There has been a shift in how organizations think about performance management. You can see it in headlines like these…
That said, progress has not been linear and you may also have seen headlines like these…
So where does that leave us? What is Modern Performance Management?
In the early stages it looked as if modern performance management would coalesce around a set of best practices, like quarterly conversations, weekly 1-on-1s, or continuous feedback frameworks. But this didn’t happen.
Organizations went in many different directions and most of the bold claims about the end of rankings, ratings, annual reviews and other elements of “traditional” performance management haven’t come to fruition.
Today, years into the performance management revolution we find ourselves in a middle ground. Organizations continue to improve their processes, but they are doing so with a mix of new and old practices.
It turns out there is no performance management panacea. What defines performance management as “modern” is not your process, but your approach.
1. Modern performance management is about starting with your organization’s needs and the needs of your workforce, then building a custom strategy that serves those needs.
That means no more over-stuffed annual reviews that are a big waste of time, but it also means you shouldn’t necessarily take Adobe’s strategy off the shelf and apply it to your organization.
2. Modern performance management is about creating a strategic business operation rather than fulfilling a year-end compliance requirement.
If you are analyzing the needs of your organization and then building up a strategy that drives results for your organization, that’s modern performance management.
Ok, that is a little abstract, so we’ve also compiled a list of themes that help define modern performance management.
Here are some of the changes we often see when organizations transition to modern performance management. These aren’t all requirements, even pursuing one or two of these changes is sufficient.
Digital tools are enabling the transformation. More feedback, more data, more transparency are only possible because they can be achieved with a light tough through technology. Before adding complexity to their processes, organizations are streamlining them through technology. Ultimately performance management needs to be layered on top of the real work of the organization, so it can’t be cumbersome or time consuming.
Traditional strategies focused primarily on rewarding top performers and eliminating under-performers. While that is still a part of modern systems, the focus has shifted to include development. We wrote about this idea here - Accountability vs Growth: Choose a side (or don't).
You can’t talk about modern performance management without talking about increased frequency of feedback. Whether it’s quarterly check-ins, weekly one-on-ones, or continuous feedback, more feedback is what it’s all about.
Traditional performance management tended to give everyone individual ratings which did not always incentivize teamwork. Today organizations want to know not only how well you work alone, but how you build up a team.
We live in a more dynamic world and organizations want to reward employees who have the flexibility to adapt and perform as an organization evolves. Modern strategies reward both tactical performance and adaptive performance. Read more about that here - Tactical Performance vs. Adaptive Performance: Why You Need Both.
Unfortunately traditional performance management is filled with bias. Modern performance management seeks to even the playing field and get to a better understanding of actual performance. It’s no longer just about your manager’s opinion of you for one week a year. Read - The Biases You Must Remove from Your Performance Reviews.
Finally, modern performance management still embraces data. Even after an initial rejection of ratings and rankings, many organizations are looking for smarter ways to bring data back into their process in order to inform career planning, hiring, and other business decisions. Data gets smarter with better questions, like how Deloitte reframed their review questions to focus on things a manager is a better judge off.
If you’re ready to embrace a modern performance management strategy, don’t be intimidated by all your options. The right strategy is simply what’s right for your organization right now.
For many organizations the best first step is to streamline their existing process. A well run process that doesn’t waste employee’s time will go a long way as you continue to build out the rest of your strategy. If you’re interested in learning more about how PerformYard software streamlines modern performance management get a demo here.
If you want to learn more about creating your own modern performance management strategy, read our guide
We geek out over performance management process. For us, and many other HR professionals, it is what we get paid to think about. But! that is not the case for most (almost all) employees at your organization.
For most employees performance management is a distraction. And worse it doesn’t do anything for them. Employees are paid to do their job, and HR asks them to stop doing their job for this other thing they feel has no value.
There’s no use arguing it, this is the reality every HR department faces when they try to introduce new performance management initiatives. Most employee’s first thought will be, “how big of a waste of time is this going to be?”
It is our job, HR’s job, to change this narrative, to prove people wrong, to justify our initiatives. We can’t lean on the fact that we’ve been given authority, we should be winning over employees, not forcing things on them.
The first step is taking on a new mindset. We should be designing our performance management processes for our employees. We should start thinking of them as customers we want to win over, and start thinking of ourselves like product designers.
The product designer framework is helpful because there is a tremendous amount of existing research into product design, customer experience, and service design that we can lean on. Even if it isn’t a perfect analogy we think it’s a valuable one and we think it’s always a good idea to learn new lessons from experts in other fields.
It’s amazing how many organizations have only a vague understanding of why they’re running a performance management process. Start by understanding the needs of the organization and the needs of your employees.
Print them out, put them on the wall, read them out at the start of each meeting. If you stay true to these needs it will bring great clarity to the design process.
Focus your efforts on one thing. It is better to do one thing really well than to do many things poorly. Even if your ultimate goal is the most far-reaching performance management process in history, start small.
HR needs to build up trust and buy in from the organization, and you do that by knocking each new thing out of the park. Impress your employees with the first thing you introduce and they’ll be ready to jump on board with the next thing.
Have you ever heard this in a meeting? - “oh they’ll be able to figure it out…”
Expecting someone to “figure it out,” is a huge taboo in product design, but it is extremely common everywhere else. Yes, it’s true that employees will mostly be able to figure out how to navigate that cumbersome process. The problem is that they’ll be frustrated, uncertain, tired and just “over it” by the time they get there.
Making it easy matters.
The process should almost disappear. Employees should spend all their time on the value creating aspects of the initiative, and none of their time on the administrative/process aspects.
One classic example of this is when review forms contain a section where the employee just copies down their personal information, like name, ID number, job title etc. The organization already has this information! Why are they wasting the employee’s time to copy it down again?
Details matter. Getting this right is about more than the questions on your forms, choosing quarterly vs annual check-ins, or deciding the number of peer reviews to include. A great performance management system is about all the little details.
How clear and concise are your emails? When and how will you remind employees to complete reviews? Where will employees see what is expected of them/left to do? How do you encourage managers to leave more feedback? How do employees know what an effective goal looks like?
Changing the narrative around performance management, and getting buy-in from employees should be HR’s responsibility.
We can’t rely on our authority we need to win employees over with great design. Let’s learn something from the product design community and start wowing our employees.
If you’re interested in further reading, here are two fun product and experience design books to get you started:
The Design of Everyday Things by Dan Norman
Performance Management is a big idea. We’re talking about improving the performance of every employee at your organization.
How do you even begin to tackle something like that? At PerformYard we believe the first step should be defining your purpose.
If you are developing a new performance management strategy you’ll find yourself pulled in many directions. Someone on your team will push for OKRs, another person will tell you about the weekly 1-on-1 process they read about, and still another will recite the adobe quarterly check-in case study.
The best way to evaluate all the ideas that will be thrown your way is to start with a clear sense of why you’re developing a new strategy and what you’re trying to achieve.
We’ll get to the five purposes quickly, but it is important to mention this first. You can’t do all five!
Maybe you can if you’re already crushing 3 or 4 of them and you want to layer on a new initiative, but most of us aren’t there.
It is very important to focus with a new initiative, and so you should choose one or two from the following list. Kick those out of the park first, then layer in others.
So how do you choose?
One purpose will tend to be better fit and have a bigger impact depending on the type of organization you manage. So think about your organization along the following lines, and then map your needs to the best purpose for you.
Decision Rights - How and by whom are decisions made?
Information - How does knowledge move around your organization?
Motivators - What drives your people to perform?
Structure - What are the lines and boxes that connect people?
This framework comes from a great little book called Results: Keep What's Good, Fix What's Wrong, and Unlock Great Performance, check it out if you’d like to go deeper on diagnosing the performance needs of your organization.
Ok let’s get to why you’re here. But don’t forget that you should be thinking about choosing the right purpose for you, not how you can do all five!
This is the old standard, and while it has fallen out of favor in recent years, it absolutely still has a place.
Performance management systems that focus on accountability evaluate employees against standards. A classic example would be the sales quota.
These systems can work very well because employees know what is expected of them and are highly motivated to achieve the standard.
What the standard is and how it is established is very important. It helps to have many people at your organization performing the same well-defined role. For example with 15 sales professionals doing the same job you can begin to standardize what level of performance is and is not acceptable.
