reinforcing a sense of achievement. Ideally, employees will fulfill their responsibilities because they have personally been involved with the goal-setting process as well as brainstorming with management on how to reach them. Meeting objectives is later graded with group input and often incentivized.

Why does MBO work?

MBO’s success can be attributed to several important features. The first one is the equal participation of both managers and subordinates. This model cannot function properly unless both parties are aware of their roles and participation. Secondly, MBO emphasizes a joint goal-setting and joint decision-making feature. Superiors bring their knowledge and experience to the table, while subordinates help determine the speed and capacity in which goals can be reached. Lastly, the MBO model ranks high on support levels. Because of its dynamic, managers and employees are forced into effective communication resulting in stronger relationships and positive work environments.

What are the steps?

There are several steps to the MBO process:

  1. Identify organizational goals - Goals must be realistic and achievable, which helps to guarantee your best results.
  2. Define employee objectives - Translate organizational goals to employees. The purpose is to make sure each employee is aware of the objectives and willing to participate in the process.
  3. Monitor progress - Here, management needs to provide proper resources and support so employees can follow through with their action plans. Making the progress measurable is key. If you can show that objectives are being met, your employee will likely experience personal growth and be further motivated.
  4. Performance evaluation and feedback - MBO traditionally uses positive recognition.
  5. Reward Performance - After a performance evaluation, your employee should be rewarded for high performance.

The Pros and Cons of MBO

Management by Objectives has a variety of benefits. The most obvious one is the amount of employee participation and engagement. Increased participation creates a positive work environment as employees feel the direct impact of their mutual work effort. This leads to more motivated employees and a higher level of job satisfaction. Another benefit of MBO is it develops stronger communication skills. The model requires a substantial amount of input and feedback which helps everyone to improve their exchange of ideas. Better communication equals better relationships and clearer direction. Lastly, and probably the best pro to consider, MBO is easily applicable to any organization at all. It is not difficult to implement, no matter the type of industry or size. It can truly suit the needs of most organizations without incurring major costs.

Criticisms however do exist. The most criticized issue of Management by Objectives is its short-sightedness. Some believe MBO has the tendency to consume an entire organization’s resources solely towards achieving goals, overlooking other important needs. This produces the mentality of achieving goals “at all costs” where employees are tempted to focus only on the finish line without considering the quality of their work. If the employee is a manager, this stifles leadership as well. Efforts become polarized as employees begin to focus only on their own set of objectives instead of the bigger picture. Another criticism is the joint approach doesn’t work well when challenges concerning incompatible needs arise. Some would say it is too time consuming and difficult to sustain over time. The most interesting criticism might be that MBO misses the human point. Because it is organization-centric, questions regarding the managers’ personal objectives, needs, and relevance are many times left unanswered.

In Conclusion

Management by Objectives is now a popular and widely used management theory. I believe its appeal to conduct business in a positive, productive work environment would catch anyone’s attention. Decisions don’t feel top-down and each member of the organization contributes equally. The synergetic approach does not lack in benefits and implementing this system is straightforward and clear. Ultimately, keep in mind that MBO leaves behind a demand to meet both organizational and individual purposes, which can easily become problematic without proper leadership.

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11/5/2019
What is Modern Performance Management?

Modern performance management is about designing a process that is unique to your organization and its culture. Even with outside role models and inspiration, the most successful organizations are being driven more by what they see inside their company than what they learn elsewhere.

For example, Adobe, Deloitte, and GE each designed a unique performance management strategy, and despite three very different approaches, each was a perfect fit for their organization.

Does Modern Performance Management mean the Death of traditional Performance Reviews? Not exactly.

Sensational headlines would suggest traditional performance reviews are a thing of the past. And yet the leaders of the performance management revolution have all continued to use aspects of traditional reviews in some form.

Adobe still uses end-of-year reviews that summarize performance and allow for discussions about compensation. They chose to reduce the length of these reviews and add quarterly check-ins to create a more ongoing dialog around performance.

Deloitte transitioned to a short four-question review system administered at the end of every project or quarter—whichever comes first. They use these more frequent reviews to create employee rankings, which drive promotion and compensation at the end of the year.

GE introduced a real time feedback app, but they also continue to do annual reviews, which they now call Summary Conversations. Instead of bringing up new ideas, the end of year discussions summarize feedback.

Modern performance management can be intimidating, but it’s actually quite simple. There isn’t some new “right” way to do things. It’s all about taking the old tools and bringing them together in a way that best serves your organization.

5 Steps to Creating a Modern Performance Management Strategy

We’ve taken what we've learned from working with hundreds of customers and put together a plan for any organization to create their own modern performance management process.

We've expanded on this post with a full guide here:

Creating a Modern Performance Management System

1. Understand Your Organization

Be sure you begin the process with a clear understanding of your own organization in the context of performance management. PwC provides a good place to start—they identify four building blocks for diagnosing the needs of your organization and determining your Organizational DNA. 

  • Decision Rights: Understand how decisions are made, who is influencing them, and who is making them.
  • Information Flows: How does knowledge and information move around your organization? Are their formal channels? 
  • Motivators: Identify teams’ and individuals’ objectives, opportunities, and incentives—how does your company’s history and existing practices impact them?
  • Structure: Create a formal organization model with clearly distinguished roles and responsibilities.

The performance management strategy that works for you will be different from what works for other organizations because other organizations will differ on these factors. For example, the right strategy for a flat video game development company will be very different from a 50 year old insurance organization with lots of hierarchy.

2. Set a North Star

Performance management can serve several purposes, and it is important to identify which is right for your organization. Here are a few of the most common-

  • Accountability
  • Development
  • Recognition
  • Engagement
  • Organizational Alignment
  • Reinforcing values

The military has historically focused their performance management strategies on accountability and recognition. In organizations with strict hierarchies and well-defined roles this makes a lot of sense.

In many creative organizations, like Betterment, the focus in on alignment. Flat organizations with many ill defined roles can struggle to together in one direction.

3. Use the Three Building Blocks

With a clear purpose, you’re now ready to develop a clear process. At PerformYard, we’ve found nearly every performance management strategy can be built with just three parts:

  • Reviews: While we’ve seen a lot of pushback against performance reviews, some type of structured review process continues to serve an important purpose. Regularly scheduling reviews allows for longer-term reflection on performance, and a formal process keeps things fair and transparent.
  • Goals: High quality goals will not only motivate your team and move everyone in the same direction, they also form the bedrock of constructive performance conversations. When everyone can agree in advance on what success looks like, then it is much easier to discuss what’s working and what isn’t.
  • Feedback: Feedback is what connects reviews and goals to an employee’s day-to-day. You can think of review meetings and goal meetings as the planning for how we’d like to perform. Feedback takes those intentions and reinforces them, putting them to action throughout the entire year.

4. Get Out of the Way

As HR leaders we care deeply about these topics. It is our job. However, it is important to remember that it is not the job of most people at our organizations. Some employees might even see our performance management processes as a distraction.

That is why it is so important to put on our product designer hats and think of our employees as customers of our product. Customers don’t want confusing and time-consuming products that don’t provide them clear value.

If you’re current system is bulky and disliked internally, the first thing to do is fix that.

You won’t have any buy-in to build on your existing performance management process until you make it easy and useful.

At PerformYard we streamline any performance management process you want to run. By design we do not force anything on our customers. Whether you want to do annual manager reviews or are going to try weekly 360s it can all be managed simply in PerformYard.

Once you’ve streamlined your existing process, then it’s time to start iterating.

5. Iterate, Iterate, Iterate

If your company has more than 1 employee there is already some type of performance management in place whether its formal or informal. And one of the great benefits of accepting that there is no magical right way to do performance management is that you can embrace your existing process and start improving it year after year.

Rather than make wholesale changes to your process every year, keep what’s working and drop what isn’t. For example, maybe this year you add 4 quarterly conversation, and remove a third of the questions from your annual review. See how that works, then next year adjust again.

Conclusion

Modern performance management is about doing what’s right for your organization. While a big clunky annual review may no longer be right for you, that doesn’t mean you need to make a jump to continuous feedback and OKRs. You already have the building blocks, so simplify your process and start iterating. Before you know it you’ll have your own modern performance management process.

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10/29/2019
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Why SMART Goals are Important

The ideas behind SMART are timeless, however if you simplify complex ideas into simple acronyms a lot is lost. That is why we think it is time to go back to the source, and explore exactly what makes SMART goals smart.

We looked at what goal science has to say about the S-M-A-R and T. SMART is still very important, but it might not be for the reasons you've been told.

S is for Specific

The reasoning behind setting “specific” goals is that we perform better when we know what to do. Think about your to do list. Which are the items that get done quickly and which are the ones that seem to stay on your list forever? If you are like me, something like “Buy a dozen eggs” will get done quickly while “Buy a chicken” might stay on my list for weeks. I have lots of experience buying eggs and can get right on it without much thought. I have never bought a chicken and having lived in the city most of my life I’m clueless about where to start.

There have been several studies that prove this. One study, out of Stanford, created two versions of a reward card for a frozen yogurt shop. The first version offered 1 free yogurt after purchasing any six flavors of yogurt in any order. The second version required ordering banana, apple, strawberry, orange, mango, and then grape in that order to receive the free cup.

The customers given the more specific version of the rewards card were 75% more likely to return to the store 6 times, complete the card and get their free cup of yogurt.

Professors Edwin Locke and Gary Latham have also written about this phenomenon. They found that as we move further outside our own area of expertise we have to engage in more and more problem solving to understand how to approach a goal. This can have negative consequences on our ability to stay motivated and complete our goals quickly.

It is a logical idea. If buying eggs is my goal I can move right to completing it. However if I am tasked with buying a chicken I will first have to engage in some problem solving, starting with my very minimal knowledge of chickens and expanding on that knowledge until I know enough to complete the task. This second process involves a lot discovery and does not always happen in a predictable way. The less I know about chickens at the start the longer and more unpredictable the process of buying a chicken will be.

You might have already noticed that buying an egg and buying a chicken are equally specific sentences. Which I did to make the point that just because you give someone a goal that sounds specific does not mean you are living up to the reasoning behind SMART goals. Specific goals should have a clear path to success for the person receiving the goal. If you’ve ever worked with a young intern, you know that specific goals mean different things to different people. For the lowly intern even getting a cup of coffee requires tremendous problem solving.

Lets return to the frozen yogurt example for a moment. There is something I didn’t tell you. The researchers also measured how many people wanted to take part in the rewards program. They presented one of the two versions and asked if the customer would like the rewards card.

Customers presented with the more flexible version (any yogurt in any order) signed up two and a half times more often than customers presented the very specific version!

We are great at completing specific goals, but we want flexible goals. This leaves us with a conflict. On the one hand employees are more likely to want to take on flexible goals that give them autonomy and let them do a little learning and problem solving. On the other hand employees will be most successful with a specific set of goals that requires no thinking, just rote action.

As a manager then we must balance these two forces. Generally goals that push employees slightly beyond their existing skill set, so that their skill set can still be applied to solving the new problem will be both quickly achieved and stimulating for the employee.

Another approach is to ask yourself, am I trying to get buy-in on a new goal or am I trying to get a difficult goal completed? If you want your team to embrace an easy but unpopular goal, consider making it a little less specific and a little more flexible so the team can embrace it and make it their own. If you already have lots of support but the goal is very difficult, consider being very specific so the team can apply their energy to exactly what needs to be done.

All that boiled was down to an "S." Before reading this you might have been forgiven for wondering why your intern still hasn't bought you a chicken.

In summary, the S in S.M.A.R.T. stands for - 

  1. Make sure the person receiving the goal can see a clear path to success
  2. And don't make the goal so rigid that your employee feels like a soulless automaton 

M is for Measurable

A measurable goal includes a metric or metrics that can be tracked so those involved know when the goal has been achieved. Many of us are guilty of setting goals that can’t be measured. For example maybe you have wanted to “be healthier.” Without metrics to quantify that goal it will be very difficult to know how much progress you are making or when you finally achieve "healthier." The unmeasurable goal is also an unclear goal, healthier could mean weighing less, but it could also mean running more.

When we make goals more measurable we also make them more motivating. From the last example, we might decide to throw out our goal to be healthier and replace it with a goal to complete a 5k race in under 30 minutes. This new measurable goal allows us to calculate exactly how much time we need to improve, and there is no ambiguity around if or when we achieve it. In fact there will be a triumphant moment when we cross a literal finish line.

The value of measurable goals is well understood, and Measurable is probably the most popular of the five characteristics of a SMART goal. So rather than convince you to make your goals more measurable, let me make the case that maybe your goals are already too measurable.

George Doran coined the acronym S.M.A.R.T. back in November of 1981, and in his original definition Doran is far less insistent on measurability than many of us are today. Doran said, “Notice these criteria don’t say that all objectives must be quantified...managers can lose the benefit of more abstract objectives in order to gain quantification.”

"Blasphemy!" I hear you say. But Doran is not the only one.

Drs. Edwin Locke and Gary Latham are the grandfathers of the study of modern goal-setting. These two scientists do not even include measurability in their 5 Goal Setting Principles. Instead measurability is discussed only as a way to give your goals more Clarity. For Locke and Latham measurability was important only as much as it made goals more clear, because clear goals are more motivating than ambiguous goals.

Now you might be thinking that Doran, Locke and Latham are luddites from another time. A time before big data, sensors, and tracking everything. Modern companies like Intel, Google, Uber and Twitter only care about things that are totally measurable.

