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8/13/2021
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, the BARS method of performance appraisal measures an employee’s performance against specific examples of behavior that are given a number rating for the purpose of collecting data.

behaviorally anchored rating scale example

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.

For now, let's dive into some examples of what BARS might look like.

Examples of Behaviorally Anchored Rating Scales

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:

  • 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 of the BARS Method?

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 to consider.

Benefits of Using the Bars Approach:

  1. It's 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's 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's 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.

Downsides of Using the Bars Approach:

  1. It’s 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 the BARS Approach 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. Its emphasis on behavior produces objective ratings difficult to distort.

Looking to implement BARS across your organization? PerformYard makes it easy to roll-out new programs company wide. Learn More.

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.

We also recommend using performance management software to help with execution. Performance management software makes it easy for employees to participate in your process and allows you to automate and track objectives, goals, and employee progress in one place.

Be sure that your team is on board with the BARS approach before implementing. 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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8/6/2021
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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8/1/2021
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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What is Management by Objectives (MBO)?

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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7/22/2021
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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7/17/2021
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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7/14/2021
What is Modern Performance Management? 5 Steps to Create a Process

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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7/7/2021
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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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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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.

 

Looking to incorporate stack rankings or other performance management strategies? PerformYard makes it easy
Learn More

 

What is stack ranking?

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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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.

PerformYard provides the tools for companies to implement focal point or anniversary date reviews -- or both
Learn More

 

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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6/17/2021
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.

 

Asking the right questions in a 90-day review is key to upgrading your onboarding process and improving employee-manager communication.
Download Our 90-Day Review Questions Template

 

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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6/14/2021
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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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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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 vary 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. 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 an employee’s performance, which can help to inform raises and promotions.

However, reviews can be done at any increment of time—quarterly, 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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5/30/2021
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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5/23/2021
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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5/18/2021
Rating Scales for Employee Performance Reviews

Rating scales are everywhere: After you visit the doctor, watch a show on Netflix, or order food on DoorDash.

They’re also a useful tool for performance reviews. Rating scales help to quantitatively measure employee performance and speed up the appraisal process, allowing organizations to solicit feedback from more people in one review cycle.

In this article, we’re providing examples and ideas to help you create rating scales for your performance management process.

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, so we don't need to reinvent the wheel. We should learn from our scientific colleagues.

Nominal vs. Binary vs. Ordinal Data

Before diving deeper into rating scales, we're going to quickly review the three types of data that are most often collected on employee appraisal forms: nominal, binary, and ordinal.

Nominal = Categories

Nominal Data

When the answer options have no relationship to each other (aren’t ordered or don't 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)

Binary Data

Binary data is always an either or answer, with the most common example being yes or no.

Other examples include:

  • 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

ordinal data

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 should be worse/less.

Numeric vs. Descriptive Answers

There are two common ways to present rating scale answers: numeric and descriptive.

Numeric - Just Numbers

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

Numeric scales only include numbers and rightfully get a lot of pushback.

It can be really hard for managers to understand what constitutes a 4 vs. 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 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 Scale

Likert scales measure our response to a statement, with the most common example 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 number on a likert scale, but any number can be used.

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” and does not give a neutral option, so the respondent has to pick a side.

Semantic Scales

semantic scale

Semantic scales are similar to likert scales but present 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

Custom scales are common because they allow HR teams to create their own scales to fit their needs.

A risk of custom scales is that they can lead to unexpected distortions in data. Below are several real-life examples of custom rating scales to help you see how they can be used effectively.

No matter which rating scale you choose, PerformYard makes it easy to automate and track objectives, goals, and employee progress. Learn More.

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 that 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)
  • 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:

  • 5 = Leading
  • 4 = Strong
  • 3 = Solid
  • 2 = Building
  • 1 = Not Meeting Expectations

Goals are also tracked using a 3-point rating scale that measures whether a goal or project was on time, on budget, and accomplished.

  • 3 = Goal Was Met
  • 2 = Goal Was Partially Met
  • 1 = Goal Was Unfinished (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 includes the following:

  • 4 = Advanced
  • 3 = Proficient
  • 2 = Developing
  • 1 = Does Not Demonstrate

Direct report ratings are reserved for managers only and determine whether the ratee’s capabilities are:

  • 3 = Highly Effective
  • 2 = Effective
  • 1 = Needs Improvement

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:

  • Building Trust
  • Collaboration
  • Communication
  • Delivering Results
  • Problem Solving
  • Taking Initiative
  • Functional Knowledge and Skills
  • 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:

  • 3 = Exceeds Expectations
  • 2 = Meets Expectations
  • 1 = Unacceptable

All ratings apply to supervisors and managers, as well as non-managers.