Beyond setting the level of performance it is also important to determine how you will measure performance. Unfortunately, there is rarely a straightforward way to measure high-performance, so we rely on metrics that are just indicators. We must choose these indicators carefully to prevent people from gaming our system.
There are many examples of accountability standards gone wrong.
Public school teachers “teaching to the test” is one. Some school districts are heavily incentivizing teachers based on their students test results and so teachers focus more on the test than on the thing the test is designed to measure.
Another example is the Wells Fargo fake accounts scandal. Bank employees were so fearful of getting fired for not opening up enough new accounts that they began to open fraudulent accounts to keep their jobs.
With the right system and the right employees we believe there is still a place for accountability focused performance management.
Organizations with well-defined roles, many people in those roles and measurable results. It also helps to have a large pool of qualified candidates to fill vacancies.
Employees could be tempted to game the system as we see with “teaching to the test” and the Wells Fargo scandal.
Development focused performance management is having it’s day! Popular tactics like weekly 1-on-1s, continuous feedback and engagement surveys fall squarely in a development focused performance management strategy. The idea behind a development focus is that employees don’t need to be forced to perform, they want to perform well and just need to be developed.
The increasing need for agility, creativity, teamwork, self-direction and other totems of the modern workplace have all made it difficult to effectively apply accountability standards. Which has increased the organizations taking on a development focus. Additionally, a tight labor market for many roles has led organizations to eliminate any sources of employee dissatisfaction. Being rated and ranked is not something most of us enjoy so moving away from accountability is a way to appease employees.
However, while development focused performance management is spreading, it has always been an important part of the professional services industry. For these firms, turning college students into high-paid advisors is part of the business model. Structured training and regular development conversations are the status quo.
It is important to note that just because development focused performance management is popular, does not mean it’s for everyone. It tends to work best for employees who have a lot of intrinsic motivation to improve their performance. This could be due to competition for career advancements like in professional services, it could be due to a desire to develop skills like in tech or creative work, some combination, or something else entirely.
If your employees don’t live for their work, and think of their job as just a paycheck you’ll either need to change their mindset or not use a development focus.
One more note on development. It is not the same thing as learning management. You don’t need to have very structured training to run a development focused strategy. Google famously gave employees “flex-time” to pursue their interests at work. This is a development focused tactic that had no top-down direction at all.
Knowledge workers, team based work, or employees with a lot of self-direction.
Employees need to be intrinsically motivated to improve their performance. We often see tech companies struggle to build sales teams because sales lends itself to an accountability/recognition focus, while many tech companies embrace a development focus with their engineering teams.
One of the most common complaints about informal continuous feedback strategies is that employees don’t know where they stand. CEB conducted research on organizations that had dropped ratings and rankings. One employee in the study shared the following:
“I have these great conversations where I thought they were providing feedback, but it was like me reading my horoscope. I only found out the truth about my performance when I didn’t get a raise. If I had gotten a score I would’ve had more clarity.”
Your most driven employees likely embrace some level of competition with their peers and also have aggressive personal goals. These employees want to know if they’re on the right track, they want to know if they are achieving their goals.
Deloitte recognized this in their performance management redesign. In the HBR article about their new performance management strategy they say,
“We began by stating as clearly as we could what performance management is actually for, at least as far as Deloitte is concerned. We articulated three objectives for our new system. The first was clear: It would allow us to recognize performance, particularly through variable compensation.”
The result for Deloitte was a short four question manager review, with three of the questions designed to recognize top performers, and one designed to call out low performance. In short they were:
Deloitte did other things with their performance management strategy as well, but their primary focus was to recognize, compensate and promote their highest performing employees.
Recognition for high performance can backfire, especially if it involves extreme compensation. You could find yourself rewarding the most unscrupulous of your employee's, which is a big part of what took down Enron. If you don’t set guide rails, extremely driven employees might do whatever it takes to win, even if that means committing fraud. This usually happens when the rewards start to become extreme.
Recognition can also fail if the act of recognition feels empty. If you’re putting up an employee-of-the-month plaque, and your employees don’t respect or care about the honor, then your recognition efforts will fail.
The form of recognition needs to let employees know they are achieving their personal goals. For some organizations, employees personal goals and work goals are just harder to align.
Organizations with highly motivated and driven employees, opportunities to promote from within, and room to give some variable compensation.
Extreme recognition can lead to extreme, and maybe even fraudulent, behavior from your most driven and unscrupulous employees. Empty recognition or recognition for things your employees just don’t care about won’t have much of an effect.
Alignment embraces the idea that you don’t need to manage people’s performance, you need to get out of their way. If you can clearly articulate what needs to get done, your employees will get after it and make it happen. This is the realm of goals and OKRs.
Jon Stein of Betterment, wrote a fantastic post for First Round Review on how he thinks about performance management. First he says you must “start with the why.” You already know we love that. Then he lays out his three goals for an effective system:
There is nothing in these three objectives about holding people accountable, developing employees or recognizing achievement. Jon Stein is laser focused on alignment through clearly articulating goals and expectations. (to be fair I’m sure Betterment does many of the other things on this list, but with this initiative they were focused on alignment.)
Stein eventually arrived at a very effective system, but it took some trial and error to get there. One of the greatest challenges was setting goals in an uncertain and dynamic environment. How do you both 1) tell employees what they should be doing but 2) don’t micromanage or overprescribe, leaving them room to run and adapt.
This is one of the most common downfalls of systems that focus on alignment. It is very hard to set great goals. When alignment systems are done poorly, they don’t give everyone room to run in the right direction, they strangle action and encourage odd behavior.
One example from the Betterment case study was what happened when they introduced team goals. The teams became aggressively siloed and even competitive with each other because everyone was focused not on company success, but on team success.
Flat organizations with highly distributed decision making and information flows. Hierarchical organizations are just naturally better at alignment and don’t need as much help. Flat organizations need a way to get everyone moving in the same direction.
Whatever you measure will improve, but it can be hard to know what to measure. There is no simple measure for high performance.
So what if your employees are all naturally accountable, pursue their own development, are happy with their level of recognition, and know exactly what to do… is there any performance management to do?
At the Stanley Clark School, a K-8 institution in South Bend, Indiana, the Head of School Melissa Grubb went with another approach. Her focus was on instilling a set of values in every employee. She wrote about her process for Gibson’s blog.
The idea is to bring the organization’s values off the wall, and into conversations between employees. At Stanley Clark teachers reflect on 6 questions and 30 statements before having a regular conversation with their manager. The goal is to increase self-awareness within the context of the school’s culture.
The values/expectations are well articulated, and target issues that Melissa has recognized as vitally important to a great school culture. The hope is that if employees embrace these values the results will trickle down to every element of performance.
To get this right it’s so important that your values are well articulated. This means more than short ambiguous slogans. Values should be turned into practical expectations that everyone can understand.
Some examples of Stanley Clark’s 30 statements are:
Additionally, your process should focus on self-reflection and conversation with others. Cultural values can’t be reinforced just by checking boxes on a form.
Finally, be sure your values are being informed by the actual values of your organization. If values are established top-down and employees don’t buy in, you will have just built a big waste of time.
Organizations that struggle with toxic cultures. Some public sector organizations fall into this category.
It’s hard to know what cultural values to emphasize. If you get it wrong employees will resent the process and consider it a useless exercise.
Once you’ve decided what matters, it’s time to build your process. Evaluate every performance management tactic with the lens of “does this advance our purpose?”
Don’t let your process become bloated. If you keep it simple and focused you will have much more success getting employees to adopt it.
Netflix's no-holds-barred approach to HR has gained the attention of many, both good and bad. This is because they’ve succeeded not only in retaining prime talent, but also in achieving a high-performance culture.
The methods Netflix applies could be called radical, but they address challenges that all organizations face. Here are four common performance management challenges and how Netflix overcame them.
According to Netflix, leaders and managers need to live and breathe company values into everything they do. Your mission statement and company values are not supposed to just sound nice, they’re supposed to be displayed throughout the work of your employees.
Posted on Netflix’s famous culture deck, is a stark comparison between a list of Enron’s company values and photos of their leaders in handcuffs. They go on to state that Enron’s values weren’t truly what was valued there. Netflix wants to strictly reward and promote employees that demonstrate their values and let go of those who don’t. It’s that simple, but it’s a big deal.