Well lucky for us we know how Intel, Google, Uber and Twitter set goals. They all use a popular framework called OKRs. OKR stands for Objective and Key Results. The objective is a qualitative goal (ie not easily measurable) and the key results are several metrics that will be used to determine if the qualitative goal was achieved. Notice how the squishy unmeasurable goal come first in their framework.

The thing that Doran, Locke, Latham, Intel, Google, Uber and Twitter all have in common is that they don’t choose goals based on measurability. They set the goals that are most important for their companies first then they figure out the best way to measure them.

It is important to separate the goal and how we measure it because when we focus just on hitting certain metrics it can create perverse incentives. For example, maybe as a way to run that 5k race in under 30 minutes we drink a ton of caffeine and take a dangerous supplement. Sure we beat hit our metric, but we definitely did not achieve the original spirit of the goal which was to be healthier.

So by all means keep making your SMART goals measurable, just don’t compromise on what matters just so you have an easier time measuring. The OKR framework is helpful here. Set your goals first and let them be unencumbered by how easy or hard they are to measure. Then figure out how to make them measurable.

A is for Achievable

Oh “Achievable.” How did you get such a prominent position in the most well known framework for creating effective goals?

George Doran’s original SMART had “Assignable” as the A... but he did use “Realistic” for the R. Today the most common SMART acronym uses “Achievable.” But still, whether it is “Realistic” or “Achievable” how is this one of the 5 most important characteristics of an effective goal?

Can you imagine the conversation a rocket scientist who recently read Doran might have had with President Kennedy in the Fall of 1962?

Rocket Scientist: Mr. President I don’t feel like putting a man on the moon in this decade is realistic. What about a more achievable goal like sending a little robot up there?

President Kennedy: We choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard; because that goal will serve to organize and measure the best of our energies and skills.

The president knows what he’s talking about, and he’s backed up by the scientific research. In fact almost all goal research says that goals should be difficult or challenging in order to improve employee performance. “We choose to go to the Moon and do the other things...because they are hard.”

Unfortunately, SMART doesn't say anything about making our goals difficult. “Brush your teeth on the first Tuesday of every month,” is technically a SMART goal. However, since most of us are setting goals with the purpose of improving performance it seems like a strange omission.

For that reason I think it is important that we bring some nuance to the A in SMART so our goals will be better aligned with the scientific research.

For that lets turn to the work of the famous goal researchers Locke and Latham. They considered the idea of achievable goals, but only in the context of setting challenging goals.

One of the duo's most fundamental findings over their entire career was that, “the more difficult the goal, the greater the achievement.” This finding held true even when the goal was impossible.

But impossible is the opposite of achievable, what is going on here?

Locke and Latham explain it like this, difficult goals drive higher and higher performance as long as a person remains committed to those goals. For a person to be committed to a goal they must 1) believe the goal is worthwhile (we’ll cover this in the next post) and 2) believe the goal is achievable. Finally the word “achievable” in a scientific paper.

What Locke and Latham are saying is that when we set goals they should be the most difficult goal that our employees will believe is achievable, and therefore stay committed to. So yes, our goals should be achievable in the eyes of our employees, but our goals must first be challenging or they will not drive improvements in performance.

When Kennedy is giving his famous Moon Speech he is not interested in compromising on his audacious goal, he is trying to make the country believe in it, believe that it is achievable to go to the moon. Rather than making the goal easier, he is increasing the belief of his people.

Practically what this means is that when we look at the A in SMART it shouldn't make us want to set easier goals. Instead it should remind us to set the most difficult goals that we can then convince our employees are achievable. The A in SMART should really stand for “An almost impossible goal that your employees will believe is achievable.”

Subscribe to our blog to get our next post about the R in SMART - Relevant. We'll dive deeper into the idea of keeping employees committed to goals.

R is for Relevant

Remember Algebra homework? Or maybe your kid’s algebra homework?

When I think back to those days, there is one exasperated question that always comes to mind…

“But when am I ever going to use this stuff again?”

If you think for a moment about how you would answer that question from your teenage self or teenage child, you might just already understand the importance of the next component of SMART goals.

R is for Relevant, and it is the second “commitment modifier” we've talked about. Think of commitment modifiers this way…

You start a new project and you’re totally gung-ho, then things starts to get hard and the little voice inside your head says, “this is impossible” or “this is stupid.” That little voice is reducing your commitment to the goal because it isn’t achievable (impossible) or isn’t relevant (stupid).

The goal researchers Locke and Latham say "When goals are easy or vague, it is easy to get commitment, because it does not require much dedication to reach easy goals. When goals are specific and hard, the higher the commitment the better the performance."

So once we've crafted a difficult and specific goal the job is not over, we have to continuously maintain commitment to it if we want to keep performance high.

Back to the algebra homework, when the little voice inside our head was telling us that algebra is stupid. At this point a good leader, maybe a parent or a teacher, can help bring relevance to the goal by showing us why it matters. For example, “If you want to be an architect (or something else we feel is important) you’ll need to know algebra.” Or “You’re right, as a NFL player you might never use Algebra, but if you want to play in college you’re going to need to get good grades.”

One of the most important things to remember when creating goals for your team is that relevance is not intrinsic to the goal itself. People can find different relevance for the same goal.

Completing an algebra assignment could be relevant for one child because understanding and improving in math is important in its own right, while the same assignment for another student might only get completed because they seek the approval of their parents, and a third student may only do it because they’ve been threatened with expulsion if their grades don’t improve.

One of the most common mistakes managers and business leaders make when setting goals is thinking that a good goal is crafted on the page. They think, let me Google “writing good goals” and then take an hour to scribble down the team’s goals. What you can't write down is the relevance to each team member. The relevance the goal has for you is probably obvious -

“If we increase our Q4 numbers 10% I will look amazing to the boss and I will be in a good position for that promotion I want.”

But you have to remember that those things might not be relevant for everyone on your team. The algebra teacher might assign the night’s homework because “my students need more practice before they are ready for next week’s lesson.”

Meanwhile the students are doing the assignment for totally different reasons, or maybe they don’t have a good reason and aren’t doing the assignment because “it’s stupid.”

So while you might set the same goal for every person on the sales team, you may need to use several different techniques to create relevance.

Something I often hear is “because I said so," that should be relevance enough. That is true to a point, although over time your team’s commitment will start to slip if they don’t have more.

Our favorite goal researchers have a lot to say about this. From Motivation Through Conscious Goal Setting, “There are many ways to convince a person that a goal is important. In work situations, the supervisor or leader can use legitimate authority to get initial commitment. Continued commitment might require additional incentives such as supportiveness, recognition, and rewards.”

So get out there and spend a few moments with each member of your team, talk about the goals you set and help each of them find the relevance they need to succeed long term. Some will be motivated by the success of the company, others by personal power and riches, and a few may just want to avoid getting fired. Whatever it is everyone needs their own relevance or the positive impacts of your well crafted goals will quickly start to fade.

T is for Time Constrained

Time if the fourth dimension, it is a fundamental part of...of just everything. Everything you do happens over the course of time, so to set a goal and not talk about time is just crazy. Time is so fundamental to goals that you’d think we wouldn’t have to talk about it, but we do and we will.

A time-constraint is just a deadline. It could be one deadline, or it could be a recurring deadline. Maybe you don’t want to just complete 1 blog post, but you want to complete 1 every week.

Deadlines get their own letter in SMART, but in the science of goal setting deadlines are important for their impact on two other characteristics of effective goals, Clarity and Difficulty.

Setting clear goals helps us to focus our energy and motivation towards action. If a goal is unclear it can be very disorienting. Imagine you set a goal for yourself to complete a painting and sell it. On it’s surface that is a very clear goal, but if you don’t set a deadline all of a sudden the possibilities become endless. Should you practice for 1 month or 6 months before starting the painting you'll try to sell, how often should you practice, how good should the painting be before you try to sell it.

This is the type of ambiguity that tanks goals. As you start to work towards your goal, things will become difficult, your paintings won't be as good as you expected them to be and the ambiguity in your goal will become the room you need to start making excuses. "I'm still going to sell a painting, I just need more time to practice." "I'm still going to sell a painting, I just only have once-a-week to paint these days." The less ambiguity there is in a goal the less places there are for us to get lost in our pursuit.

If we imagine that our goal had been to sell a painting in 3 months, we can see how that would bring clarity and help us formulate a plan. We'd be able to start working backwards from that date and determining just exactly what we need to do to accomplish our goal. Eventually 3 months would come around and we would either succeed or fail, but either way we'd be futher ahead than if we hadn't set a deadline.

Everything you do is going to take place over time and so any goal you set needs a deadline to have clarity.

The other important aspect of deadlines is their impact on goal difficulty. Locke and Latham talk extensively about the power of difficult goals to increase output. It makes sense, if you think a goal is easy, you’re probably not going to work that hard to achieve it. If it seems really hard, but still achievable and worth doing, you’re going to give it everything you’ve got.

Time can act as a way to increase the difficulty of any goal. Think about it, almost all of us will cover 1 mile on our feet over the course of the next few days, but some people devote their entire lives to covering that same distance in under 4 minutes. It is something that all of us can do, but only becomes a motivating and difficult goal when we put a time constraint on it.

The easiest tasks benefit most from tight deadlines. This is because an easy goal can be made difficult with a deadline and therefore drive high performance. If you ask me to run a mile in the next week then I might not make any progress until the last few minutes of the last day of the week. If you tell me to accomplish the same goal in the next hour, I'm immediately kicked into gear and thinking about getting a change of clothes and some better shoes. If you tell me to cover a mile in the next 10 minutes I'm headed out the door now and I'll just endure the blisters and chaffing. The same goal with three different deadlines and therefore three levels of difficulty, drives three different amounts of effort.

The next time you set a goal don't forget time, it is inescapable.

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10/22/2019
Employee Check-ins vs Employee Reviews

If you’re heard the word “check-ins” talked about in performance management circles, you’ve likely had one of two reactions: what’s the big deal? It’s just another method of performance reviews, right?

Or, maybe, the Adobe innovation piqued your interest and you’re wondering whether to ditch your annual performance reviews like other companies have. Whatever you do, don’t allow the semi-sensationalized nature of employee check-ins to influence your perception of them. You may find that they’re not such a dramatic innovation after all--maybe they’re simply another method of measuring employee performance.

This article will help to better define the buzzword that is “check-ins” and maybe help you to analyze whether they are right--or wrong--for your employee performance conversations.

Similar to performance reviews

In many ways, employee check-ins are not so different from traditional performance reviews. The main priority in both remains the same--to conduct effective one-on-one meetings with employees to discuss progress, goals, and share feedback.

The most significant difference is the frequency in which the meetings occur. The idea behind check-ins is to foster a more informal, ongoing dialogue between employees and their managers. Some companies schedule mandated check-ins every month, while others schedule them as needed, or after completing major projects. Regardless of their specific schedule, the main purpose is to keep the lines of communication between employees and managers open so as to engage and manage employee performance more readily.

Adobe introduced the concept of employee check-ins in 2012 as a means of doing away with traditional performance reviews. As Adobe realized, and as many other companies have discovered, the annual performance review format tends to get bogged down by paperwork, bureaucracy, and unnecessary complexity. It can also lead to employees feeling limited by ranking and undervalued for performance.

Check-ins were brought into play as a means of catalyzing change in the standard performance review format, and to help employees feel more engaged and empowered.

How check-ins differ from performance reviews

The purpose of check-ins is to ensure that employees are given the opportunity to understand their expectations, share feedback, and discuss the development that is needed to enhance their performance.

Much of the appeal for companies that have switched to check-ins is the informal nature of them. Instead of being scripted, check-ins can remain relatively casual for both employees and management. The idea is that more frequent, less formal communication will allow employees and managers to work better together in accomplishing goals, sharing feedback, and developing skills.

While check-ins can be held with a more casual approach, it’s important that managers are still able to keep a loose structure intact in order to make the most of employee conversations. Employees should walk away from each check-in feeling inspired and driven to action, having established clear goals and discussed pointed areas of development.

The benefit of holding more frequent check-ins is that managers have a better idea of what an employee is working on in that moment. Instead of providing vague references to the employee’s overall performance from an extended length of time, managers can point to specific projects, goals, or coaching points to hone in on during each meeting.

It’s also important to note that feedback shouldn’t be restricted to just check-ins or formal reviews--feedback should be given throughout the year, so that these discussions can focus on goal-setting under the assumption that the employee already has ideas of ways to improve.

Beware of micromanagement

To the manager, more frequent, informal check-ins can certainly seem like a solution to the problems presented by annual or traditional performance reviews. But check-ins aren’t without their pitfalls.

In the case of traditional performance reviews, employees often reported feeling left in the dark regarding their performance rating until the annual or quarterly meeting, which would often leave them even more confused and unmotivated. Holding less frequent reviews runs the risk of employees losing vision of their goals, and then being overwhelmed with feedback to the point that they walk away discouraged and criticized.

However, the opposite can become true of check-ins--instead of being left in the dark, check-ins create many opportunities for an employee to feel micromanaged. A Harvard Business Review article distinguishes the importance of “checking in” with an employee rather than “checking up” on them--in other words, establishing clear, meaningful goals while also giving them the autonomy to meet those goals.

If you’re considering check-ins

We’ve said it before, and we’ll say it again: Doing what’s right for your organization and your employees is key.

It’s not a bad thing to hold less frequent check-ins, especially if you believe in the success and capability of your employees. In many organizations, typically ones that are smaller, managers have found that checking in with employees is less needed when they are able to give employees clear strategic goals. This develops a sense of ownership in the work, and in turn, creates a nearly autonomous workforce that fosters healthy collaboration in management and employees.