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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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5/8/2021
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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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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13 Types of Employee Engagement Programs

From slides to cryogenics, there's no shortage of wild ideas for increasing employee engagement. And we get it. Engaged employees are more productive, less likely to quit and great for a company's bottom line.

But real employee engagement doesn't require an investment in meditation pods or Michelin star chefs. Inspiration, recognition and culture are the essential ingredients, and there's always a way to keep teams inspired and engaged, even if you're not a Silicon-valley startup.

1. Paint the big picture

Trite as it may sound, inspiration is probably the #1 key ingredient to a highly motivated workforce. Take a look at the best and brightest leaders today, and you can see they all have this one nailed.

And it all starts with a meaningful goal. Whether you use an OKR or KPI model for goal-setting, the most important thing is to make sure the goal can be directly tracked back to the individual contributions of every member on your team. And don't be afraid to get creative.

Coors Brewing Company successfully rallied their employees around a business goal through an internal campaign designed to win back market share from smaller micro-brews. Their #ReclaimColorado campaign offered employees a monthly stipend of $35 to buy beer with friends when they were out having drinks. Employees were asked to share their stories on the company's internal social network, and over 200 employees participated.

2. Get personal

Most business leaders expect their employees to be as excited about their goals as they are. But in the real world, that's an unlikely scenario.

Your employees can of course care deeply about the business, but when push comes to shove, that business is someone else's baby. To truly increase employee engagement, you must acknowledge that each of your employees has personal and professional dreams of their own.

That's why leading companies like Deloitte, Asana, and many others, put a big emphasis on learning and development. Don't have the budget for life coaches and employee sabbaticals? Don't worry. If you’re like most offices with a multi-generational workforce, you probably have plenty of in-house coaches on hand. In fact, almost 9 in 10 Millennials see baby boomers as a great source of mentorship in the workplace. Companies like AdRoll are known for using senior staff as mentors.

3. Emphasize progress

Big picture inspiration and personal motivation are important, but they aren't always enough to keep your employees engaged year round.

Researchers Teresa Amabile and Steven J. Kramer found that managers of high-performing teams maintained a consistent, daily focus on progress. When we're stressed or under pressure, it can be easy to focus on how far behind we are, or how much work lies ahead of us. But according to the research, that's simply a waste of time. If you want your employees to maintain a winning trajectory, focus your attention on their strengths and acknowledge every step they take in the right direction.

4. Upgrade your tools

On the subject of progress, it's worth noting that if it takes employees 20 minutes just to boot up their computers in the morning, they'll feel like they've hit a wall before they even log in.

Employees need seamless access to the right tools and info, or what experts refer to as an "enabling infrastructure", in order to feel empowered to do their best work every day. Take a look around your workplace. Is there anything in need of an upgrade?

Same goes for your software and systems tools. Where are the bottlenecks? How can you make it as painless as possible for employees to get the answers they need? Removing or replacing red tape may involve an investment up front, but it will definitely pay off in long-term employee productivity.

5. Get real about recognition

Contrary to popular belief, recognition isn't just about acknowledging top performers for hitting the right sales goals (though you should definitely do that).

True recognition is an active appreciation for your employees, both professionally and personally. It's not just about knowing who hit their numbers last month, but knowing whose kid just made the honor list.

Despite Dale Carnegie's best advice, most leaders are too busy to stop and recognize their employees, and most organizations are incredibly siloed. Bridge the gaps between teams and departments and encourage your employees to really get to know each other. This can be as simple as scheduling a company-wide coffee break (like they do over at Slack), or as sophisticated as creating an internal culture platform with a tool like Bonfyre.

6. Turn the tables

Regular employee engagement surveys that flip the script by asking employees to rate the organization are a great way to improve engagement, simply by making employees feel heard.

In a recent article for TLNT, Ron Thomas of Strategy Focused suggests employers follow up with as much attention and frequency as a 5-star hotel—just replace "How was your stay?" with "How are we doing?". And you don't have to do this all the time, once a month is a great start.

Ron also recommends creating an engagement council to consistently request and monitor employee feedback—a move that will not only keep employees engaged, but also give you a great understanding of what is and isn't working over time.

7. Stop micromanaging

The most common advice for improving employee engagement is to implement some kind of weekly performance check-in.

And we agree, frequent reviews can be incredibly effective for keeping employees motivated and on track. But beware. There's a thin line between continuous feedback and micromanagement.

Resist the temptation to use the weekly check-in to dive into project setbacks or details. Instead, take a page from Asana's book and focus your one-on-ones on your employee's personal goals, and the measurable progress they made on the big picture company goals. Rather than telling an employee how to do their job, managers should simply let employees know their doors are always open if they ever need help. After all, accountability is useless if it doesn't come with the kind of autonomy that empowers employees to make changes themselves.