Several years ago, Netflix revamped their performance management by completely doing away with annual performance evaluations. Annual reviews were irrelevant one year later, consequentially meaningless, and they felt like a waste of time.
Instead, Netflix opts for a 360 degree review procedure. The reviews are regular but informal. In this new procedure, employees are advised by their colleagues on what they should stop, start, or continue. The reviews began anonymously at first to avoid awkwardness, but since then, they shifted to signed feedback and later face-to-face 360 reviews. Opting for full transparency, Netflix believes people can handle anything, as long as they’re told the truth.
Despite ditching formal evaluations for the 360 degree review process being bold enough, Netflix makes the reviews public. In fact, employees are encouraged to give one another blunt feedback with the purpose to provide ongoing opportunities for improvement. Their belief is that in order to build a dream team, an organization must “ foster collaboration, embrace a diversity of viewpoints, support information sharing, and discourage politics.” This can’t be done without hiring well.
The desire is for one entire dream team versus a few small groups spread out throughout the company. Managers use what they call a “keeper test” to build their team. Essentially, they’re asked to question “Would you fight for that employee?” The end goal is to give ownership of building great teams back to managers.
Netflix wants their employees to think independently and be able to make decisions on their own. The leader’s main job at every level is to provide clear and complete context to create autonomous thinkers. With the right information, employees are given the confidence to make great decisions.
Former Chief Talent Officer and co-author of Netflix’s culture doc Patty McCord says “The best managers figure out how to get great outcomes by settling the appropriate context, rather than by trying to control their people.” It’s important that managers at Netflix don’t try to control their staff, rather provide the framework to get the best results out of them.
It seems that getting fired is never really far from your mind, if you work at Netflix. The keeper test in itself is not always a source of comfort for employees. Managers also say it makes them feel pressured to fire people or “risk looking soft.” According to Glassdoor, the culture of fear is actually one of the most frequent cons. Many employee reviews mention the highly competitive environment makes work-life balance difficult to achieve. Other cons focus mostly on the transparency of the 360 review process; learning the details about why someone was let go or watching the politics carried out after uncomfortable feedback is made public.
So how is it that they maintain a seemingly average score? What are the pros that make working at Netflix a positive experience? Most reviewers seem happy about the perks; free lunch, free coffee, flexible schedules. However, the most resounding pros listed repeatedly are compensation, freedom, and responsibility. Netflix’s theory of responsible people thriving on freedom really works here and the employees seem to love it.
At Netflix they hold strong to the belief that if you talk simply and honestly about performance on a regular basis, you can get good results. Opting for full transparency is certainly not for everyone. Employees chime in on the company’s path, price increases, logos, literally everything. But can this work for any organization? McCord’s own advice would tell managers to think like business people and ask “what’s good for the company?” Then, implement those strategies, because when a company is at the top of its game, the people and their morale are also.
Netflix is not the only organization going its own way. These days most great organizations are thinking critically about performance management and coming up with innovative new solutions. Here are a few more examples to help inspire your own strategy.
And if you're ready to take the next step, check out our guide to creating your own modern performance management 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.
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.
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:
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.
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.
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-
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.
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:
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.
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.
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.
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:
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.
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.
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?
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.
“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.”
“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.”
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.
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.
And if you're ready to take the next step, check out our guide to creating your own modern performance management process.
Just when you thought performance management was getting soft, along strolls Tesla hitting the headlines with its no excuses approach.
If you believe the hype, Tesla has been managing its extreme growth and aggressive goals as an old-school taskmaster.
Back in 2017, the global automotive company reportedly fired hundreds of staff with little or no warning following annual reviews. It was an unexpected move and one that left everyone wondering whether the notorious rank and yank approach would be making a comeback. Then, in 2018, Tesla announced it was planning to cut another 9% of its 46,000-person workforce, citing the "normal ebb and flow of hiring and firing in a business."
Tesla stands out amongst its tech star peers for a less cushy approach to performance management process. Here's what we know about it.
Tesla is one of those mysterious companies we’re all intrigued by.
What’s it like to work there? What do employees do all day? What do they get rated on?
Unfortunately, we can’t answer all of these questions.
Here's what we do know. The company was founded in 2003 and is currently estimated to be worth $60 billion. Led by the enigmatic (and let's face it, controversial) Elon Musk, Tesla is an organization like no other. Its business is luxury cars, but its ambitions are much higher. Under Musk's guiding hand, Tesla wants to revolutionize the entire automotive world in ways we can’t even imagine.
Explaining his master plan for Tesla, Musk writes “the overarching purpose of Tesla Motors (and the reason I am funding the company) is to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy.”
The man has grand aspirations. And Musk has made it no secret that the company faces challenging production targets. (He recently apologized to a customer who was waiting for her new Tesla car by tweeting “we’ve gone from production hell to delivery logistics hell.”)
As Tesla ramps up production to hit a target of 5,000 Model 3 cars every week, its priority is 100% delivery execution. Given the goal, maybe a cutthroat performance management approach is the best way to get those results and keep customers happy? We'll let you be the judge.
Like most organizations of Tesla's size and influence, its performance management system is somewhat of a mystery.
But if you know how to read between the lines, there are some interesting strands to follow. For starters, it seems that the performance management culture has changed quite dramatically over the last few years as the company has grown.
Back in 2016, when Juliana Bednarski was HR Business Partner and Louis Efron was Head of Global Employee Engagement, the picture looked quite different. In a presentation for Talent Week, Bednarski and Efron outlined Tesla’s dynamic approach to leveraging the best talent.
They recognized the importance of engaged employees and their impact on customer engagement. In response, they created the Tesla360 Summary. This was essentially a staff survey that used the Maslow Hierarchy of Needs to guide performance management. The survey was a massive success and achieved an impressive 91% participation rate.
So it's strange that during the tenure of Gaby Toledano, the Chief People Officer who left late last year, Tesla appears to have embraced an entirely different approach. Details are thin, but it seems that they've gone back to using a traditional annual review to determine promotions, demotions and firings.
That's a stark switch up from their previous engagement-focused approach aimed at helping employees reach the top of the self-actualization pyramid.
In an email statement submitted to Fortune, a Tesla spokesperson confirmed that performance reviews happen annually and employees meet with managers to discuss their achievements over the past 12 months.
As a result, top performers are rewarded with either compensation, equity awards or promotions. And we saw what happens to the low performers.
Not much to go on there. But it's clear that Tesla is driving hard to deliver what former employee, Spencer Gore (now CEO of Impossible Aerospace) describes as “industry-defining product on a limited budget."
And, to deliver on such a promise, Tesla needs to run a manufacturing operation that is lean and mean.
With Tesla’s formidable production goals, it might make good business sense to remedy the bottlenecks as firmly and swiftly as possible. And if that's the goal, what could be more effective than the good old rank and yank approach?
But to be fair, even the grandfather of rank and yank performance management, Jack Welch would say that this is approach is as much about employee growth as it is about assessment. And it is possible that Tesla's current performance management framework somehow marries the two. But with the layoffs still hot off the press, it may be awhile before they start opening up about their latest performance strategy.
It depends on who you ask.
If you defer to Tesla's current and former employees, some seem to accept that working for Tesla is a competitive and stressful environment. Others are less complimentary.
But for many, the prestige of having Tesla on your resume supersedes the downsides. One anonymous employee writes “having the opportunity to work for a company that is changing the world is exhilarating and rewarding.” But another reviewer warns “Tesla is a high-stress, fast-paced environment. People here work really hard and get things done. I wouldn’t say it is for everyone.”
It’s hard to say where Tesla's performance management process will go from here. For a company with such high aspirations, it’s clear that its employees hold the key to success. But how they attract and nurture that talent seems to be a moveable feast. As the new VP of People and Places, Kevin Kassekert, settles into his role, it will be interesting to watch how Tesla’s performance management evolves in the future.
Tesla is not the only organization going its own way. These days most great organizations are thinking critically about performance management and coming up with innovative new solutions. Here are a few more examples to help inspire your own strategy.
And if you're ready to take the next step, check out our guide to creating your own modern performance management process.
If you want happy, thriving and committed employees, you need to give good feedback. And, when we say "good", we don’t mean unfounded praise for the sake of it.
What we mean is that you, the manager, put in time, effort and intentional thought into what and how to make employee reviews a valuable exchange.
Because according to the Society for Human Resource Management, 95% of employees are unhappy with the management of their performance reviews and 90% don't believe the process is reflective of the truth. Ouch.