In larger companies, however, frequent check-ins play a valuable role in making an employee feel heard, seen, and set up for success in achieving company goals. The increased communication fosters employee engagement, and, in the long run, can help your organization retain employees. Employee check-ins can also be used as a valuable way to measure a new hire’s experience.

Most importantly, managers should seek to establish a regular cadence of check-ins or performance reviews (no matter how frequent) that fits the needs of their organizational needs.

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10/15/2019
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What are Behaviorally Anchored Rating Scales (BARS)?

Behaviorally Anchored Rating Scales, also known as BARS, are a type of performance management scale that use behavior “statements” as a reference point instead of generic descriptors commonly found on traditional rating scales. Designed to add the benefits of both qualitative and quantitative information to the appraisal process, BARS measures an employee’s performance against specific examples of behavior that are given a number rating for the purpose of collecting data.

Establishing specific behaviors for grading, are meant to give the rating a higher degree of accuracy relative to performance. This is because you’re relying on unique, individual behaviors required for each individual position within an organization, instead of behaviors that can be evaluated in any position across the board. It is presumed that using a rating scale with specific behaviors for selected jobs, minimizes the subjectivity in using basic ratings scales. We’ll take a closer look at this later to see if it’s true.

For now, let us consider some examples of what BARS might look like.

 

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Examples

The job being appraised belongs to a customer service representative:

  • A level four rating might assume the rep “answers the phone after 1 to 2 rings with a friendly greeting.”
  • A level six rating might assume the rep “answers phone after 1 ring with the correct company greeting.”

A traditional rating scale would ask if the employee “answers phone promptly/courteously” and list the number ratings as “1-never, 2-not often, 3-sometimes, 4-usually, 5-always”. It is clear to see there will be a difference in the outcome of the appraisal with the more definitive BARS method.

The job being appraised belongs to a nurse:

  • A level four rating might assume the nurse “shows sympathy to patients.”
  • A level six rating might assume the nurse “shows higher levels of empathy in all dealings with the patient and their family.''

The job being appraised belongs to a waiter.

  • A level 2 rating might assume the waiter “talks on phone while taking orders.”
  • A level 4 rating might assume the waiter “makes eye contact with customers during every transaction.”
  • A level 6 rating might assume the waiter “greets customers cheerfully and makes suggestions from the menu based on their preferences.”

What are the Pros and Cons?

While these examples are great at offering an insight to the effectiveness of the BARS method, not everything about Behaviorally Anchored Rating Scales is perfect. There are several benefits to making the switch but also some downsides one should examine first.

The benefits of using the BARS approach include:

  1. It is easy to use. The standards upon which the employee is being appraised are significantly clear which makes the entire process much less confusing.
  2. It is based on behavior. The ultimate goal of employee appraisals is to improve performance. Having a better understanding of the behaviors and what leads to them, allows the company an added perspective to what works and what doesn’t.
  3. It is impartial. Because BARS is heavily focused on behavior, the evaluation process seemingly has more fairness to it.
  4. It is completely individualized. BARS creates the ability to design a unique performance management experience for every position within an organization.

The downsides of using the BARS approach include:

  1. It is a time-consuming process. As great as it sounds to design the unique experience for each position, an organization with many different roles would have to invest an enormous amount of time and resources to get it done.
  2. It can be expensive. Time is money. For smaller organizations with multiple roles, this may not be feasible to accomplish in the short run.
  3. It demands a management team that is highly devoted/motivated. All of the statements and anchors used on the appraisal need to be developed. It is demanding and managers would have to be highly involved.
  4. It can be accused of leniency bias. BARS directly removes the opportunity for an evaluation to be biased, however, it doesn’t remove them all. Some believe there is still room for the leniency error.

Who is it best for?

After taking a closer look at the pros and cons of using Behaviorally Anchored Rating Scales, one can expect that the method is best used by larger companies financially capable of pursuing the project. However, realizing that major manager input is mandatory, the company also needs to have understandable time and commitment expectations.

It would be ideal if the company did not have a large number of different positions but rather, groups of positions or departments made up of similar types of jobs. Being that this approach is still a measuring system used for rating employees, another suitable use for BARS is when you encounter bias challenges in the current performance management process.

It’s emphasis on behavior produces objective ratings difficult to distort.

How to set yourself up for success?

If you want to include BARS in your performance management plan, it is highly recommended that you start by diligently researching the approach. Be prepared with a full understanding so that you can execute the method properly for your own organization. Also be sure to have a team onboard. As previously mentioned, managers will need to be greatly involved. The following steps will assist in developing the final product:

  1. Collect examples of adequate and inadequate behavior related to jobs. Some use the Critical Incident Technique.
  2. Convert data into performance dimensions using examples of behavior.
  3. Ask your team of subject matter experts (SMEs) to translate into their own performance dimensions.
  4. Give the remaining behaviors a scale, usually a 5 to 9 point one.
  5. Discard the higher deviated standards to ensure SME agreement on behavior ratings.
  6. Develop the final scale accordingly.
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10/11/2019
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5 Modern Alternatives to Annual Performance Reviews

The business world is becoming faster, more efficient and more innovative. In coordination with these changes, many HR professionals are evaluating classic annual reviews to see if there is a better way to do things. Let’s take a closer look at some of the modern performance management alternatives that are often discussed.

 

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One-on-Ones

One-on-ones are an informal opportunity for managers and employees to regularly meet face to face.

Pros

  • Demonstrate interest in the employee. Quite simply, one-on-one check-ins let the employee know that they matter to the manager. These can help build an employee/leader relationship.
  • Act as an early warning. These informal meetings can help identify struggles or issues early on.
  • Opportunity to listen. Many people are looking for an opportunity to be listened to, and these one-on-ones provide a chance for employees to tell their story.

Cons

  • Easy to postpone. It can seem simple to postpone or cancel these one-on-one meetings. If this becomes a regular habit, it can send a message to the employee that their role or work isn’t as important.
  • Time-consuming. These meetings can be hard to manage if a manager has multiple direct reports.
  • Hard to measure. These meetings often don't have a formal reporting structure to help capture an employee's progress against goals throughout the year.

Quarterly Check-Ins

As the name suggests, these mini-performance evaluations happen with an employee four times a year. These can be formal or informal meetings to discuss performance from the last quarter.

Pros

  • More interaction with employees. Meeting an employee at least four times a year provides an opportunity to deepen the leader/employee relationship.
  • Timely feedback. Instead of asking an employee to keep a yearly scorecard, managers can provide feedback as things happen. This allows an employee to act on recommendations immediately.
  • Reduce admin load. Managers can pull together information from these conversations to perform annual performance reviews.

Cons

  • Manager commitment. If a manager has many direct reports, this meeting frequency can become a burden.
  • Lack of long-term focus. When you are reviewing progress on a shorter-term basis, it can be hard to focus on the big picture.

Project-Based Reviews

Project-based reviews are distinct from other types of reviews because they focus on the last project an employee completed. Project-based reviews combine feedback from project managers and others from different teams who also worked on the project.

Pros

  • Goals are clearly defined. Project-based work tends to have very clear objectives, scope, and deliverables. This can help guide reviews.
  • Timely, relevant feedback. Managers and employees can discuss relevant feedback from others who worked on the project while the work is still fresh in everyone’s mind.
  • Meaningful performance records. Project-based reviews can quickly surface patterns of excellence or signs of trouble in an employee.

Cons

  • Not a one-size-fits-all solution. Projects can be too big or too small for this to work. Daily or weekly project reviews would quickly become overwhelming, and multi-year projects could leave employees with very infrequent reviews.
  • Time-consuming. Since input needs to be gathered from a variety of sources beyond the direct manager, this style of feedback can be time-consuming for both the manager as well as peers and project leaders.

Goals and Goal Check-ins

These meetings focus the discussion on creating and measuring performance and progress of an employee’s SMART goals. It typically doesn't involve a formal analysis but could be documented.

Pros

  • Provides timely feedback. This helps keep employees engaged with and thinking about their goals throughout the year. It also provides an opportunity for discussions when things are not going well.
  • Goal tracking. This also allows managers to track an employee’s activities related to goals and objectives.

Cons

  • Can be too focused. If employees and managers are only discussing goals, there may be other successes or challenges that are not being discussed.
  • Overly impersonal. Discussions about goals and progress against goals can be very impersonal. These meetings don't often contribute to building a strong employee/manager relationship.

Continuous Feedback

In a nutshell, continuous feedback includes any assessment that happens on a regular basis. These can be formal or informal meetings.

Pros

  • Provide immediate evaluation. These meetings help address issues and celebrate successes as they happen.
  • Summary of objectives. Employees are reminded of their responsibilities and overall objectives and can be sure that they are on the right path for success.

Cons

  • Hard to see the big picture. When you are meeting on a regular basis, it can be harder to identify the milestones in measurable goals.
  • Keeping a consistent schedule. Continuous performance reviews can only be successful if they are indeed continuous.

Organizations have many performance management options. The best process for your organization may actually bring together elements of several of the processes described above. The bottom line is that any employee performance review process needs to accurately reflect performance and ultimately be effective.

Ready to learn more about creating a modern performance management system? Check out our guide.

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9/11/2019
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What is the Essay Method for Performance Appraisals?

While some would label it as the “grandfather” of performance appraisal methods, the essay method is still a commonly used appraisal method in a variety of business models. The essay method, sometimes known as the “free-form method,” is a performance review system where a superior creates a written review of the employee’s performance.

These essays are meant to describe and record an employee’s strengths and weaknesses in job performance, identifying problem areas and creating a plan of action to remedy them. Whether the essay is written by the appraiser alone, or in collaboration with the appraisee, essays provide supervisors the opportunity to assess behaviors and performance with greater complexity and attention to detail.

There are many reasons that the essay method--which was one of the first methods used to evaluate performance--is still effective today.

Pros

One of the most noteworthy aspects of essay appraisals is their free-form approach to performance reviews. Whereas some employers can feel limited by rigid performance appraisal criteria, the essay method takes a far less structured stance than typical rating scale methods. In so doing, the appraiser is able to examine any relevant issue or attribute of performance that is pertinent to an employee’s job description or overall company growth.

The essay method assumes that not all employee traits and behaviors can be neatly analyzed, dissected, and rated--instead, it allows appraisers to place varied degrees of emphasis on certain qualities, issues, or attributes that are appropriate. Rather than being locked into a fixed system, this open-ended method gives supervisors the freedom of expression and critical thought.

When preparing an essay, a supervisor may consider any of the following factors of an employee as they relate to the company and employee relationship: potential and job knowledge, understanding of the company’s policies, relationships with peers and supervisors, planning and organization, and general attitudes and perceptions. This thorough, non-quantitative assessment provides a good deal more information about an employee than most other performance appraisal techniques.

However, as with all performance appraisal methods, there are a few limitations that the essay method suffers from that are worth examining.

Cons

One of the major drawbacks of the essay method is its highly subjective nature--they are often subject to bias, and it can be difficult to separate the assessment of the employee from the bias of the evaluator. While the essay can provide a good deal of information about the employee, it tends to tell more about the evaluator than the one being evaluated.

Another element that essays leave out (that other appraisal methods rely heavily on) is comparative results. Instead of utilizing standardized, numeric questions, these appraisals rely only on open-ended questions. While the essay method gives managers the ability to provide detailed and circumstantial information on a specific employee’s performance, it removes the component of comparing performance with other employees. This often makes it difficult for HR to distinguish top performers.

Overall, the appraisal method’s greatest advantage--the freedom of expression for the evaluator--can also serve as its greatest handicap. Even the actual writing of the reviews can upset or distort the process of employee appraisals, as the introduction of inconsistent, unorganized, or poor writing styles can distort and upset the review process. An employee may be unfairly helped or harmed by an evaluator’s writing ability. An evaluator can also find themselves lacking sufficient time to prepare the essay, and can write an essay hurriedly without accurately assessing an employee’s performance.

What is the essay method best used for?

Appraisal by essay is generally most effective in performance reviews for employees with atypical job descriptions or non-numerical goals. While other appraisals work well in analyzing performance for jobs that are subject to goals based on numbers, essays offer a more subjective analysis of performance for employees with managerial or customer service positions.

When analyzing production, the essay method is most effective in combination with another appraisal method. Using a graphic rating scale along with essay appraisals allows one method to focus solely on numbers, while the essay portion can be used to analyze other performance goals.

Doing essay appraisals right

Here are 3 things to strive for in order to set your company up for success in essay performance appraisals:

  1. Consistency.

Keeping a standard for style and length of essay appraisals can make the biggest difference in ensuring that your reviews are effective. Essays that are unstructured and unnecessarily complex can be detrimental to an employee’s rating, as well as using unspecific, flowery language that is not relevant to the employee’s performance. In order to remain efficient and effective, today’s evaluators should focus on making appraisal essays short and specific, ensuring that the entire review reflects the performance of the employee.

The appraiser should also ensure that they are making sufficient time in their schedule to prepare the essay. A busy evaluator may compromise an employee’s performance rating by writing a hurried essay, or running out of time to thoroughly assess employee performance. It’s important for all participants of essay appraisals to take enough time to write a consistent, accurate, and succinct review in order to set employees up for success.

2. Proficiency.

If you’ve chosen to use essay appraisals in your organization, it’s important to ensure that your appraisers possess the ability to write well. Even if an essay contains detailed, circumstantial information, it becomes difficult to extract valuable data from a poorly written essay. To ensure that nothing stands between an HR professional’s ability to assess an employee’s performance, evaluators should be trained as well-equipped writers.

Giving writing assistant tools or tips to supervisors can make all the difference in the accuracy and efficiency of an employee’s performance review.