8. Acknowledge mental health

In the wake of Olark CEO, Ben Congleton’s viral email, mental health is finally becoming a priority in the workplace. But unfortunately, most employees are still too uncomfortable to discuss their mental health in the office, which can have a devastating impact on a company's bottom line.

In fact, mental health issues cost 12 billion days in lost productivity for employers around the globe, prompting companies like Barclays, Amex, Starbucks, and many more to create internal initiatives aimed at improving employee mental well being. Employees who feel great inside and out just perform better. And if you lead the way, they'll follow. For example, Amex’s ‘Healthy Minds’ program has a 98% internal satisfaction rate.

9. Get outside

One simple way to offer a quick boost of energy is to let employees take meetings outdoors.

Stale office air can actually make employees less productive, but on the flip side, getting outside is great for mental health. A University of Michigan study even found a 20% increase in short term memory performance for participants who walked among trees, compared to those those who walked down city streets. Employees at LinkedIn take regular ‘Walk and Talks’ to wake up their brains and make meetings more productive.

10. Say more with video

No one wants to read 10 pages of fine print on changes to their health policy. One great way to show your employees you're committed to engagement is to cut the jargon and start speaking their language. And these days, that means video.

According to Hubspot, a whopping 59% of company decision makers would rather watch a video than read an article or blog post. At Wistia, managers cater to the masses by making key announcements via weekly video updates. And no need to fret over production value. Even a simple smartphone-recorded video is a great way to liven up internal announcements and make sure employees actually see important updates. Video can also be used to help get new hires more amped up during the onboarding process, and even cut down on time lost due to frivolous meetings.

11. Be flexible

From star startups to Fortune 500s like GE and Johnson & Johnson, leading companies offer flex scheduling and remote work arrangements to help zap work/life stress and keep employees focused on outcomes.

And this is one engagement tool that will become even more crucial in the near future. By 2030, millennials will make up 75% of the workforce—and more than a million millennials are becoming parents each year.

It's no secret working parents are under extreme pressure and today's leading companies are competing hard on parental benefits—even going as far as offering onsite daycare facilities and free breastmilk shipping for traveling moms. But a simple flex scheduling policy is a great way to attract star talent, even if you don't have a billion-dollar budget. Just work a little extra flexibility into your existing flex scheduling, PTO, or WFH policy. For example, Capriotti's Sandwich Shop allows on-staff parents to take time off to attend their kids’ events and activities, no questions asked.

12. Have more fun

Most employers make the mistake of trying to dress work up as fun. But no matter how creative the ice-breakers, a team-building workshop is still a work activity.

Create events that bring employees together with the sole purpose of letting their hair down. For example, employees at Penguin Random House love books (obviously), so they created a summer reading club. For offices with a more diverse workforce, choose something a little more universal like last Friday pizza lunch. (Because, come on. Who doesn't love pizza?)

Socializing at work has an undeniably positive impact on employee performance. Having a set time and place can help cut down on the distractions of friendships at work, while still harnessing the benefits of increased engagement and productivity. Whether you opt for classic or creative, just make sure there's one clear rule: No talking shop.

13. Commit

There's no shortage of perks and tools out there promising to make your employees feel more engaged at work. But in truth, the single biggest thing you can do to improve employee engagement is to simply show your people you're committed to their success.

Because at the end of the day employee engagement isn't just an altruistic lip service initiative. It's the key to a profitable future for your business, and coincidentally, it's the right thing to do.

 

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4/23/2021
The Most Important (and Overlooked!) Features to Consider When Selecting Performance Management Software?

Congrats! You've made the decision to upgrade your performance management strategy. Get ready for a happier workforce and healthier bottom line!

As you consider different software solutions be sure to ask about these most important, and often overlooked, elements of great performance management software.

Cost of implementation

For most organizations, getting started with a dedicated performance management system will be completely new territory. You may have several members of your management or even leadership teams who are software-fatigued and wary of learning another system. That's why implementation is so important.

Your performance management system should come with the kind of support that makes a great first impression with users. But many performance management vendors only provide limited support, or charge support as a separate service.

Unless your entire office is extremely tech-savvy, you should probably select a solution that offers full training (preferably at no additional cost) at kickoff so that every employee feels great about using your new tool from day one.

Key Questions:

  • Who will be responsible for setting up the platform initially? You or your provider?
  • Are there any extra costs?
  • Is there human support during this process?
  • Will there be training for the staff?
  • If yes, is the training in-person or remote?

 

Ongoing support

Even with the smoothest launch possible, questions will arise. As mentioned, many vendors charge support as a separate service, which can dramatically increase your ongoing expenses throughout the year.

Look for a solution that offers regular, ongoing support at no additional cost to avoid sticker shock after kickoff.