The harsh reality is that far too many managers think they can just turn up for a performance review unprepared and rely on their subjective memory to carry them through. But that's an approach that time and time again has proven to result in biased, inaccurate and ineffective performance reviews.
But writing a meaningful review doesn’t have to be nearly as daunting as the business headlines make it out to be. Read on for a quick cheatsheet to help managers write better reviews in less time.
Today, most managers are about as loved as the office fax machine.
Unless they absolutely have to, employees would rather not engage. And if they're really honest, they're not even totally sure why they're there.
But like employees, managers have gotten a raw deal. They have mountains of paperwork to fill out, bureaucracies to navigate and they get very little feedback about whether their actions are helping or hurting.
So it makes sense that most managers would be tempted to rush through the first stage of writing up the employee review. After all, they've got to tick that box so they can move swiftly on to the next one. Problem is, if you don’t put in the groundwork, the result will be generic and useless.
The question for managers is this: Do you want to simply go through the motions, or do you want real progress for the individuals on your team?
Admittedly, some people just aren’t great at giving feedback — there’s definitely a skill to doing it well. But like any new skill, it’s something you can practice and develop. Instead of thinking ‘I can’t be bothered’ or ‘I don’t have time for this’ — change your viewpoint. A much more productive way to look at the process is to view it as a reflective exercise. One where you gather information with the express purpose of generating a meaningful dialogue and clear follow-up steps.
Set aside an hour (you honestly don’t need more) and write down the key points you want to cover, using your company mission, values, personal and departmental goals, and previous reviews as a rough guide.
And remember, it’s better to have something short and relevant than a 10-page review filled with pointless platitudes or irrelevant ratings. Here are some practical tips to keep in mind.
Ask yourself, ‘How can I help this employee?’ Remember, your goal is to ensure that the employee walks away knowing what they did well and how they can improve. The more genuine you are, the more honestly and objectively the employee will view their own performance.
Cover things that went well and things that didn’t go so well. And don’t shy away from sensitive topics. Instead, tackle them in a way that encourages the employee's personal and professional growth.
It's a fact: Employees who receive praise and recognition perform better. Research reported in the Harvard Business Review found high-performing teams are nearly 6X more likely to focus on positive feedback than the average team.
Take a minute to think about your employee's biggest wins and strengths and provide real examples of how they impacted the rest of the team or the business at large.
For instance, saying ‘You’re a great team player’ gives the employee zero practical insights into what behaviors they should keep demonstrating at work. But if you give them a concrete example like, ‘When the team was short-staffed, you didn't hesitate to pick up the slack to make sure we were able to ship on time,’ they can then relate to the memory of the event and tell you more about what happened.
That's how you get better insights into what drives an employee to do their best work. And as a major bonus, the employee will walk away from the review feeling awesome about what they've accomplished.
If there's one single rule for writing better reviews, it's this: Avoid vagueness like the plague.
Common statements like, 'You have poor communication skills’ are as lazy as they sound. What does that even mean? Is the employee a poor writer? Are their presentations confusing? Have other team members complained about their interpersonal skills? You need to exemplify each comment clearly.
In this instance, you could write: “In meetings when you disagree with another person, you appear emotional and it’s difficult to finish the discussion.” This gives the individual a real-life situation they can either recall or imagine and, hopefully, relate to.
Then you can identify a solution: “When you have a point to share that you think will help the team, try to point out how it will impact the work itself so that everyone can see the big picture impact of your suggestion.”
Edit your review to remove any vague, verbose or played-out language.
That means avoiding overused terms like ‘good’ and ‘excellent’. Instead, see if you can bring in a few action words like: excels, exhibits, demonstrates, grasps, generates, possesses, communicates, directs and achieves.
Choosing better, more specific words is a powerful way to say more with less.
It doesn't always make sense to approach the employee review as a solo project.
Even if you're not integrating peer or 360 reviews into your performance management process, it can help to get feedback from other people to either confirm or discredit your assumptions about an employee's performance.
Ask for examples of when the employee did something well or when they needed extra help or support. This will make sure the written review is fully focused on the individual being reviewed, not the manager reviewing them.
A successful performance management implementation enlists HR Professionals to set clear objectives, timelines, and have a thorough understanding of their workforce needs; which can be difficult feat in itself. One variable that adds an additional layer of complexity is when the roll-out occurs across a decentralized office. A decentralized office can be any one of the following scenarios; several regional offices with varying cultures, management styles and workplace dynamics. Or, it could be a contracting agency whose workforce includes both onsite construction workers and offsite administrators, both with starkly different job tasks. Or, this could be a company that has a high percentage of remote workers or workers that use co-working spaces. According to Forbes, about 43% of employees spend some of their time working outside of the office and that number is only expected to increase. Regardless of the circumstance, the challenges presented with implementing a performance management system that accommodates the modern, dynamic, office environment may bring into question its efficacy or its necessity entirely, but it shouldn’t. Here’s why:
According to one leading food and beverage company, the performance review is, “the glue that holds an organization together across geographic, technical, and cultural boundaries.” Performance management is an integral component of a company’s organizational strategy. Without it, executives are unable to answer the ‘how’ before the ‘why’ when identifying their workforce needs.
PerformYard clients are no exception to the shift from the traditional office environment. Our Customer Success Team has first-hand exposure to some of the challenges imposed on their HR Leaders as well as solutions our clients have adopted, using our software’s capabilities in order to mitigate these problems. Here are some of the biggest takeaways:
Challenge #1: Employees feel disconnected from their company’s mission. They don’t see their daily work impacting the ‘bigger picture,’ leading to decreased productivity and accountability.
Solution #1: Manage off-site productivity the same way you manage on-site productivity, by having clear goals and accountability,
Before implementing your software, rather than asking “how will my performance management be able to enhance connectivity between our corporate and regional offices?” Instead ask, “Does my performance management allow for goal transparency and have an intuitive way for workers to track and update progress?” Instead of asking, “Can my performance management system accommodate a remote team tasked with only special projects?” Instead ask, “Does my performance management allow for me to set top company goals that departmental or individual goals can align to?” Adopting a top-down mentality that begins with clarity and transparency before moving to individualization is good starting point.
Challenge #2: Between having multiple HR people, various management styles, and different cultural norms, standardizing the reviews process seems nearly impossible.
Solution #2: Assign one person to oversee the software implementation from a corporate standpoint and have them train representatives from different entities so they can adopt their own methods as needed.
This person should should not only have the bandwidth to learn the software inside-out, but should also be willing to initiate frequent dialogue with local HR teams to ensure the software is used correctly adds value. In some ways, the solution here is similar to the first challenge, in that, the first step begins with high-level corporate approach. But the former does not effectively reach each worker.
Having a ‘performance management guru’ allows companies to create a standardized process as a foundation while empowering other entities to make tweaks and modifications that may be more suitable for their specific needs. Using this approach, local HR professionals can incorporate performance standards that are customary for that particular region.
Challenge #3: Employees feel left out of office dialogue. The concept of ‘water cooler talk’ that once built office camaraderie and rapport is no longer prevalent.
Solution #3: Establish a method of communication that is frequent and informal where employees can interact with each other.
Even if your company uses other communication platforms like gchat, slack, or an internal system, using a feature directly from your performance software is useful for two reasons. First, studies show that remote-site workers require more frequent dialogue than those in the office to absorb new information and to help them feel aligned with the rest of the team. So in this instance, having additional channels of communication for specific work functions, is better. Second, using a feedback feature within your performance management software will establish a link between daily conversations surrounding performance and a more formal reviews process whether it be through a reporting function or otherwise.
With customization being the pinnacle of the PerformYard platform, our resounding answer to any performance management related challenge is that there is no one-size fits all solution. At a minimal, a successful implementation will involve the following: having your ultimate corporate objectives thoroughly established, a willingness to make tweaks and adjustments to accommodate varying processes, and a software management tool designed to do both.
Organizational alignment, also referred to as 'strategic alignment', is a company's ability to get everyone on the same page about what needs to get done and how.
But importantly, it's also about a company's ability to paint the bigger picture and get every individual within the business to see themselves in it. Or, as organizational strategists Jonathan Trevor and Barry Varcoe put it in their HBR deep dive, organizational alignment is how you bridge "the gap between ambition and performance."