2. Objectivity.

Subjectivity is both a strength and a weakness in essay appraisals. Not only are essays themselves often biased, but the misinterpretation of essays can even further distance the main evaluator from an accurate portrayal of an employee’s performance. Including objective standards in a performance review results in a more balanced and productive review process, and helps to eliminate the forming of incorrect conclusions about an employee’s behavior and performance.

Organizations often implement this goal by pairing essay appraisals with another appraisal method, such as graphic scale ratings, to draw more accurate conclusions and performance data. In so doing, evaluators can utilize all of the free expression and open-ended characteristics of an essay appraisal, while still maintaining accurate, easily translated results that are effective for the overall organization.

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9/11/2019
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3 Approaches to Performance Management: Google, Betterment and IBM

Some of the biggest names in technology and finance are not just making headlines for innovative advancement in their industries. Believe it or not, these companies also have unique approaches to performance management leading the way. Systems created by them for discovering great managers are becoming a trend and technology developed for their employee review purposes are grabbing everyone’s attention. Thriving in their performance management goals, one thing these three companies have in common is they saw a need for modification, and set out to reinvent the way they manage employee performance. The results have kept their employees happy while saving their businesses time and money.

Google

Google is an American multinational technology company that specializes in Internet-related services and products. They have what some might say is the world’s most progressive human resource organization. Google calls it “People Operations Practice” and they focus on three main purposes:

  1. Select and hire only the best fit candidates
  2. Build a merit based reward/incentive system
  3. Developing employees to their fullest potential, through coaching, outside training, and through a 360-degree crowdsourced feedback program

Taking a further dive into the way they implement these purposes, we find out that Google has a combination of some traditional HR practices with a new twist. This summary breaks down the performance management process Google is well known for:

  • Annual performance review with a mid-year checkpoint
  • Monthly performance check-ins that address career development, coaching, personal issues, etc.
  • “Googlegeist engagement survey” (measures a vast expandment of topics)
  • Annual “Upward Feedback Survey”, similar to 360-degree review where only supervisors are reviewed by their direct reports
  • A mildly different form of Management-by-Objectives called OKRs (objectives and key-results)
  • “Meritocracy”: compensating people unequally through bonuses, equity stock option grants, and prizes.

Betterment

Betterment is an online investment company known for using technology to yield returns. They do not get paid for certain funds or have any of their own, which gives them their customer centric style. Through the years, Betterment’s HR approach has emphasized a performance management philosophy of constant iteration. Jon Stein, Betterment’s CEO and founder, says the best system is one that changes easily just as your company grows and changes also. What he has learned from several trial and errors can be summed up into a final version of Betterment’s Performance Management System including:

  • Betterment added key performance indicators:
  • This move was meant for overall business performance rather than singular, distinct targets. An example they’ve mentioned is tracking referrals as a key performance indicator to make sure they're headed in the right direction, instead of setting a quota that had to be met.
  • They developed a new tier of leadership to facilitate more cross-team partnerships:
  • This is a great example of a fast-growing company revising its performance management to cope, as well as communicate the need for organizational change.
  • They called this new management level "pillar leads" that work on cross-functional projects as a unified group.
  • They made reporting simpler and more visible for all:
  • While every team has a “dashboard”, it is rare for them to instinctively collaborate or deviate from their own personal objectives. The need for more push metrics arose but Betterment wanted to broadcast in a way that was clear, allowing teams to see each other’s progress toward company goals. For instance, they send and email regularly to everyone highlighting current numbers and team metrics as well as posting them up on walls for public viewing. This has also created a common impression that “all hands on deck” to get fellow employees where they need to go.

IBM

IBM is an American multinational information technology company, that recently changed it’s 10 year old performance review system for a brand new approach that shifts employee goals throughout the year and involves much more feedback. This change came about because IBM’s chief HR officer noted employees were already doing work differently. The former system, quite similar to many traditional annual reviews, asked employees to set their goals for the year in January. After a mid-year check-in with management, they’d receive a final assessment and a single performance score in December of that same year. According to Diane Gherson, employees entered a variety of situations throughout the year, which meant oftentimes they weren’t even working towards those original objectives. So managers ended up in “irrelevant discussion” during the annual evaluation trying to determine whether the 11 month old goals were fulfilled. What they ended up with was an effort of crowdsourcing ideas from 380,000 employees across 170 countries.

They eliminated some unexpected ideas:

  • Self-assessments; the majority of employees didn’t feel it was helpful
  • Relative performance rankings; managers would no longer meet with each other to compare employees, rather, the employees wanted more frequent, direct feedback.

The result was an app-based performance review system, they named “Checkpoint”. With Checkpoint, IBM employees will have a performance management program that addresses several key objectives:

  • Setting shorter-term goals
  • Management feedback on employee progress every quarter (or less)
  • Employees will be judged across five criteria in which managers will assess whether they’ve “exceeded” or “achieved expectations” in these dimensions (or if improvement is needed): 1. business results, 2. impact on client success, 3. innovation, 4. personal responsibility to others, 5. skills.

Kudos to IBM for creating an app! There is now no single measure of an employee’s performance like in the old system. Before there was only one score but now there are five. This makes for a much more dynamic and balanced discussion.

Google, Betterment, and IBM remained flexible in their approach to HR practices. As a result, their creativity led them to redesign performance management systems that just weren’t effective anymore. In all likelihood, these practical examples of companies managing performance in their own way prove one size doesn’t fit all but there are certainly great models to glean from.

More Inspiration

These organizations are not the only ones going their own way. These days most great organizations are thinking critically about performance management and coming up with innovative new solutions. Here are a few more examples to help inspire your own strategy.

How Does GE Do Performance Management Today?

How does Facebook do Performance Management

Performance Management at Tesla: What we know.

How Regeneron Built Their Performance Management System

How Does Uber Do Performance Management?

How Does Asana Do Performance Management?

How Netflix does Performance Management

Deloitte's Radically Simple Review

How Does Amazon Do Performance Management?

And if you're ready to take the next step, check out our guide to creating your own modern performance management process.

 

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8/6/2019
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The Benefits of Project Based Reviews

Project based work is more popular than ever. With the rise of outsourcing there are more agencies and firms engaging with companies on discrete projects. So how does Human Resources keep track of employee performance when the conventional annual or quarterly check-ins don’t match the natural cycle of an employee’s work?

Enter the project based review. A natural mix of performance management and project management.

Project based reviews are distinct from other types of reviews because they focus on just the last project an employee completed. This allows the questions to be more directly relevant to the work, and it also allows the employee and the whole team to be judged against the objective goals set out for the project.

So in addition to more typical questions like how well the employee works with her teammates, you can also ask questions like did the employee deliver her part of the project on budget and on time.

Here are some more benefits to using project based reviews-

Benefits of Project Based Reviews

  • Goals are clearly defined - Because project based work tends to have very clear objectives, scope, deliverables, etc, it is much easier to have objective criteria in project based reviews.
  • Feedback is closely tied to work - The immediacy and limited scope of project based reviews tends to eliminate many of the idiosyncratic rater effects found in other types of reviews.
  • Fast Feedback cycles - Project based reviews match the cadence of the feedback to the cadence of the work perfectly. Employees have the opportunity to receive and internalize feedback before getting into the next project where they can demonstrate any improvements.
  • Meaningful performance records - The frequency and relevancy of the feedback creates a very meaningful performance record for each employee. With annual reviews, if an employee gets a bad rating one year, it can be hard to know how much to read into that. Was the whole year really that bad? Project based reviews quickly surface patterns of excellence or lack thereof.

Who Should Use Them

  • Organizations that work on discrete projects - The is obvious, but don’t try to force project based reviews if your teams are not already working on very clear and discrete projects. It also matters that the projects are a bit different each time. If the employees are doing identical work on projects throughout the year, the project cadence is less meaningful.
  • Established project management practices - The benefits of project based reviews are most pronounced when your teams already have a quality project management process in place. If your teams are just winging it on projects then you won’t get the benefit of objective criteria when reviewing a project.
  • Projects that aren’t too short or too long - The administrative burden of reviews for daily or weekly projects will quickly become overwhelming. On the other hand, multi-year projects could leave employees with very infrequent reviews. The sweet spot can shift depending on the length of the review process and is somewhere between every few weeks and a few times a year.
  • Matrixed organizations - When teams are coming together from different functional areas to accomplish something for the organization this is a great time to look at project based reviews. Often the traditional hierarchy approach used in quarterly reviews won’t work as well for employees always working with a new team of coworkers.

Some companies are unmistakably project based such as management consulting firms or branding agencies, but many companies have elements of project based work in addition to ongoing work. In those cases it could make sense to layer a light project based review process on top of a more standard quarterly, semi-annual or annual process.

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7/23/2019
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Rating Scales for Employee Performance Reviews

 

Rating scales are very common in employee reviews and performance checkins. They help us quantitatively measure employee performance. 

The benefits of employee rating questions are that they allow for simpler comparisons between employees and they can speed up the appraisal process. Faster appraisals can allow organizations to solicit feedback from more people in one review.

The downside of performance rating scales is that a lot of nuance is lost in a simple three, five or seven point scale. It can be hard to boil down all of a person’s strengths and weaknesses to one number. 

The other common issue with rating scales is that they are poorly constructed. This post is designed to help you create the scales for your performance management process. We also provide a ton of examples to borrow from at the bottom.

 

We built PerformYard to streamline and automate any organization's unique performance management strategy.

 

Learn More

 

Choosing the Right Rating Scales

There is literally a science to rating scales. Social scientists have been using questionnaires to collect real scientific data for many decades.

That means we don’t need to reinvent the wheel here, we should learn from our scientific colleagues.

Nominal vs Binary vs Ordinal Data

Stay with me, we should have a quick understanding of the types of data we’re collecting before diving deeper into rating scales. There are three types of data that are most often collected on employee appraisal forms - Nominal, Binary and Ordinal. Here is what they mean…

Nominal = Categories

Example: “Which of our six company values does this employee most live-up-to?”

When the answer options have no relationship to each other, in other words they aren’t ordered, or have any numeric relationship, you are asking a question that will generate nominal data. These are not technically rating scale questions, but are commonly found on review forms.

Binary = Yes or No (either or)

Example: “Is this employee ready for promotion?”

Binary data is always either or. The most common example being yes or no. Other examples are exists or doesn’t exist, is or is not, complete or incomplete. Deloitte collects binary data in 2 of the 4 questions on their review form. Google collects binary data on their upward reviews of managers.

Ordinal = Ordered List

Example: “Rate the employee for the following statements using a five point scale from Strongly Agree to Strongly Disagree”

Ordinal data is collected when we ask rating scale questions. The answers to a question will be a list of possibilities that have a clear order or ranking. As you move up the scale, options should clearly be better/more and as you move down the scale, the options are worse/less.

Numeric vs Descriptive Answers

There are two common ways to present rating scale answers, Numeric and Descriptiv. Here is what they mean…

Numeric - Just numbers (like 1-5)

Example: “Score the employee’s leadership ability between 1 and 5.” 

Numeric scales rightfully get a lot of pushback. It can be really hard for managers to understand what constitutes a 4 verse a 5 when it comes to subjective competencies like “assertiveness.” 

Descriptive - Ordered descriptions

Example: Everything from Agree to Disagree all the way to Behaviorally Anchored Rating Scales.

Descriptive rating scales include descriptions of what each step up on the scale looks like. This could be as simple as different levels of agreement or it could be as complex as a set of specific actions an employee should have taken to achieve each level.

Most Common Rating Scales - Likert vs Semantic vs Custom

Likert Scales

Likert scales are the most common scales and one we’ve all seen before. This scale measures our response to a statement, with the most common being…

Strongly Disagree - Disagree - Neither Agree nor Disagree - Agree - Strongly Agree. 

Well designed likert scales will be symmetrical, with an equal number of positive and negative responses. They will also be balanced with what feels like the same distance between each choice. 

Five choices is the most common, but any number is possible. One of the most important decisions to make is whether to give an odd or even number. An odd number of choices will mean the central option is neutral, neither positive or negative. An even number of options is sometimes called a “forced choice” does not give a neutral option and so the respondent has to pick a side.

Semantic Scales

Semantic scales are similar to likert scales but present just two extremes with unnamed options in between. For example you might ask an employee to rate a recent project between success and failure with 7 options in between.

Custom Scales

This is one of the most common choices on performance rating forms. We find that HR teams like to create their own scales to fit their needs. This is a bold move that could lead to unexpected distortions in your data. But! If you’re up for it we’ve provided many real life rating scale examples below.

Examples of Rating Scales in Action

UC Berkeley

The University of California, Berkeley human resources department currently conducts performance appraisals with a 5-level rating scale, ranging from Exceptional to Unsatisfactory. Supervisors that assign a Level 2 (Improvement Needed) or Level 1 (Unsatisfactory) rating to an employee must complete a Performance Improvement Plan for said employee. This plan is developed to improve or correct poor performance, containing timelines that are outlined and monitored to measure the employee’s progress. A Level 5 (Exceptional) rating is said to be achievable, but given fairly infrequently. High-performing employees often receive a Level 4 (Exceeds Expectations) or Level 3 (Meets Expectations) rating.

Huntington Ingalls

This company uses a rating system that is both numerical and alphabetical, focused on whether or not employees meet company goals. Their 5-point scale assigns abbreviations that coincide with each numerical ranking: 5 = FE (Far Exceeds), 4 = EX (Exceeds Expectations), 3 = ME (Meets Expectations), 2 = DR (Development Required), and 1 = IR (Improvement Required).