Key Questions:

  • Are there any limits to the support you receive after implementation?
  • What form does ongoing support take?
  • Do you have someone's phone number? Email address?

 

Data security standards

We cannot overstate the importance of data security when it comes to selecting a performance management system. More data than ever before is falling into the laps of employers and HR departments, and you need to make sure your business is protected by using a system that's completely compliant.

Look for a solution that offers real-time encrypted backups (preferably using HTTPS protocol) to reduce any exposure to data loss. A performance management system that goes above and beyond will also have features that protect against liability, such as review reminders and alerts for missing signatures.

But beyond the legal and regulatory risks, performance data that is collected and stored properly can be a huge asset to your business. Make sure your performance management system offers consistent, compliant record keeping to help guide decisions about hiring, promotions, compensation, succession planning and more.

Key Questions:

  • What is the vendor’s data security policies?
  • How are passwords handled and stored?
  • Who owns the data, you or the vendor?
  • How is the data encrypted?
  • How often is the data backed-up?
  • What happens if the system ever goes down?

 

User-friendliness

Let's say you've finally found a performance management system that checks all your boxes for features. Great, right? Not so fast. Just because a performance management tool is packed with bells and whistles does not mean it will work on a day-to-day level.

Employee performance is a company-wide initiative and if you really want to bring those productivity benefits home, your performance management software must be adopted by the whole organization. That means it must be intuitive and enjoyable to use.

This is especially important for teams on the go. Make sure your software can be accessed 24/7 on any device. You should be able to get more feedback, from more stakeholders, more often—while reducing the overall cost and admin burden of your performance management process.

Key Questions:

  • How easy is it to navigate the dashboard? From mobile and tablet?
  • How easy is it to get sign-off from within the system?
  • Can the system be customized with your branding?
  • What do the employee analytics and data visualizations look like?
  • What kind of reporting tools are included?

 

Flexibility

The state of performance management is changing fast and your software must be capable of evolving along with your business.

If the CEO asks for something new next year, will it require switching platforms? Or paying for an extra module? Make sure your performance management system is flexible enough to meet all your needs, both current and future.

Walk through your existing process and make sure the software can support every last step, or that there is an easy change that doesn't impact your long-term vision. Many solutions won't support seemingly simple things like multiple sign-offs, automatic calendar reminders or self-assessments.

Key Questions:

  • Does it include customizable automated workflows?
  • Can it deliver continuous feedback?
  • Does it have features for customizable 360° feedback, real-time and peer review feedback?
  • Is review timing flexible or fixed?
  • Can it deliver anonymous feedback?
  • Do system expansions and adjustments come at an additional cost?

 

Practicality

As much as we wish purchasing a performance management solution were a golden ticket to running a perfect OKR process like Google, the reality is great performance management takes time. Find a solution that lets you automate your existing performance management process while helping you grow into the performance strategy you aspire to.

One of the most important features to look for is how the system traces personal performance objectives back to the organization's most important goals. A great performance management system will make it easy to break down top level objectives and track progress as part of the employee performance record.

Key Questions:

  • Can the system be configured around your workflows?
  • Can it cover all the bases included in your homegrown system?
  • Can permission be granted to the right role (manager, administrator, etc.) in order to allow them to create and edit appraisal forms?
  • Are your launchers, authors and signers all customizable?
  • Can managers add goals and development plans?
  • Can employees add goals and development plans?

 

Final Takeaways

Your people are your biggest business assets. And purchasing a performance management system is an important decision.

A future-proof performance management system will adjust to your business—not the other way around. Choose a system that will make it easy for you to make the incremental changes that will yield big results in employee happiness and productivity.

 

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Give Effortless Feedback with PerformYard

At PerformYard our goal is to build a flexible performance management solution that is also really easy to use.

That means we need to offer all the functionality of the big clunky enterprise tools, but maintain the ease-of-use found in overly simplified small business HR software. Our customers should be able to take any complex performance management strategy and run it effortlessly in PerformYard.

That is a never-ending challenge.

It was with this goal in mind that we recently rebuilt our recognition and notes features into the brand new (and totally amazing) Feedback feature. Feedback in PerformYard now allows you to recognize employees in front of the entire company, create private notes, or share feedback with your employees individually. All of this is accomplished through a single intuitive process, because we know managers don’t have time to learn another complicated piece of software.

Employees choose

  1. Who the feedback is about (one person or several)
  2. Who they want to share the feedback with
  3. And that’s it

Whatever feedback the employee chooses to give will then automatically be stored and shared with the appropriate people.

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At review time, employee feedback from the previous year can be pulled up while filling out the review form to help inform a more complete picture of the employees performance.

Check out our customer support page to see more ways you could use Feedback at your organization.

 

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