And if you're not hitting efficiency benchmarks or reaching your potential as an organization, you could have an alignment problem. But don't worry, there are ways to fix it.
If getting your numbers back on track and fighting employee disengagement feels like an uphill battle, know that you're not alone.
Organizational alignment is an ongoing challenge for every business, regardless of shape or size. For example, investment tech startup Betterment changed their approach to organizational alignment and employee performance management three times on the road to reaching 100+ employees.
And since the beginning, massive household names like Starbucks have built their empires on organizational alignment systems in order to consistently hit growth targets and provide an awesome customer experience across some 25,000 stores in 62 countries.
With so many diverse individuals under one roof, true alignment is no small feat. But it's not impossible, either. Let's break it down to the core building blocks of a truly aligned organization.
Companies with strong alignment know their goals, actions and purpose. Here's what that means.
Goals: What are we driving the business towards?
Regardless of whether you're using annual revenue goals or departmental OKRs, an aligned organization puts the proven growth metrics first and foremost.
Depending on where you are and what you want for your business, your goals can and should vary. For more on the core elements that make a goal effective, check out our breakdown here.
Actions: How will employees achieve those goals?
Some 95% of a company’s employees are completely unaware of or confused about the business strategy. And only 7% know what's expected of them in order to help achieve company goals.
Once you're clear on the tangible results you want to see, you owe it to your employees to give them everything they need to make those results happen.
Clarify the specific day-to-day tasks, actions and behaviors at the individual and team level that, when compounded over time, add up to high-level success.
Purpose: Why is it important to achieve these goals, with this particular approach
Cautionary tales like that of Enron and Wells Fargo show us that breakdowns in organizational alignment often occur when employees are incentivized by the wrong things.
State your mission regularly and your values clearly so that every employee knows exactly what are your business goals and the behaviors that help you meet them.
We all dream of spearheading the kind of organizations that make business history. Organizations where every last individual is passionately pulling in the same direction. But the truth is, business is messy, chaotic and fraught with change — and there's no magic formula that can ever make it otherwise.
But luckily, there are many ways to make sure that the above three performance points are always being met at every level of the organization. Cascading goals is a classic approach used by many — but even companies who reject the classic hierarchy (like Asana and their AOR model), can create an approach that makes sense for their unique business culture.
What matters is that you're willing to learn and adjust as you grow.
Because as tempting as it is to blame employees for angry customers or unmet targets, the reality is it's every leader's responsibility to be the guiding force that lights a clear path forward for the business, and everyone in it. After all, how can we expect employees to support a strategy they don't know exists?
Bulky, time-consuming and ineffective. The once ubiquitous annual appraisal has gotten a bad rap — and don't get us started on ratings.
We get it. Employees don't want to be told they're 'better than average, but not excellent'. And we know that 50% of millennials would rather receive meaningful feedback every month than sit down for an hour each December. For many HR leaders, it's clear. The annual review has to go.
But the question is: in exchange for what?
Continuous feedback? Weekly check-ins? Bi-annual reviews? Performance management can be the quintessential HR Rubik's cube if you let it. And while you probably do need to make some changes, those changes might not need to be as drastic as you think.
If you want to change your performance review process but aren’t sure how, here are five steps to help you find a better way.
The number one reason companies stay stuck in an outdated performance management process is perfectionism.
HR leaders become attached to an image, idea or industry case study that made a lot of sense for someone else, but might not be relevant for them. When it comes time to buckle execute on that big idea, the process quickly becomes muddled and eventually stalls out.
But every company has its own unique DNA.
So before you embark on a system change-up, take time to identify who you are as a company.
For instance, if you have a hierarchical structure with highly skilled professionals, many of whom do a similar job, you might have a cultural need to boost employee engagement and motivation. In contrast, a small company with a flat structure of specialist employees all working on different things may need to focus on how they measure performance fairly and consistently across small but diverse teams.
Give yourself permission to do this your way. The performance management process can at should look different at every company.
Once you're clear on what your business is really about, have a good think about what you need your performance management process to accomplish.
In other words: what's the purpose of your performance review?
Is it to increase employee skills or foster greater accountability? To boost engagement or is it there to simply justify salary decisions? Be honest.
If you want your performance management process to produce meaningful outcomes, you need to define why you’re doing it.
For example, there’s no point asking managers to review employees biannually when they work on a monthly project cycle. In a case like that, it would make more sense to have a more regular review schedule while introducing some less formal elements to address issues when they arise.
Want to know a secret?
This performance management stuff isn't as complicated as it sounds.
It all boils down to 3 simple elements. Once you know those, it's easy to come up with an arrangement of those blocks that makes sense for you. For instance, Asana has an end of the year self-review that it combines with a biannual review, while the video game company Valve has a 360 system where teams of employees conduct performance interviews with everyone in the company.
Here are the 3 simple building blocks every performance management process has in common:
Reviews — Does a formal or informal approach fit better with your company culture? How often do you want to review your employees (annually, semi-annually, at the end of every project)? Who else do you need to hear from (self-appraisal, manager, peer-to-peer)?
Goal Setting — What types of goals will you set? Can you connect individual goals to the company's overarching vision? Have you created an opportunity for employees to include their personal goals?
Feedback — Where in your organization's work streams is it easiest and most natural to provide employee feedback? How do your employees want to receive feedback (in a one-to-one meeting, regular check-ins or through 360-degree-feedback)?
Rome wasn't built in a day, and you better believe your perfect performance management process won't be either.
Sure, HR case studies make it look easy but for some companies, it can take years to implement a new process. Managers and employees need time to familiarize themselves with it and they need a well-thought-out argument for why they should change in the first place.
So start with small steps like changing or removing appraisal questions, feedback methods or resetting the cadence for your reviews. Some of the most impactful change happens incrementally. You could even start by simply taking a much a smaller version of your current appraisal and executing it four times a year to test the waters.
Performance management is a moving target.
Finding an approach that works for your company means getting some things right and some things wrong. You have to be brave enough to take that leap and find what works for you. Create reflection points where you can assess what's worked, what hasn’t and how to remedy it.
And whatever you do, don’t be fooled by thinking you need to create the perfect process, especially if it takes you away from your true purpose for performance management at your company.
How often do you hear phrases like 'she's a natural athlete' or 'he's a gifted designer'?
Behind these common expressions, there's a hidden assumption that some of us are more talented than others. But is that true? Is the secret to high performance really just natural-born talent?
Or is performance something we can nurture within our environment? In June 2017, when Alex Honnold made history by becoming the first person to climb to the top of El Capitan without ropes safety gear, the internet was buzzing with speculation over these very questions. What was it that helped Alex accomplish this extraordinary feat? Was it physical aptitude, natural climbing talent or sheer mental will?
HR teams are considering the science more than ever when they design modern performance management strategies. And according to the research, the drivers behind an Olympic goal medal and a Nobel Prize is actually very similar. Let's take a look at what some of the brightest minds in business science have discovered about the "secret sauce" of great performance.
Our quest to understand human performance has intrigued scientists and psychologists for at least a hundred years.During the first half of the 20th century, the labor market was rich in human capital. With plenty of workers at their disposal, employers needed a way to discern between good and bad performance (or in more direct terms, who to keep and who to fire).
But it wasn't just employers who needed help classifying talent. During the First World War, the US military had so many recruits, they needed a quick way to identify poor performers and select stellar soldiers. They designed the first recorded merit-rating system to achieve that aim. By the 1990s the McKinsey War for Talent Study pointed a spotlight onto a fast-changing labor market. A shortage of talent due to the departing baby boomer generation was driving demand for a more sophisticated understanding of performance and reward systems.
This sparked a kind of "performance management golden age" in psychology and organizational theory that shaped our current thinking about performance management.
In 1960, Douglas McGregor penned his well-known Theory X and Theory Y. Together, these two theories clarified the differences between the key management styles of the time.
The authoritarian management style, Theory X, dominated business in the first half of the 20th century. The focus was on productivity, accountability and recognition. It assumed that when left to their own devices, workers will inevitably slack off. Under Theory X, managers were expected to control employee output through rewards and rankings.
In contrast, Theory Y defined a management approach that seeks to support employees. Rather than the classic carrot and stick routine, leaders who subscribed to Theory Y believed that employees genuinely want to perform well. Under this theory, it’s up to managers to develop and nurture this commitment in order to help employees reach their full potential at work.