Harvard

Harvard makes use of multiple rating scales within their organization, including overall performance ratings of employees, goals, competencies, and direct report ratings. Overall performance ratings are given on a 5-point scale, observing employees with performances that are leading (5), strong (4), solid (3), building (2), and not meeting expectations (1).

Goals are also tracked using a 3-point rating scale that measures whether a goal or project was on time, on budget, and accomplished. A 3 ranking implies that a goal was met, a 2 ranking is given to partially met goals, and a 1 ranking is assigned to an unfinished goal where most or all dimensions were not achieved.

Competencies ratings are given to employees who demonstrate thorough to lacking knowledge of the organization’s core competencies. This 4-point scale ranges from Advanced, to Proficient, to Developing, and lastly, Does Not Demonstrate.

Direct report ratings are reserved for managers only, and determine whether the ratee’s capabilities are Highly Effective (3), Effective (2), or Needs Improvement (1).

Emory University

Emory University’s HR team operates an in-depth rating system that is similar to BARS. Each employee is rated against a long list of unique core competencies that the organization abides by. This checklist includes building trust, collaboration, communication, delivering results, problem solving, taking initiative, functional knowledge and skills, and service to others/customer focus.

Each of these categories deals with how well an employee displays honesty, respect, listening and sharing, productivity, decision making, and reasoning. The competencies are rated with a 3-point system ranging from Exceeds Expectations, Meets Expectations, and Unacceptable. All ratings apply to supervisors and managers, as well as non-managers.

More Examples

Unsatisfactory | Needs Improvement | Meets Expectations | Exceeds Expectations | Distinguished

Needs Improvement | Meets Expectations

Does Not Meet | Meets | Exceeds

Below Level | At Level | Above Level

Needs Attention | Satisfactory

Unacceptable | Needs Improvement | Acceptable | Good | Excellent

Did not meet expectations | Met some but not all expectations | Fully met expectations | Exceeded expectations | Significantly exceeded expectations

Area of Deficiency | Inconsistently Meets Standards | Meets Standards | Meets High Standards | Regularly Exceeds High Standards

Needs Improvement | Consistently Meets Expectations | Exceeds Expectations | Strongly Exceeds Expectations | Superb 

Unsatisfactory | Meets Most | Fully Meets and Sometimes Exceeds | Consistently Exceeds | Far Exceeds 

Never | Sometimes | Often | Always

Not Often Enough | From Time to Time | Most of the Time

Minor Contribution | Important Contribution | Critical Contribution

Low Performer | Developing Performer | Highly Valued Performer | Top Performer

Unacceptable Performance | Partially Successful | Fully Successful | Superior | Distinguished Performance

Poor | Below Average | Good | Very Good | Outstanding

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7/2/2019
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The Biases You Must Remove from Your Performance Reviews

Did you know that even after developing the best HR performance management system for your organization, you still have to deal with rater bias? Objectivity is the key to a good appraisal system but unfortunately, it is not always easy to attain. Performance data is created by people, and people's opinions can be biased in a number of ways.

What is rater bias and why does it matter?

Rater biases can come about consciously or unconsciously. They are tendencies that affect how managers rate their employees unrelated to actual performance, they are also called "Idiosyncratic Rater Effects." Here are some of the more common examples:

  • Averaging ratings closer to the middle because "no one is perfect"
  • Over-prioritizing a particular skill that we value highly in ourselves
  • Rating for potential instead of performance
  • Focusing too much on recent events
  • Overvaluing people who remind us of ourselves

Ideally, accurate ratings are based 100% on an employee’s performance. Yet when a person’s unconscious bias is applied to performance appraisals, it can lead to inaccuracy, favoritism and even unfair treatment of employees.

Studies have also shown that when employees perceived performance ratings to be affected by rater bias, they expressed reduced job satisfaction further leading to greater intentions of quitting their jobs. Thankfully, there are ways to address rater bias and optimize your performance appraisal process.

The Most Common Sources of Rater Bias

The Halo Bias is the tendency to give overall favorable ratings due to strong performance in only one or two areas. Its opposite, the Horns Bias, is the tendency to give overall unfavorable ratings due to poor performance in only one or two areas. An example that would fall into this category would be an employee who always shows up early to work, even if the employee performs average overall, this one easy to see thing could greatly increase their overall rating.

What you can do: In this case, basing an employee’s performance on only one perspective allows the bias to take effect. A 360 degree perspective gathered from multiple sources, such as managers, colleagues and reports, would provide more accurate results. This idea is often referred to as crowdsourcing, and it can help to factor bias out of the equation.

Recency Bias, is likely the most common. It happens when the employee’s most recent performance level skews the opinion of the total work for the cycle being evaluated. This could happen both ways; they performed well for the entire period but made a terrible mistake before appraisal time, or they performed poorly until a recent accomplishment just before appraisal time.

Similarly, the Spillover Bias is a when a manager continues to provide positive or negative ratings for an employee based on the employee’s performance in previous cycles. The rater seems to be stuck in a mode of thinking which might be attributed to a case of forgetfulness. However, this type of bias has the potential to lead an employee to be over or under valued for their work.

What you can do: When trying to address recency and spillover bias, it is important to increase familiarity with the employees over longer periods of time. Some companies like Adobe are replacing annual reviews with quarterly performance discussions. A version of this continued conversation throughout the year gives managers the opportunity to keep up to date with employee performance and progress which brings to light what skills and strengths are being developed, as well as areas that need improvement. Work on a system that allows the attachment of files and notes so employees can be sure that their actual accomplishments are being considered when managers complete their appraisal.

Leniency and Severity Bias is when managers tend to rate higher or lower on average than their peers. This is often attributed to a manager's personality, culture or perspective on management. Since ratings are meant to be compared across the company, this bias will make your comparisons inaccurate.

Another bias is the Affinity Bias, where the rater gives higher ratings to those employees with whom they believe they have more in common. Opposite to it, the Alienation Bias is the tendency to give lower ratings to those with whom the manager believes they have less in common. This is typical in a situation where the rater and employee both grew up in the same town, have a similar heritage, or favorite sports team.

In like manner, the Identity Bias is the tendency to view and rate employee performance filtered through stereotypical assumptions about sex, race, sexual orientation, ethnicity, religion, political affiliation, socioeconomic status, educational background, age, disability, etc.

Lastly, the Comparative Bias rates an employee in comparison to another one, or groups of others, instead of evaluating them based on their ability to meet the defined performance expectations.

What you can do: When dealing with these types of behavioral bias, it is important to focus on definitive behaviors as well as measurable goals or achievements. Ratings often cover subjective metrics, but rather than asking if one answers the phone promptly/courteously, you might ask if one answers the phone within five rings or with a specific greeting. Having descriptors for the rating scale can also guide a manager to choose the proper rating and put away the bias.

Ratings are important because ratings equal data, and companies love data. You can decide to pursue good data by removing all bias, but another option is to just not collect or trust quantitative data in certain situations.

There isn’t a perfect way to eliminate every single bias, because in the end, people are the ones rating, and people are biased. So focus on helping people generate the best performance data possible, and back it up with more subjective and long form questions as well.

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6/27/2019
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Building Blocks of Modern Performance Management

At PerformYard, we believe that your performance management process should be as unique as your organization. We also know that building and implementing a custom, flexible performance management strategy can be challenging, especially one that works with your company. That’s why we’ve collected all the pieces of modern performance management and laid them out below.

Creating the right strategy is about bringing together these elements in a way that will best serve your employees and your organization.

Reviews

The core of performance management lies in employee appraisals. These could be called check-ins or calibrations or something else entirely, but despite the backlash most all organizations still use structured meetings and review forms as part of their process.

There are many different ways to customize your appraisals, from frequency to the questions asked. Although the objectives of performance appraisals varies from company to company, there are a few key elements to be aware of as you construct your reviews to be as effective as possible for your company.

Who reviews who

Traditionally, performance appraisals have been conducted in a top-down approach where the manager is the sole evaluator of the employee. In a contemporary setting, however, reviews can take on a 360-degree approach that allows employee evaluation from all directions, including management, colleagues, customers, and partners, as well as self-reviews.

Questions

Another important element to consider in your performance evaluation is the kind of questions you ask. Between two fundamental types of questions, open-ended and closed-ended questions, your appraisal form should consist of a variety of pointed questions that give managers a comprehensive understanding of an employee’s performance, and give employees the sense that they were heard and evaluated fairly.

Open-ended questions have no predetermined answers, which can be great for performance reviews; and in the meantime, closed-ended questions (yes/no, strongly agree/strongly disagree) can collect actionable data.

Timing

One of the most important components of a performance management process is determining when and how often reviews should occur. The classic model of performance reviews holds appraisals annually, at the end of the year. This allows management to draw data from at least 12 months of employee’s performance, which can help to inform raises and promotions.

However, reviews can be done at any increment of time -- from quarterly to semiannually, and even project-based. Whether you choose to conduct them every three, six, or twelve months, a variety of surveys have shown that the majority of employees prefer more frequent conversations with managers.

Format

In the past, traditional performance appraisals took on a format that had a more rating-oriented approach in evaluating work results, with methods including appraisal templates, grading scales, ranking, checklists, critical incidents, essay evaluations, and more. Modern performance reviews tend to focus more on an employee’s development, in order to not just review the year but plan for the future.

Format can include giving employees a score based on numerous areas of job performance, as well as qualitative input, and comments directed to employees that communicate how they can best succeed.

Goals

The best way to initiate an effective performance management process is to set forth clear goals and expectations. Involving your employees in the planning process allows them to envision how their personal goals will fit into the overall goals of the company, and gives them a clear understanding of what is expected of them and what to work towards.

Setting goals also helps managers to develop an understanding of the ongoing training needed for employees, and ensures that both are on the same page as progress is made. Goals that are given meaning, and are challenging (but attainable) can drive performance more than any other element in your performance management strategy.

Types of goals

Personal goals are the goals set forth by each individual employee. These goals are 100% about the employee, and are usually great for engaging employees with their work and determining where an employee shines in an organization.

Corporate goals have more to do with the success of the organization, and therefore the success of individual employees. These goals seek to align each team member’s individual goals with the overall goals of the company, bringing about a sense of unity between company and team priorities.

Goal direction

In traditional performance management methods, companies communicated top-down goals that were paired with annual performance reviews. Originating from senior management, these goals are identified and communicated to team members, cascading from the top of the company to lower-level employees.

Collaborative goals, or bottom-up goals, are created by team members that understand the company’s strategy for achieving goals, as well as the individual role they play in the company. A manager will compile a set of company goals based on each team member’s individual goals, ensuring that each employee is a key player in executing the company’s strategy and objectives.

Feedback

While effective performance management has a great deal to do with documentation and meetings, it has even more to do with continuous dialogue. Ongoing feedback between managers and employees helps to more quickly recognize achievement, document individual performance, and ultimately help employees succeed.

Sources of feedback

Customers can be considered the most important source of feedback as they can provide input for individuals, teams, groups, and management performance. Using surveys, customer visits, complaint systems, and focus groups, customers can provide a unique perspective in the feedback process.

Supervisors, managers, and team leaders are generally the most experienced in giving feedback, and tend to have specialized knowledge of their employees and team members. When given adequate training, these sources can be an integral part of acquiring data for feedback purposes.

Feedback can also be provided by an employee’s peers. This feedback tends to be the most actionable, as an employee’s coworkers deal most directly in examining their performance in the workplace. Subordinates can also provide upward feedback that can improve a manager’s style and performance, and can also motivate low- to moderate-performing employees.

Types of feedback

Constructive feedback, praise, and criticism all fall under the category of feedback in the workplace. While praise and criticism are fairly self-explanatory, constructive feedback is generally the most potent in providing specific information that is based on observation, and is issue-focused.

Constructive feedback is helpful because it contains both positive and negative feedback. Positive feedback affirms past behavior, and focuses on actions that were successful and should be continued. Adversely, negative feedback critiques past behavior and emphasizes the actions that should not be repeated.

Both of these types of feedback can also inform future performance, as employees can get an understanding of what behavior to avoid or improve in the future.

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6/19/2019
Managing Complexity without Compromising Your Review Process

When a fast-paced, growing company signs-on with a new Performance Management software, they have high expectations for the value it will add to their corporate framework; streamlined communication, greater accountability, more frequent check-ins, more robust reporting features, to name a few features. Their expectations are high, as they should be, and their intentions are noble, as they always are. But before they begin compiling a portfolio of flowcharts, modules, performance tables, and spreadsheets, those tasked with the implementation should consider the following:

  1. The most effective employee experiences usually steer clear from unnecessary steps and processes. Rather, they focus on increasing productivity and quality of work.
  2. If employees that feel their performance management system is easy to execute and serves a distinct purpose, they are more likely to embrace their system
  3. If employees believe their performance management system is cumbersome and unnecessarily complex, they may become inherently untrusting of the process, feel micromanaged, and therefore, less likely to engage with the system.

The benefit of having a clear and concise performance management process is apparent, but sometimes not so easy to execute in practice. Sound like your organization? Here a few ideas to get you on the right track:

Set your priorities based on the immediate value added

Chances are, when you began sending RFP’s for a new performance management software, you probably had 1-2 features that were ‘must haves’. Keep those features front and center of your implementation, even if there were other ‘bells and whistles’ you may have been interested in during your sales demos. You can also enhance or supplement your process later.

Was your priority to automate your pre-existing review process? Great. Focus on transitioning your forms into your software and setting up a system that mimics what you’d done in the past.

Was your top priority to increase engagement? Rather than attempting to use multiple features for this one purpose, focus on the type of engagement you are looking to enhance, and instead work exclusively in feature that will best get you to your desired outcome. In doing so, you’ll be able to establish a standardized process and promote more consistent product usage across your organization

If your objective is better accountability, perhaps start exclusively within a goal setting feature so that your employees can get in the habit of using of setting and tracking their goal progress and develop a cadence around how they monitor their progress. In doing so, employees will feel that they are setup for success as they become more adept as using they continue to use the system successfully.

Be intentional with your reporting features

When it comes to analyzing your data, sometimes less is more. While the reporting structure may be designed to be robust to accommodate different organization’s needs, it doesn’t mean necessarily mean that their needs are your needs, or that you should adopt every conceivable report type to stay relevant. Hone down on the type of information you are looking to extract from your company’s reports and create a process that will bring you specifically to those reports. Overquantifying your employees can lead to disengagement, and may not come with tangible benefits to your organization’s compensation model. Even companies like General Electric and Microsoft have conceded that complex processes don’t lead to reliable data. And that doesn’t address the degree of subjectivity that can be associated with performance management driven reports.

In short, reporting features, when used strategically and specifically, can undoubtedly be a great resources when identifying your workforce’s strengths and weaknesses. But over-usage or making an attempt to over quantify your workforce, when simpler, more qualitative methods can be adopted can be counterproductive to its initial purpose.

Re-evaluate and make adjustments as needed

There’s no shame in looking back at the end of a year or few years and deciding what’s working and what needs to be tweaked. Companies like Regeneron and Deliotte, both examined the efficacy of their performance management processes. In doing so, they made strategic changes their previous processes, and their newly created system was adopted with high levels of success across the board.

The readjustment phase for your company can be more subtle. If you noticed that employees were quick to go in and set their goals at the beginning of Q1 but haven’t been so diligent about going in to update their goals in Q2 and Q3? Maybe it’s time to think about implementing a check-in. Conversely, if you noticed that review form responses become more spare and less detailed throughout the year? Maybe it’s time to reduce the frequency of your check-ins and/or switch up your question types to elicit more detailed responses. The benefit of starting simple and re-evaluating subsequently is it gives you will not only have the bandwidth to zero-in on your existing process, but also the clarity and experience to identify strengths and/or opportunities to make adjustments.

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6/11/2019
How Does GE Do Performance Management Today?

When it comes to discussing performance management, it’s impossible to skip Jack Welch’s “rank-and-yank” review tactics back in the 1980s. During a time when the economic reality at GE demanded efficiency and operational excellence, the company became well-known for its hard-charging and intense approach to performance reviews.

The company has since undergone much change in their style and performance management process. Today they conduct a more evenly distributed and ongoing review process. The focus is less on rating and ranking and more on developing, connecting, and inspiring employees.

Here is what performance management looks like at GE today.

Performance management at GE

GE rolled out its new performance management strategy at the end of 2016, replacing its legendary Employee Management System that was implemented in 1976 and widely emulated by other companies. The change took place largely due to a program launched in 2013 called FastWorks, which introduced skills and processes to make GE a more lean, agile, and customer-centered organization.

Under the new direction of CEO Jeff Immelt, GE began to shift from annual performance reviews to a system that accommodated the lean and innovative methodology of Fastworks. The organization developed a simple, contemporary smartphone app, designed with the sole purpose of facilitating more frequent communication and meaningful conversations between managers and employees.

The app, called PD@GE, exchanges voice and text input, attached documents, and even handwritten notes between employees, managers, and teams across the company. The organization’s goal was to shift their employee review focus onto continuous dialogue and shared accountability. The app facilitates a constant exchange of feedback year-round; participants can receive suggestions from anyone in their network, including upper management and members of other teams.

In order to continue in the vein of customer-centered growth, GE’s IT team developed the app so that managers can hold regular “touchpoints” with employees in order to set goals and update priorities based on customer needs. At its core, the app serves as a platform to define goals for employees and to enable constant improvement for all users.

While many of the headlines and articles detailing the legendary company’s migration from annual cycles and stack rankings may lead people to believe it’s been a neat and succinct transition, the question begs to be asked: Has GE really gotten rid of annual rankings entirely?

Summary Conversations

As stated previously, one of GE’s main aims in their performance review strategy is to facilitate recurring, meaningful conversations between managers and employees. Along with continuous feedback through the PD@GE app, the company also mandates yearly summary conversations where employees and managers finalize and submit a summary document together.

During the meeting, employees and managers reflect upon goals met and impact achieved, while casting vision for future goals to be met. These meetings act as an existing piece of the old EMS structure, and operate just as they did before -- with managers basing compensation, promotion, and development decisions on the input provided.

However, with the introduction of the new performance-development approach, these year-end conversations exist as more of an ongoing dialogue rather than a one-time meeting that is loaded with expectations. This allows the conversations to be more meaningful and future-focused, and informed by more specific data of an employee’s contributions and achievements throughout the year.

In a Harvard Business Review article, GE executives Leonardo Baldassarre and Brian Finken describe GE’s new performance-development approach as an attempt to shift the company’s focus from “command and control” to “empower and inspire.” Judging by the company’s latest increase in productivity and significant benefit yield for customers, it’s working.

But how do their employees feel about the change? Let’s take a look at some anonymous Glassdoor reviews to get a glimpse of how GE’s work culture has shifted along with their performance review strategy.

What Employees Say

Pros

“Great company to work for even while being one of the largest corporations in the world. Never have to worry about not having a job. They seem to care about the ‘little’ guy as much as possible.”

“Best company I have ever worked for. The company knows how to motivate employees and get ahead of competition. Even through rough times they are still competitive in areas. Leaders are trained unlike other companies where managers and leaders are terrible and untrained.”

“World-class training programs and people development. Very smart leadership, great to learn from. Strong organization around the business cycle, you know what to expect. Work/life balance is good, if you make it a priority.”

“Work culture is too good, people around are very professional. Company is very secure for female employees. Offers good work life balance as flexible work hours are allowed. No punch in/punch out needed as GE believes in their employees. Lateral/vertical movement is appreciated after every 3 years.”

Cons

“Very big company so it makes you feel unconnected to some of the things that go on. Many times it is difficult to get a straight answer when important, company-wide news comes out. Progressively changing a huge company takes time, don’t expect culture to change overnight.”

“Management can be clueless. Culture has been rough the past few years with layoffs and reduction in force. HR controls a lot of the decisions, with little line of sight to what’s actually happening. And too many buzzwords.”

“Back in the day when Jack Welch was at the helm, GE was run like a well oiled machine. The stock split, GE was good. GE was diversified and the pension was funded. Things changed when Jeff Immelt came and took charge and totally screwed up GE, he did not do what was best for the company, nor did the board of directors. They kept the problem going on for over 16 years. Replacing Immelt and not giving John Flannery enough time to fix a 16 year mess was wrong. After 39 years, this is not the GE I started with. I was embarrassed at the end to say I worked for this company.”

In summary

So, has GE’s management served to “empower and inspire” its employees as they set out to do when they shifted their performance management approach?

It may be that time will tell. However, it’s safe to say that many positive changes have occurred during the company’s transitional phase that have impacted many individual pockets of the organization -- and perhaps the most significant is the culture.

Leader of cultural transformation at GE, Janice Semper, set out to change the company’s operations and solutions for its customers by first looking inwardly at the mindsets and behaviors of its employees. The organization has made many strides to change the language and the way that many processes are done in order to promote a sustainable, collaborative, and empowered employee environment.

At the end of the day, GE’s performance management strategy focuses on people and dialogue -- meaning that intensive conversations and enormous chunks of time are dedicated to ensure that each employee is exhaustively evaluated both on what they’ve accomplished and how they lead. Attention is given to each individual appraisal, and manager’s assessments can be questioned or given feedback to ensure that the quality of each appraisal is honest and comprehensive.

And clearly, it’s working -- one of the most repetitive “pros” found in GE’s anonymous Glassdoor reviews is the company’s culture.

So, while it’s hard to say whether or not GE has abandoned its old system for good, it is certain that there have been benefits to both of the company’s major performance review systems. The company would not be what it is today without its Six Sigma, rank-and-yank of the Welch era, and is experiencing continued growth and profound success as they continue to adapt their appraisal process to the needs of their organization in an ever-changing business environment.

More Inspiration

GE is not the only organization going its own way. These days most great organizations are thinking critically about performance management and coming up with innovative new solutions. Here are a few more examples to help inspire your own strategy.

3 Approaches to Performance Management: Google, Betterment and IBM

How does Facebook do Performance Management

Performance Management at Tesla: What we know.

How Regeneron Built Their Performance Management System

How Does Uber Do Performance Management?

How Does Asana Do Performance Management?

How Netflix does Performance Management

Deloitte's Radically Simple Review

How Does Amazon Do Performance Management

And if you're ready to take the next step, check out our guide to creating your own modern performance management process.

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6/4/2019
The Right Way to Use Ratings in Performance Reviews

Ratings are often maligned because no one wants to be boiled down to a score, but ratings do offer a quantifiable view of performance.

When companies need to make decisions regarding their talent base, they rely on data and use trends to plan for improvements. Some questions they might be asking are which managers are most efficient? Which employees demonstrate the best leadership qualities? Are there skills gaps that need to be addressed?

For someone in the process of building out a performance management strategy, rating scales can be an essential tool used to measure the performance. So if the information gathered from a rating scale system is valuable to an organization, why are some ditching the entire approach, and is there a better way to implement its use?

What are rating scales?

First, let's clarify; ratings are not rankings. Rankings make up a system where employees are compared and categorized into some type of ordering or buckets.

Ratings instead are the quantitative answers to performance appraisal questions. Ratings could be used to rank, but they certainly don’t need to be used that way. According to SHRM, rating scales are used in performance management systems to indicate an employee’s level of performance or achievement. The types of methods used to measure the performance are graphical rating scales, numerical scales, and letter scales. Some are only 2 or 3 point scales, but most companies opt for a 4 or 5 point scale, which might look something like this:

Outstanding - 5pts: Performance consistently far exceeds job standards/expectations on a sustained basis.

Exceeds Expectations - 4pts: Performance consistently meets and exceeds normal job requirements.

Meets Expectations - 3pts: Performance meets position requirements.

Needs Improvement - 2pts: Performance meets some position requirements, objectives and expectations.

Unsatisfactory - 1pt: Performance does not meet position requirements. Immediate attention to improvement is required.

Pros and Cons of Ratings

The advantage of this model is that it is structured. It allows ratings to be quickly compared and contrasted, and because each employee receives the same rating criteria with the same range of responses, it is a standardized process as well. Consequently, this encourages fairness in treatment for all employees and creates standard measures of performance across any business area.

The disadvantage one might run into with rating scales is the loss of trait relevance. Are the selected rating-scale traits relevant to the performance of all employees? Since the questions need to be constrained, there is a higher likelihood they won’t apply to an employee’s work. Not every job within an organization will require the same use of specific traits.

Another challenge is the accuracy of ratings. Numbers can feel authoritative, but they are only as good as the process that creates them. Just because it’s cleaner to make decisions with data doesn’t mean that you’ll be making the right decisions.

How to Make Ratings Better

One way to improve performance rating data is through calibration sessions. The way this works is managers prepare preliminary performance appraisals, then meet with other managers who supervise similar groups of employee's. The participants review and discuss their proposed appraisal ratings for every employee. In the end, participants adjust ratings to assure accuracy and final performance appraisals are then prepared. This also weeds out the “hard” and “soft” grader effect.

Another way ratings are being modified is by combining them with qualitative comments and feedback that give the employee a clear understanding of why they got their rating and how their performance aligns with goals. In this case, we see that ratings can serve as a base for more productive conversation, engaging meetings, and employee input.

Lastly, many companies are changing the scales to reflect behaviors and ditching the “expectations” terminology. A lot is said in a word and employees don’t necessarily feel great when given a number 3 for fulfilling their job description accordingly. Re-defining rating scales to make them specific to the criteria being rated could mark goals “achieved” or “deferred”. Competencies and soft skills could be marked as being observed “consistently” or “sometimes”.

Organizations that are able to develop standard competency based ratings across all functions would be most likely to benefit from its implementation. Likewise, companies that can rate various job objectives across all functions as well, could benefit from using rating scales in their performance reviews. Companies that work on diverse projects, or contain diverse positions, might not be able to customize the use of ratings to their advantage.

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5/21/2019
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Focal Point Reviews Benefits and Challenges

The differences between focal point reviews and anniversary date reviews are significant, and many HR professionals struggle to decide which method is ultimately better for handling employee evaluations. The truth is that there is not necessarily an objectively better method -- each company’s needs are unique, and both approaches have merits and challenges that are likely to shape your organization in different ways.

While focal point reviews have managed to eclipse anniversary date reviews in popularity, it is best to choose the performance review cycle that works best for you -- we’ve laid out some pros and cons to help you do just that.

 

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Focal point and anniversary date: What are they?

Focal point reviews, also referred to as common date reviews, are performance evaluations that occur all at one time for all employees within an organization. These reviews can occur once, twice, four times a year, or even more frequently. Salary adjustments and performance evaluations are conducted on a fixed date for all employees, or segmented groups such as executives and front-line employees.

Anniversary date reviews are scheduled in such a way that each employee is reviewed in cycles that are based on a date specific to that employee (like a hire date). Employees are reviewed and compensated at the same interval, but not the same date. This system usually makes it so that a company is conducting individual performance reviews year-round, rather than at one time.