The influential psychologist Abraham Maslow is best known for his motivational theory The Hierarchy of Human Needs, often shown as a five-tier pyramid.
Each level, starting at the bottom must be satisfied before you can move up. Maslow outlines human needs in the following order, bottom to top: physiology, safety, love, belonging and finally, self-esteem and self-actualization in the top spot.
Until this point in the history of performance management, psychology only focused on curing mental illness. No one bothered to investigate people who were mentally healthy. This piqued Maslow's curiosity. He noticed a correlation between healthy people and increased states of being that he named 'peak experiences'.
Today, the entire field of positive psychology, made up of theories that focus on human strengths rather than weaknesses, is grounded in Maslow's work.
With self-actualization now pinpointed as the holy grail of human performance, management consultant and author Peter Drucker set out to develop a framework that would help managers lead their employees to the top.
In 1954, Drucker argued that employees should have access to learning and development opportunities equal to those of managers and business leaders. And at the time, this was a radical position. Until this point, the biggest names in organizational theory had presented employees as subordinates whose only real job was simply to do what they were expected to do.
Fun fact: Drucker is also the brains behind SMART goals and the term "knowledge worker."
In the 1970s, pioneering psychologist Mihaly Csikszentmihalyi conducted one of the largest psychological studies ever in human performance. As part of the study, Csikszentmihalyi interviewed individuals across all ages, genders and ethnicities about their performance.
He spoke to Japanese teenagers, Navajo farmers, athletes, chess players, dancers and factory workers to name a few. The result was fascinating. Regardless of their background or career, they all described experiencing a sensation they called ‘flow’ during peak performance.
In the 1990s Csikszentmihalyi utilized these findings to fully develop his theory on happiness, considering the two completely interlinked. He defined flow as the experience a person has when they are "completely involved in what he or she is doing." In the example of a musician, Csikszentmihalyi explained: "If you are playing a musical instrument you know what notes you want to play, every millisecond.”
A person performing under Csikszentmihalyi's definition of flow, reaches maximum productivity almost effortlessly and feels great as a result.
Steven Kotler took the concept of flow a step further with his Flow Genome Project.
Kotler is often described as one of the world’s leading experts on human performance. He calls flow the “optimal state of consciousness where we feel our best and perform our best.” He explains that when we're in a state of flow “all aspects of performance both mental and physical go through the roof.”And according to a 10-year study conducted by McKinsey, Kotler's theory holds water. The study found that senior employees were up to five times more productive when performing from a state of flow. The bad news? The study also found that the average employee spends only 5% of their overall time in flow.
Just imagine the impact of increasing this to even 15 or 20%.
But how can you create flow in the day-to-day? According to Kotler, flow happens more often if you surround yourself with novelty, complexity and unpredictability.
The ‘fail forward’ ethos is one example of how companies can alter their culture to encourage more flow at work. For example, Google asked employees to deliver ten times more improvements, rather than 10% growth. By saying ten times instead of 10%, they're opening the door to radical new ideas rather than simply trying to optimize the status quo.
These are the theories, but what about the science behind the theories?
Let’s take a quick look at what happens to the human brain during performance.
Neuroscience tells us that the human brain is malleable. It can adapt to its environment, creating new neural pathways and thinking patterns. Our flight or fight response is a perfect example of this.
Discovered by physiologist Walter Bradford Cannon at the beginning of the 20th century, flight or fight response asserts that when humans perceive a threat, adrenaline is released in the brain causing an increase in our heart rate and often making us feel sweaty or even nauseous. The idea is we'll either stay and fight the threat or take off running.
Thousands of years ago, this physiological response gave us a life-saving biological advantage when faced by hungry tigers and other prehistoric dangers. But in the modern world, our threats are much more minor. Today, it's mostly things like public speaking, deadlines and of course, performance reviews that tend to make us sweat.
So how does this impact our performance? Does a shot of adrenaline speed us up or burn us out? A study by VitalSmarts found that 83% of leaders and 77% of workers say that top performers have less stress, confirming that increased stress and pressure does not lead to increased performance.
Thanks to technological advances like brain imaging, we can now map the brain patterns of high performers to see what's really happening in there.
Historically, many theorists believed that during peak performance our brain usage actually increased and went into hyper mode. But actually, the human brain slows down and becomes hypo during peak performance. The pre-frontal cortex, the area of the brain responsible for our inner chatter and sense of time, gets essentially switched off in a phenomenon that neuroscientists call transient hypofrontality.
That's why when a person is deeply focused on completing a task, they seem to make decisions almost automatically. If your inner voice of self-doubt is activated, you become distracted and lose focus.
The answer to the question what makes one person perform better than another is anything but straightforward. The research shows us it’s a complex interplay of internal and external factors and unfortunately, there's no magic formula for getting it right. But one thing we do know is that given the right set of circumstances, support and mindset, we all have the ability to do great work.
Have you ever looked up from your day to day and realized there's no rhyme or reason to your performance management process?
Sure, you have all the ratings, weightings and paperwork in place. But what if it all amounts to nothing more than an administrative exercise?
This was the situation Michelle Weitzman-Garcia found herself in when she joined Regeneron Pharmaceuticals in 2015 as Head of Workforce Development. From the get-go, it was painfully clear that Regeneron's performance management system was in need of an upgrade. Managers hated it, and so did employees.
Fast forward to 2018, Michelle and her team have redesigned Regeneron's performance management process and the global biotech company has doubled in size. They have kept pace with that breakneck speed of growth and secured a 92% participation rate in the company's performance management process.
Here's how she did it.
Regeneron Pharmaceuticals develops life-changing medicines for patients with serious diseases. Founded in 1988, the company started with a small team guided by two core principles: hire the smartest people and do great science.
One of Regeneron's largest performance management challenges is that their business units do radically different work.
From drug development, corporate functions and product supply — they needed a flexible performance management system that could match the needs of their diverse workflows. For example, it can take a new drug up to 20 years before it's market-ready, but a marketing and sales plan for the same product might only take a few months to organize.
Each business unit needed its own customized approach. Figuring out what exactly that should look like was the first challenge Michelle faced.
She embarked on a three-year intensive redesign of their entire process, And she started by asking each unit of the business what they thought performance management should be.
One of the first things Michelle learned was that Regeneron's original performance management system was complex and antiquated. Structured around an intricate 12-point rating scale, it was also immensely confusing for managers.
Michelle reduced the rating scale to 4-points to make the process faster and easier. "There's a very strong consideration given to making sure that we're not taking time away from our scientists to do HR things, so that they can spend more time doing science and being more creative," she explains.
Armed with this feedback, Michelle and her team created four different review forms, including a traditional structured form for the R&D team and a 30/30 process (every 30 days employees get 30 minutes of feedback) to completely replace the appraisal process for the product supply team.
In 2016, Michelle and her team eliminated the rating scale for half of the company and each year they continue to scale down. As of today, less than 10% of the company uses ratings.
"The benefit we found of not having a rating is that it opens up more authentic conversations between managers and employees," says Michelle. Regeneron still uses compensation ratings behind the scenes, but they're working to separate that from the performance management process altogether.
Rather than setting corporate and individual goals, managers at Regeneron talk about performance targets in terms of "what you need to accomplish."
According to Michelle, "It's really about teaching them about behaviors and performance. You can't have one without the other." Employees are asked to think not only about what they got done, but also how they got it done it. This shift in focus empowers engaged conversations about employee behavior, rather than focusing exclusively on how much they'll be paid.
Michelle and her team also introduced mid-year calibrations to hone in on performance and behaviors. For this, she uses a 9-box model with Results on one axis and Behaviors on the other. This shows her a full picture of how employees live up to both expectation and goals, all the way from "Exceptional Results, Inconsistent Behaviors" to "Inconsistent Results, Exceptional Behaviors." Behaviors are composed of important competencies and are defined at the local or departmental level.
Regeneron also does an annual calibration and discussion, and employees across departments are offered the chance to participate in voluntary mid-year discussions. Additionally, Michelle implemented a learning and development framework to help give more clarity to an individual's career planning and steer conversations around performance.
In 2016, 92% of Regeneron's employees were participating in the performance management process.
So, would Michelle's approach work for you?