 

The benefits of focal point reviews

The advantages to focal point reviews are numerous -- so much so that they have become the favored review approach among many of today’s companies. Organizations that have chosen to implement focal point reviews have found that they are easier for HR to coordinate, as the review process can be completed in a single one-to-two month time frame rather throughout the full year. Synchronizing performance reviews across the organization allows companies to establish corporate goals before beginning the process, ensuring that individual and organizational goals are linked as employees approach performance reviews.

Focal point reviews also give managers the opportunity to compare and contrast employee performance, making it easier to distinguish top performers and to pinpoint low-performing employees. Many companies have found that this approach helps managers to distribute fair and consistent feedback, as well as compensation adjustments that are unaffected by changing business cycles.

The challenges of focal point reviews

Some managers might consider focal point reviews to be a dream performance management strategy; but to others, one-to-two months of non-stop performance evaluations is a nightmare.

A significant amount of time and dedication is required to complete a review process that spans across the entire company, especially for managers with a large number of employees. This might require management to neglect other tasks for as long as it takes to complete the process, which has the potential to hurt organizational growth and development -- not to mention it has the potential to seriously exhaust your managers.

Another downfall of focal point reviews is the inadvertent, but significant disadvantage that it places on newer employees. Employees that are new to an organization will not have a full year of performance to be evaluated, and often, companies make no plans to address partial-year reviews.

These challenges are what have motivated some companies to continue practicing an alternative method -- namely, anniversary date reviews.

The benefits of anniversary date reviews

One of the appeals of anniversary date reviews is that evaluations are distributed more evenly for managers. This ensures that management does not become overloaded with reviews during a brief season. It also gives them the ability to spend more time and attention on each evaluation.

Proponents of anniversary date reviews claim that the evaluations have the potential to be of higher quality, since more time can be spent on each individual employee’s review. This approach also allows all employees to be evaluated based on one full year of work, placing new hires and seasoned employees on a level playing field when it comes to reviews.

The challenges of anniversary date reviews

While the spaced-out nature of anniversary date reviews can make it less stressful for managers to handle evaluations, it can also cause some difficulty in a manager’s efforts to keep organized in the review process. With so much data to keep track of, reviews can easily become delayed or postponed -- not to mention the potential recurring issue of retroactive salary increases.

The evaluation process can also become jumbled due to ever-changing data that can evolve over a year’s time. Reviews can become difficult to administer, and managers may find it challenging to gather accurate performance metrics and to make improvements to the review process.

How to choose

Ultimately, the main goal of your decision making process should be to choose the review cycle that works with your organization. The choice between focal point and anniversary date reviews should depend on the size and needs of your company, and should be implemented with other customized evaluation tools to maximize your performance reviews.

Focal point reviews may be the better option if your company is focused on maintaining organizational excellence in your performance review system. They can also be helpful to managers that wish to evaluate employee performance using a comparison and contrast method.

On the other hand, some organizations wish to evaluate individual employee performance against established standards rather than against fellow employee performance. In such cases, anniversary date reviews work well to objectively analyze an employee’s performance exclusively as it relates to the goals and standards set out by the company.

Focal point reviews allow managers to schedule reviews and salary adjustments according to the timeline that fits your organization’s overall growth, from quarterly to annual reviews. However, anniversary date reviews can be better suited to fast-growing companies that are hiring at an ongoing, consistent pace because they ensure that every employee is rated equally.

If you’re still having a hard time deciding, never fear -- some companies choose to combine the two approaches, transitioning from anniversary date reviews to focal point reviews after the first few years.

Regardless of the performance review cycle your company chooses, the most important thing to remember is to implement the process in a consistent way. The best thing that you can do for your organization and your employees is to lay the groundwork for effective and constructive performance review feedback.

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5/14/2019
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Stack Rankings: What they're good for and where they fail.

Some have condemned it as a cutthroat, destructive, and outdated practice, while others promote it as the most effective tactic to ensure a high-performance workforce -- stack rankings are one of the most widely discussed (and highly contested) components of performance management strategies.

When it comes to the debate of stack rankings, it’s no secret that the majority lies with people who despise them. Companies such as GE, Microsoft, and Goldman Sachs abandoned them long ago due to employee backlash. But even after facing such harsh criticism, the controversial approach hasn’t been entirely dismissed -- prestigious companies like Amazon and IBM are still implementing stack rankings in their performance appraisals. So, what does this mean? Is the majority wrong about stack rankings? How do we know if (or when) we should (or shouldn’t) use them?

First things first, it’s helpful to understand the origins of stack rankings, and the context in which they were created.

 

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The history of stack rankings

The practice of stack ranking, otherwise known as rank-and-yank or forced ranking, was conceptualized by GE’s CEO Jack Welch in the 1980s as a method of differentiating high-performing employees from low-performing employees. The process ranks individual employees relatively against their coworkers in order to reward top-tier performers, while identifying and weeding out low performers.

Stack rankings came out of a desire to enact performance appraisals in an effective and efficient way, with the ultimate goal of cultivating a high-performance workforce. But this is where it gets complicated:

In a stack ranking performance rating system, managers are forced to rate their employees on a bell curve. Only about 10-20% of employees can be designated as top performers, while a fixed number of employees must be labeled as low performers and are either placed in a probationary improvement period or let go. In the meantime, about 70% of the company’s workforce, labeled the “vital” employees, are depended upon for adequate and reliable performance.

Naturally, the implementation of stack rankings has produced a variety of both negative and positive effects, both in overall organizations and among employees. Here are a few of the positives.

What stack rankings do well

One of the main goals of stack ranking was to achieve meritocracy across organizations and businesses -- and, some would say, that is exactly what they do best.

CEO David Calhoun, a former vice president of GE, defends stack rankings for this very reason, claiming that the system was effective because they had a clear objective to support it. The objective at GE, and for many organizations, was to clearly articulate the specific criteria required for employees to become high-performers in the organization. Stack ranking promotes, and even forces, honest discussions between employees and managers about where they stand in meeting that criteria.

In this regard, the stack ranking system can help to avoid uncomfortable or ambiguous circumstances that employees often face -- whether it’s a high-performing employee who isn’t getting promoted and doesn’t understand why, or a low-performing employee who finds himself suddenly and unexpectedly laid off.

Stack ranking can also be a positive force in employee morale. The process of identifying high-performers makes it easier for organizations to take the necessary steps to keep them. In the stack ranking process, managers are provided with useful data that can help them to more quickly spot and champion talent.

Addressing low performance can also have a beneficial effect on productivity, especially if low-performing employees are given specific objectives to improve and develop. This also serves to motivate regular and high-performers when they see that low performance issues are being taken care of. Overall, the process can help to inspire and spur on employees of all performance levels.

Now, it’s time to discuss some of the less-than-positive outlooks and opinions about stack rankings -- and while the above-mentioned “positive effects of stack ranking” can ring true in some organizations, other companies and employees would fervently argue that stack rankings had the complete opposite effect. Here’s what they might say:

The arguments against stack rankings

While creating a meritocratic workplace based on employee performance seems like a fair way to promote and fire employees, many companies have discovered that the use of stack rankings has resulted in more harm than good.

Ex-employees of Amazon, where stack ranking is still in use, have spoken out about the tech giant’s cutthroat, survival-of-the-fittest work environment. The company’s work culture, which has been described as “purposeful Darwinism,” evidently pits employees against one another to compete for the top-performing percentile. Naturally, this hardly boosts employee morale.

Others have criticized the flawed nature of forced ranking, claiming that the process was crippling for its employees and overall growth. When Microsoft got rid of stack rankings in 2012, an article was written describing the lack of innovation that the company experienced due to the harmful practice. When every manager was forced to rank their employees on a scale from top to poor performers, two out of 10 employees would receive a great review, seven out of 10 would receive an adequate review, and one employee would receive a terrible review. Author of the article Kurt Eichenwald determined that the practice had caused employees to compete against one another rather than with other companies, stifling the organization’s overall growth and innovation.

So, you might be wondering -- what’s the verdict? Are stack rankings a good or bad tool to use in performance management? It all depends.

When stack rankings should/shouldn’t be used

Stack ranking is obviously a powerful performance management tool, but should be used with caution and close examination of your organization’s overall goals. Author Dick Grote makes a case for using the controversial evaluation system on an interim basis, saying: “The procedure is not right for all companies, nor something that should be done every year. But in the right company at the right time, forced ranking creates a more productive workforce where top talent is appreciated, rewarded, and retained."

Implementing a stack ranking procedure essentially guarantees that managers will be able to differentiate talent within your organization, which can lead to several positive business outcomes. Rewarding and retaining top talent can simultaneously inspire and stimulate middle-to-low performers toward higher performance. When used in combination with continuous, candid feedback, stack rankings can be a powerful tool to create a more productive workforce overall.

However, be cautious of the pitfalls -- namely, a competitive work environment, and an emphasis on rating rather than cultivating employee improvement.

Taking Microsoft as a prime example, a competitive work culture can be detrimental to both team dynamics and overall company success. The moment that your employees start spending more time thinking about their ranking and where they stand in relation to their coworkers, they become distracted and unable to produce their best work. This can lead to talented employees underperforming, and focusing more on their rating than on the feedback they need to improve and succeed.

Similarly, if your company is reliant on innovation and creativity, you may want to consider leaving stack rankings out of it -- especially if you desire for your performance appraisal process to focus on employee growth and development.

Stack rankings are riddled with issues and complexities, yes, but they could still have a positive impact on your organization. While they shouldn’t be the only facet of your performance management process, maybe there is still room for them as part of your process.

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5/9/2019
The Purpose of 90-Day Reviews for New Employees

New-hire reviews are one of the most frequently overlooked and grossly underrated parts of a functioning performance management strategy. Whether it’s well-intentioned managers that allow new hires to fall through the cracks, or companies choosing to skip reviews altogether, the idea behind new-hire reviews can get lost in the onboarding process. New-hire reviews, specifically 90-day reviews, can actually be one of the most important facets of your performance management strategy.

The purpose of 90-day reviews is to make the onboarding experience as seamless and effective as possible for new hires and management alike. An investment in your company’s new hires via 90-day review can make the biggest difference in productivity and average tenure for employees, manager-employee relationships, and saving time and resources at your organization.

 

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Here’s what a successful 90-day performance review should look like:

1) A benchmark for measuring performance.

90-day reviews function as an important checkpoint for an employee’s progress. In order to fully understand the importance of 90-day reviews, it helps to analyze the patterns of new hires in today’s organizations.

Employee loyalty statistics have determined that average job tenure is about 4.5 years. Employee retention numbers are critically low--especially in tech companies--and according to a study from an HR technology company, approximately 17% of new hires leave within the first three months at a new job, while 30% leave within the first six months.

If anything, these statistics prove that a new employee’s first 90 days are critical. Companies that choose not to implement 90-day reviews into their performance management strategy are forced to then rely on annual reviews to evaluate employees, which--if the above statistics are true--either occur after one-quarter of an employees entire tenure, or after an employee has already left the organization.

90-day reviews serve as an excellent benchmark during onboarding to measure a new employee’s performance in a realistic timeframe. After a solid 90 days, new employees should feel independent enough to be held accountable for their performance at the company thus far.

2) An opportunity to ask questions.

A successful 90-day review gives employees the opportunity to assess themselves while also giving and receiving feedback. The review provides an open forum of communication which allows each new hire the chance to speak, ask questions, and get the help they need to continue improve their performance.

An employee has the opportunity during this review to discuss with management any questions, requests, or concerns that may have surfaced during their first 90 days at their new job. They can receive feedback on their initial performance that includes reinforcement of things that are working, as well as feedback about the things that should change. The 90-day timeframe gives them a chance to make changes early, ultimately setting them up for success in the annual performance review.

3) A solid foundation for manager-employee relationships.

While the 90-day review could technically be considered a formal discussion for managers to communicate and clarify their performance expectations for new hires, this review can also be an important opportunity for managers to build a solid relationship with their employees. Overall, a well-planned 90-day review can help to solidify and guarantee long-term employee engagement at your organization.

Connecting socially can also help your new hire to better understand the culture and politics of your company. While a hefty percentage of starting a new job has to do with projects and tasks, there is also a large social component to a new hire’s first 90 days in a new work culture. Meeting in a 90-day review can help your new hire to understand the lingo, meeting dynamics, and general culture of your organization.

Ultimately, 90-day reviews benefit managers greatly, as they provide structure to the task of assessing a new hire’s potential success going forward. After 90 days, managers have had ample opportunity to observe the progress made by new employees, and a formal discussion can help managers more quickly evaluate whether a new hire is not a great fit for the organization. This can be an instrumental step in helping to save time and resources at your company, and is one of the reasons that 90-day reviews can be an incredibly effective tool in performance management strategies.

Here’s what a 90-day performance review shouldn’t be:

1) A “probationary period.”

The first 90 days of a new hire’s employment are often dubbed a “probationary period”--a phrase that has lead to many common misconceptions about 90-day reviews. Employees can misinterpret their first 90 days in a new job to be a correctional period that they are immediately placed in on their first day of work. This can potentially harm their view of the company, leading employees to believe that they must “hit the ground running” instead of taking the time that they need to get up to speed.

90-day reviews should instead be adopted into performance management strategies with the intention to structure the review as a reflection of the position. The reviews should be designed to get new hires up to speed in a thoughtful and deliberate way, ensuring that your new hire is able to add value to the company as soon as possible, while also feeling valued as a contributor.

2) A one-sided Q & A.

If your approach to 90-day reviews consists of nothing more than a checklist of questions for your new hires, chances are you won’t get much out of using them in your performance management strategy. It’s important that managers treat 90-day reviews as a performance review for both employees and management. When the review consists of nothing but feedback from management, a new employee can feel as though their opinions are not valued, and that the effort they put into their first 90 days of work went unheeded. New employees are often already stressed by the multitude of new tasks and responsibilities on their plate, and overloading them with feedback can cause them to feel overwhelmed.

Allowing new hires to provide feedback, both positive and constructive, helps companies to streamline their onboarding process and help new hires realize their full potential more quickly. Feedback for both parties is a critical component to ensuring that both managers and employees get the most out of your 90-day review. New employees can provide valuable information about what is and isn’t working, which can lead to improvements for the overall organization.

3) Post-poned or shrugged off.

You may think this is an obvious one--but unfortunately, this is one of the most common mistakes that companies make regarding 90-day reviews. Managers that promise to conduct a 90-day review and fail to follow through can cause unnecessary stress to new employees that are already overwhelmed with the start of a new job.

It’s important that management puts forth the effort to create an organized agenda when it comes to 90-day performance reviews. Studies show that organizations that follow through with 90-day reviews see direct benefits in increased employee engagement and tenure. According to a recent study, new employees that went through an organized, structured onboarding program were 58% more likely to remain with the organization after three years.

The key to achieving a well-structured onboarding program that sets your new hires up for success may be as simple as sticking to your 90-day review plan.

So, why use 90-day new hire reviews?

Overall, 90-day reviews can be a great, highly effective tool to implement into your onboarding and performance management strategy in order to increase productivity, extend employee tenure, and ultimately access the full potential of new hires at a quicker pace. When new employees are given the opportunity to weigh-in and be evaluated at around the 3-month mark, it’s possible to unlock their full potential and see their contribution to the organization much sooner.

If done right, 90-day reviews will help to transition your new hire from the “new guy” into a key performer at your company within the first 90 days on the job.

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4/17/2019
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How does Facebook do Performance Management

Facebook stands apart from the crowd in more ways than one. Their performance management strategy is no different.

Although some Fortune 500 companies are moving away from performance evaluations, Facebook is standing firm by conducting biannual 360 reviews. The company also facilitates a continuous stream of real-time feedback, allowing employees across the globe to give and receive feedback.

Peer reviews and feedback has the potential to create a competitive and hostile work environment -- but from what it sounds like, you won’t hear employees complain about that at Facebook. Instead, coworkers often exchange feedback with complete cordiality and civility, to the point that one news outlet labeled the work atmosphere “cult-like.”

Whether or not the employees are as happy as their Facebook profiles make it seem is up for debate, but one thing is certain -- Facebook’s talent is certainly taking the already-successful company even greater heights.

Let’s take a deeper look at Facebook’s performance management strategy.

Facebook's approach to performance management

Employees and managers at Facebook generally know what to expect when biannual performance reviews roll around. Due to the company’s continuous stream of 360 real-time feedback, everyone has a good understanding of an employee’s performance prior to the appraisal, minimizing any uncertainty or ambiguity on both ends.

All of Facebook’s global employees have access to internal software that enables real-time feedback among coworkers, while management uses the software to keep track of project progress and provide general support. The information gathered in this system, as well as the feedback collected from three to five close colleagues in peer reviews, is what managers use to determine each employee’s performance at the biannual review.

Molly Graham, a software engineer at Facebook, shared online that the actual process of gathering 360 feedback is dubbed the Performance Summary Cycle. According to Graham, “There is a two week period where employees solicit peer feedback (usually 3-5 peer reviews), and write a self assessment. Managers then read all the peer feedback and the self assessment and determine a ‘Performance Assessment’ or rating of the employee's performance over the last six months as well as whether or not it is the right time to promote the employee.”

You’re probably thinking: “Don’t they also decide which employees to fire?”

In an interview with Business Insider, Facebook’s VP of People Lori Goler stated that the company’s evaluations act as checkpoints rather than in-depth investigations into an employee’s performance. Goler claims that if anything is surprising in these reviews, then “something has gone horribly wrong.”

In other words, management seizes the opportunity during performance reviews to reward the performance of exceptional employees, whereas underperforming employees rarely make it to their performance review.

Employees walk away from their appraisals with a grade out of seven. The numbers are given definitions from “redefines” to “does not meet.” This stack ranking system has obviously worked to some degree, as evidenced by the social network’s astronomical success and impressive talent, but it has had a somewhat polarizing effect among employees and ex-employees.

Potential Problems

According to a 2016 edition of the Harvard Business Review, Facebook promotes three core values in their performance management strategy: fairness, transparency, and development.

However, it sounds like some ex-employees would argue that the company did not always live up to these values.

In January 2019, Salvador Rodriguez of CNBC conducted in-depth interviews with more than a dozen former employees to ascertain how the felt about Facebook’s performance culture. The Ex-employees likened the company to a cult, claiming that employees feel a distinct pressure to never show dissent, to keep up appearances on their Facebook profiles, and to force cordiality and friendships with their coworkers in order to advance.

Here are few statements from these employees regarding their struggle with the company’s performance review system:

“It is not OK to act like this is not the best place to work." - Former employee

"People are very mindful about who they're connected with on Facebook who they also work with and how what they're posting will put them in a favorable light to their managers.” - Former employee

"It's a little bit of a popularity contest. [With the Peer Reviews ] you can cherry-pick the people who like you — maybe throw in one bad apple to equalize it." - Former manager

In direct opposition to COO Sheryl Sandberg’s personal mantra to strive for authenticity at all costs, one former employee claimed, "I never felt it was an environment that truly encouraged 'authentic self' and encouraged real dissent because the times I personally did it, I always got calls.”

Many of these ex-employees attributed Facebook’s recent series of scandals to its so-called no-dissent work culture. If employees had been encouraged to give honest and critical feedback, they said, some of these problems may have been caught prior to their exposure in the media.

While the peer review component of their performance management strategy may be an efficient way of assessing each employee’s strengths in such a large company, many former employees felt that it often turned into a simple popularity contest where coworkers were pitted against one another to compete for advancement.

However, there are two sides to every coin, and there are obvious and unmistakable benefits to Facebook’s performance management system that are hard to ignore.

The Benefits of Facebook’s Strategy

Lori Goler, along with head of HR Business Partners Janelle Gale and writer Adam Grant, implored fellow HR representatives and companies not to “throw the baby out with the bath water” when it comes to performance reviews, claiming that the complete disregard of performance reviews is an overreaction to how they’re executed. Facebook’s implemented system was discovered to be the most practical and efficient among the various methods they tried. They write:

“Many companies that are abandoning performance evaluations are moving to real-time feedback systems. That is an excellent way to help people repeat their successes and learn from their failures. But it doesn’t help them—or the organization—gauge how they’re doing overall.”

And employees seem to agree--in an internal study, Facebook concluded that over 87% of people wanted to keep performance ratings.

Employees recognize that the system has flaws, but most also agreed that what they have is better than no reviews at all.

Former Facebook manager Daniel Ho claimed that the company’s performance review software and 360 feedback twice a year made it easy for employees to give and receive recognition and visibility. Ho said, “Facebook's process was transparent enough that I knew where I stood and what I needed to work on. It was hard not to notice that managers cared about giving employees ownership, responsibility, and opportunities to learn.”

And Goler et al. agree -- at Facebook, performance reviews are used to help employees understand how their contributions matter to the company’s growth, as well as to more easily recognize and reward top performance.

What to take away

Here’s what we can glean from the way Facebook has constructed its performance management system:

While performance evaluations are not necessarily the perfect system, and can have costly flaws, they are certainly better than no reviews at all. Without formal reviews, performance will still get rated in another, more secretive manner that leaves employees in the dark and creates a sense of distrust toward management.

Even continuous real-time feedback, while a helpful tool to improve an employee’s performance, can employees unsure of their impact on the company overall.

More Inspiration

Facebook is not the only organization going its own way. These days most great organizations are thinking critically about performance management and coming up with innovative new solutions. Here are a few more examples to help inspire your own strategy.

3 Approaches to Performance Management: Google, Betterment and IBM

Performance Management at Tesla: What we know.

How Regeneron Built Their Performance Management System

How Does Uber Do Performance Management?

How Does Asana Do Performance Management?

How Netflix does Performance Management

Deloitte's Radically Simple Review

How Does Amazon Do Performance Management

How Does GE Do Performance Management Today?

And if you're ready to take the next step, check out our guide to creating your own modern performance management process.

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1/17/2019
Performance Management at Tesla: What we know.

Just when you thought performance management was getting soft, along strolls Tesla hitting the headlines with its no excuses approach.

If you believe the hype, Tesla has been managing its extreme growth and aggressive goals as an old-school taskmaster.

Back in 2017, the global automotive company reportedly fired hundreds of staff with little or no warning following annual reviews. It was an unexpected move and one that left everyone wondering whether the notorious rank and yank approach would be making a comeback. Then, in 2018, Tesla announced it was planning to cut another 9% of its 46,000-person workforce, citing the "normal ebb and flow of hiring and firing in a business."

Tesla stands out amongst its tech star peers for a less cushy approach to performance management process. Here's what we know about it.

What’s going on at Tesla?

Tesla is one of those mysterious companies we’re all intrigued by.

What’s it like to work there? What do employees do all day? What do they get rated on?

Unfortunately, we can’t answer all of these questions.

Here's what we do know. The company was founded in 2003 and is currently estimated to be worth $60 billion. Led by the enigmatic (and let's face it, controversial) Elon Musk, Tesla is an organization like no other. Its business is luxury cars, but its ambitions are much higher. Under Musk's guiding hand, Tesla wants to revolutionize the entire automotive world in ways we can’t even imagine.

Explaining his master plan for Tesla, Musk writes “the overarching purpose of Tesla Motors (and the reason I am funding the company) is to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy.”

The man has grand aspirations. And Musk has made it no secret that the company faces challenging production targets. (He recently apologized to a customer who was waiting for her new Tesla car by tweeting “we’ve gone from production hell to delivery logistics hell.”)

As Tesla ramps up production to hit a target of 5,000 Model 3 cars every week, its priority is 100% delivery execution. Given the goal, maybe a cutthroat performance management approach is the best way to get those results and keep customers happy? We'll let you be the judge.

A glimpse into performance management at Tesla

Like most organizations of Tesla's size and influence, its performance management system is somewhat of a mystery.

But if you know how to read between the lines, there are some interesting strands to follow. For starters, it seems that the performance management culture has changed quite dramatically over the last few years as the company has grown.

From employee development to stack ranking

Back in 2016, when Juliana Bednarski was HR Business Partner and Louis Efron was Head of Global Employee Engagement, the picture looked quite different. In a presentation for Talent Week, Bednarski and Efron outlined Tesla’s dynamic approach to leveraging the best talent.

They recognized the importance of engaged employees and their impact on customer engagement. In response, they created the Tesla360 Summary. This was essentially a staff survey that used the Maslow Hierarchy of Needs to guide performance management. The survey was a massive success and achieved an impressive 91% participation rate.

So it's strange that during the tenure of Gaby Toledano, the Chief People Officer who left late last year, Tesla appears to have embraced an entirely different approach. Details are thin, but it seems that they've gone back to using a traditional annual review to determine promotions, demotions and firings.

That's a stark switch up from their previous engagement-focused approach aimed at helping employees reach the top of the self-actualization pyramid.

Changing priorities, changing process

In an email statement submitted to Fortune, a Tesla spokesperson confirmed that performance reviews happen annually and employees meet with managers to discuss their achievements over the past 12 months.

As a result, top performers are rewarded with either compensation, equity awards or promotions. And we saw what happens to the low performers.

Not much to go on there. But it's clear that Tesla is driving hard to deliver what former employee, Spencer Gore (now CEO of Impossible Aerospace) describes as “industry-defining product on a limited budget."

And, to deliver on such a promise, Tesla needs to run a manufacturing operation that is lean and mean.

With Tesla’s formidable production goals, it might make good business sense to remedy the bottlenecks as firmly and swiftly as possible. And if that's the goal, what could be more effective than the good old rank and yank approach?

But to be fair, even the grandfather of rank and yank performance management, Jack Welch would say that this is approach is as much about employee growth as it is about assessment. And it is possible that Tesla's current performance management framework somehow marries the two. But with the layoffs still hot off the press, it may be awhile before they start opening up about their latest performance strategy.

Is Tesla’s approach good or bad?

It depends on who you ask.

If you defer to Tesla's current and former employees, some seem to accept that working for Tesla is a competitive and stressful environment. Others are less complimentary.

But for many, the prestige of having Tesla on your resume supersedes the downsides. One anonymous employee writes “having the opportunity to work for a company that is changing the world is exhilarating and rewarding.” But another reviewer warns “Tesla is a high-stress, fast-paced environment. People here work really hard and get things done. I wouldn’t say it is for everyone.”

It’s hard to say where Tesla's performance management process will go from here. For a company with such high aspirations, it’s clear that its employees hold the key to success. But how they attract and nurture that talent seems to be a moveable feast. As the new VP of People and Places, Kevin Kassekert, settles into his role, it will be interesting to watch how Tesla’s performance management evolves in the future.

More Inspiration

Tesla is not the only organization going its own way. These days most great organizations are thinking critically about performance management and coming up with innovative new solutions. Here are a few more examples to help inspire your own strategy.

How Regeneron Built Their Performance Management System

How Does Uber Do Performance Management?

How Does Asana Do Performance Management?

How Netflix does Performance Management

Deloitte's Radically Simple Review

How Does Amazon Do Performance Management

How Does GE Do Performance Management Today?

3 Approaches to Performance Management: Google, Betterment and IBM

How Does Facebook Do Performance Management?

And if you're ready to take the next step, check out our guide to creating your own modern performance management process.

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