The answer is probably yes. A bespoke performance management approach can do wonders for employee participation and engagement. But it's important to remember, change doesn’t happen overnight. And your managers and employees won’t thank you for rushing through a new process, only to discover a few months later it’s actually created more work.
If your goal is to abandon the old ways and create a custom-fit process that works, the unsexy truth is that it will take time. By allowing themselves three years to implement a new performance structure, Regeneron took the time they needed to do three core key things.
And they haven’t stopped. Regeneron's process will continue to evolve, just as the company does.
Regeneron 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.
Everyone loves a good TED Talk.
World-renowned experts sharing cutting-edge ideas in a bite-sized format — there's really no better (or quicker) way to get inspired.
And for performance management, a little inspiration in the form of a beautifully original idea is often just what we need. After all, there is so much NOISE out there. It can be hard to steer through the jargon and find a voice that can tell you clearly and simply why this stuff matters.
Luckily, we found four of those voices. So whether you want to be an HR trailblazer, or simply a better manager— sit back and be inspired.
Watch time: 18 minutes
“There’s a mismatch between what science knows and what business does.”
The Puzzle of Motivation by Dan Pink is one of the most popular TED Talks of all time.
What Dan will teach you about performance management:
This video, released in 2009, became part of the performance management canon because it flies in the face of the traditional ‘carrot and stick’ approach which, Dan points out, is actually pretty detrimental to business outcomes.
According to Dan, there's a 40-year-old body of expert evidence proving the classic reward incentives don’t work. Not only that, they're counterproductive. Dan's big idea is based on what he calls ‘intrinsic motivation’ — the desire to do things because they matter, not because we’ll be paid more.
Dan lays out a new business model based on three essential components for employee success: Autonomy, Mastery and Purpose. If you can come up with creative ways to use these tools, you can make your employees feel more motivated than money ever could.
One way to nurture greater autonomy at work is to rely on your performance management process to check in regularly, but not too regularly. When you get the timing right, you reduce your risk of falling into a culture of micromanagement.
The can't miss moment: minute 9:00, hear Dan explain why reward incentives simply don’t work.
Watch time: 20 minutes
“Ignoring the performance of people is almost as bad as shredding their effort in front of their eyes.”
Chances are you’ve seen that quote before. It has made appearances in almost every HR publication on the internet — and for good reason.
What Dan will again teach you about performance management:
In this TED Talk, world-renowned behavioral economist Dan Ariely dives deep into the relationship between motivation, meaning and productivity. By taking us through a series of experiments, Dan demonstrates just how important meaning is in our working lives. And all too often, it's the missing piece.
Dan presents seven key principals that underpin employee satisfaction: Meaning, Ownership, Creation Challenge, Pride and Identity. And the other six principles are just as important as meaning (seriously check this one out!).
In one simple example of how to help employees develop a sense of ownership, take a look at how prototype optics manufacturer Optimax uses peer reviews. Under the right circumstances, peer reviews can not only help identify areas for development, they can also help your team feel a sense of collective support for your performance management process.
The can't miss moment: Minute 13:20, Dan's clever ‘instant cake’ anecdote, which outlines his theory that the more effort we put into a task, the more meaningful it becomes.
Watch time: 9 minutes
“It’s not just the reality that shapes us but the lens through which your brain views the world that shapes your reality.”
In this immensely enjoyable talk, Shawn Achor takes us on a fast-paced journey into the science of happiness.
What Shawn will teach you about performance management:
According to Shawn, the old formula for success — ‘If I work hard, I’ll become more successful and I become more successful, I'll finally be happy' — is broken. Believe it or not, this broken belief system is more a recipe for unhappiness than anything else. That's because our brains are conditioned to constantly move the goal posts. For instance, an employee gets a promotion, but rather than being happy about it, they end up obsessing over hitting the next step on the ladder. And on and on it goes.
By switching into a present, positive mindset, employees and managers can experience what Shawn calls the ‘Happiness Advantage.’ With this performance power tool, employees can essentially harness the happiness hormone, dopamine, to become smarter, faster and more successful at work, without stressing out about it.
In your employee reviews, there are always questions about what’s gone well. But if you really want to tap into the 'Happiness Advantage', you need to narrow down the focus to what's good about the present. One way to do this is to simply ask employees what aspects of their work they feel the most grateful for.
The can't miss moment: Minute 9:20, Shawn explains the 'Happiness Advantage' in detail.
Watch time: 15 minutes
“Companies don’t have ideas only people do.”
With that statement, Margaret Hefferman poses a radical idea: it’s not leaders that save the day but the team.
What Margaret will teach you about performance management:
She argues that the bonds and trust we develop with each other is a key driver of outstanding employee performance. Yet many companies ignore this. Leadership has been conditioned to create a competitive environment that values the "stars" rather than the group.
For those of us who see the importance of social cohesion at work, we often we assume it'll happen organically. But it doesn’t. (After all, anyone who's ever worked in an open plan office can tell you it's no guarantee of camaraderie.)
So how do you overcome this age-old culture of competition?
A great starting point is to encourage peer-to-peer recognition. For instance, the healthy snack delivery company Snacknation has ‘crush’ Friday, where employees are encouraged to publicly praise each other by simply calling out someone on the team who's really "crushing it". And it doesn’t matter if it’s for finishing a massive project or simply a small act of kindness. All crushes count.
The can't miss moment: Right at the start, hear Margaret talk through ‘the super-chicken model.’ It's pretty great.
It's that time of year again. HR events are in full swing, 'Best of' lists are hitting the internet on the daily and big ideas abound.
But which ones are worth your time?
At PerformYard, we're big believers in substance over form. We've combed through the most relevant and comprehensive HR reports to separate the fact from the clickbait and bring you the big-picture predictions that will have a tangible impact on the way you run your performance management process.
Klaus Schwab is the founder and executive chairman of the World Economic Forum (WEF). So why is he on this list?
Though you might be tempted to think of the WEF solely in terms of high-level Davos meetups, the world-leading economic think tank became highly relevant in HR circles in 2016 after publishing their seminal paper on The Future of Jobs: Employment, Skills and Workforce Strategy for the Fourth Industrial Revolution.
For their latest follow-up, Klaus and his team at the WEF surveyed a collective of in-the-know Chief HR Officers at some of the world’s largest employers. And while many HR predictions this time of year will focus on the shiniest new tech, the WEF found that what really matters is how tech will be used. Or, more specifically, how it will be used to "vastly improve the job quality and productivity of the existing work of human employees."
"As has been the case throughout economic history, such augmentation of existing jobs through technology is expected to create wholly new tasks — from app development to piloting drones to remotely monitoring patient health to certified care workers — opening up opportunities for an entirely new range of livelihoods for workers."
— Klaus Schwab, Founder and Executive Chairman, World Economic Forum
While the onslaught of tech means that the number of employees needed to complete certain tasks will likely decrease, it also means there will be opportunities for employees to transition into new areas of innovation, including brand new roles. Research from a 2018 Randstad survey seems to support this, with 65% of employers globally saying they believe HR tech will free up workers to focus on more knowledge-intensive tasks.
But for many employees, this won't be an easy transition. If you're considering introducing a new tool or workflow next year, use your performance management strategy to establish clear expectations about how an employee's role has shifted, identify changes in their core KPIs and, if you want to go the extra mile, give them access to the learning and development tools they'll need to stay ahead of the curve.
Discussion about the future of work has been marked by hype and panic — but now that there's more proof behind the argument that technology is here to "help us, not hurt us", it should be easy to figure out which tools to add to your HR tech stack, right?
Wrong. As one of HR's biggest thinkers Josh Bersin puts it, "I’ve been studying this market for close to 20 years and it is now more confusing than ever." In order to make sense of it all, Josh and his team are launching a 2019 study with a view to reframe the role of HR tech.
From my perspective, we’re moving into a new era. One where HR technology is no longer a forms automation system, but is now becoming a true “system of productivity.”
— Josh Bersin, Founder, Bersin by Deloitte
According to Josh, tech should be natural and easy to use. And it should meet employees where they are in their actual daily workflow (hence the name of his research theme, “HR in the Flow of Work”). As the nature of work shifts, placing increasing demand on knowledge-intensive tasks, it's important to track performance at the practical level.
Whatever tool you decide to use, make sure it matches the unique shape and rhythm of your business, and that it's light and easy to implement across teams. Because the counterintuitive truth about tech is that there is no shortcut. Making it easy and relevant is the only way to guarantee a solid participation rate.
If you've attended even one HR conference this event season, you've likely heard one (or more) of the following phrases: people analytics, predictive analytics, prescriptive analytics.
It's a lot. But with the lightspeed rise of tech, it's no surprise that analytics are becoming a bigger and bigger part of the HR picture. Erik van Vulpen is the founder of Analytics in HR and the HR Analytics Academy. He believes HR analytics can transform the way businesses evolve and innovate. But how does that look on a practical level?
“People analytics is changing how we do business for the better.”
— Erik van Vulpen, Founder, Analytics in HR
In one of the best examples, HR leaders at Credit Suisse launched a people analytics project to help offset high turnover. The company was investing heavily in attracting and training young talent, but their strategy just wasn’t working. Employees were leaving in droves.
After an investigation into their turnover analytics, the team was able to identify the key drivers of employee turnover and predict on an individual level which employees were most likely to leave. They then gave this information to a team of trained managers who would provide individual coaching and feedback to get those at-risk individuals back on track. Experts estimated this saved the company up to $100 million annually in attrition-related costs.
While this is a great example of predictive people analytics (i.e., analytics used to predict a probable outcome), many HR leaders are now exploring the idea of prescriptive analytics, or analytics that predict which solution to a problem might work best.
Robust performance management data can help you "prescribe" a performance coaching plan to individual team members based on what has consistently worked (or not worked) in the past.
You could have the best performance management process in the world, but it won't make a bit of difference if you've made the wrong hire.
Tom Haak is the director of the HR Trend Institute and one of many HR leaders who believe the interview is a poor selection tool. Luckily, the right analytics can help here, too.
With good workforce analytics, we can determine the characteristics that differentiate the high performers in our organization from the average performers.
— Tom Haak, Director of the HR Trend Institute
Performance data can help narrow down the traits of high performers and enable HR and hiring managers to make better decisions. For example, tailoring your interview questions to draw out the behavioral insights about what makes a great candidate can help you make a hiring decision that is both values-based and performance-driven.
Even smaller insights, like knowing where your top performers hang out online, can maximize your recruitment budget by helping you source from the right places. But you have to be close enough to your top performers to get those insights. You also need a system that helps you close the gap between collecting performance insights and using them to guide hiring decisions.
Now we've arrived at what may prove to be the biggest HR buzzword for 2019. But unlike most buzzwords, this one holds its weight.
What started as a strategy swiped from Silicon Valley by business big-wigs like Gap, Pfizer and GE has now quickly caught on with organizations of all sizes. And it makes sense. With the pace and shape of business looking markedly different than in the post World War II environment when HR was born, agile HR presents a fast and nimble alternative that gives businesses the competitive advantage they need to stay relevant.
With the business justification for the old HR systems gone and the agile playbook available to copy, people management is finally getting its long-awaited overhaul too.
— Peter Cappelli, George W. Taylor Professor of Management, Wharton and Anna Tavis, clinical associate professor of human capital management, New York University
For those who don't already know, the Agile Manifesto was created by a small group of fed-up software developers. Tucked away at a meetup in the mountains of Aspen, they set out to create a better approach to building tech products, thus the Agile Manifesto was born. It laid out four core principles for agile development:
The founders pointed out that while all of the above are valuable, the bolded items on the left are more valuable. Which begs the question, what's valuable to you as the New Year approaches?
Perhaps more than ever before in the history of HR, we've arrived at a moment of less talking and more doing. If HR leaders are to rise up and finally get that "seat at the table" that's been mentioned on lists like this year after year, action is what's needed more than anything else.
Ask the HR critics and they'll tell you, the future of performance management has been hanging in the balance for quite a while now. Clickbait headlines like, "The Annual Review Is Dead" and "15 Reasons Your Employees Hate the Performance Review" hit a strong note with those of us who know there are improvements to be made.
But the truth is, there will always be a need for a system of checks and balances to help employees be their best at work. As humans, we just care more when we know where we stand. In fact, in one survey 92% of employees that negative feedback is effective at improving performance (that is, if you deliver it well).
Love it or hate it, performance management is here to stay. But that doesn't mean you need to rip out and replace your entire system. More often than not, a couple small tweaks is all it takes to get your existing process back on track.
Let's take a closer look at some of the most common issues that might be tripping up your system.
If that sounds like you, know that you're not alone.
In many ways, the annual review has become the scapegoat for companies that have much bigger cultural problems. Do they take too long? Usually, yes. Are they too one-sided, formal, and complicated? Probably. Does that mean you should throw the performance review baby out with the bathwater? Not so fast.
Before you get rid of the annual review altogether, first consider a faster, more efficient framework, including more feedback opportunities throughout the year. Second, engage employees in the process so they feel a sense of ownership over their performance goals and the metrics you use to measure their performance.
Rating employees can be a contentious endeavor, especially when ratings are tied to pay increases and promotions.
But when used correctly, ratings can be a great way to create and uphold workplace standards. The challenge is knowing when to use, and when not to use ratings in performance reviews. For instance, if you're rating an employee on a vague personal identity characteristic like how "collaborative" they are, you could easily see a backlash. Especially, if you're not bothering to follow that rating with development opportunities to help them learn how to play better with others.
Instead, focus your ratings to help carve out a growth path for employees or measure a manager's subjective opinion of the employee, not the employee themself.
The biggest mistake in performance management is forgetting why you’re doing it. But if your approach isn’t aligned with your company goals, you’re working with a blunt tool.
A 2016 study found consumer companies whose employees understood their role in delivering the organization’s aims managed to triple their annual growth rates.
Start by finding your performance management north star. And keep in mind, this probably won't be an exact match to the mission statement hanging in the lobby wall, but it should definitely be related. For example, Starbucks's mission statement is “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”
It’s ambitious, but also simple. So for Starbucks's employees, the ‘north star’ is all about creating the kind of culture that leads to stellar customer service.
When you sit down to evaluate an employee, are you asking the right questions?
A well thought-out question can mean the difference between a productive employee and a toxic workplace culture. And there are many ways to say the same thing. Think about your language, tone and phrasing. Is it accusatory or focused on growth? Is your intent clear? Dig deep, ask follow-ups and allow a two-way conversation to take place.
Here are a few example questions to help get you started:
Despite the buzz, there's no one-size-fits solution to performance management. Your performance management must evolve right along with the rest of your business. And if your business has changed and your performance management process hasn't, it's probably time for a tune-up, not a complete trade in.
Ready for a modern and effective performance management system?
Is Amazon a lone wolf in the tech world?
Unlike Apple, Microsoft, Google or Netflix, Amazon's working culture is anything but glamorous. You won't find employees skateboarding across the office or kicking back in high-tech meditation pods. Yet, Amazon is undeniably a direct competitor to some of the brightest Silicon Valley darlings. So if it's not competing on Michelin-star rated lunches and unlimited vacation time, how is Amazon winning its talent?
In 2015, a controversial New York Times article described Amazon's culture as "purposeful Darwinism" and accused the company of creating an environment where employees are ruthlessly pitted against each other using a brutal rank and yank performance management system. But employees, including Jeff Bezos himself, spoke out against the article saying that much of it was nothing but hype.
So what's true and what's false when it comes to the retail giant's performance management system? Unfortunately, it's tough to know for sure. But luckily, there are a few clues that can give us a good glimpse into how leaders at Amazon run their employee appraisal process.
Before we start piecing together what we know about Amazon's performance management strategy, let's not forget how influential the tech giant is.
Amazon is arguably the most successful startup of our era, and has eclipsed the likes of Walmart as America’s largest retailer. Amazon created the modern category of retailing, pushing the boundaries on everything from eReaders to video streaming, web hosting, smart devices and so much more.
The tech giant currently boasts 100 million prime members and a market cap of about $380 billion. Its workforce is comprised of 560,000 employees from all over the world. Despite their top-dog status, Amazon remains ever-aware of the competition. “Our customers are loyal to us right up until the second somebody offers them a better service,” says CEO, Jeff Bezos, “And I love that. it’s super-motivating for us.”
Jeff's known to lead by lean, Six Sigma–style processes that enable Amazon to offer the best possible customer experience at the best possible price.
But Amazon arguably gets its edge by using a data-driven approach with clear metrics to measure both consumer and employee behavior. In Gallup's more objective assessment of the company's work ethos, head of finance for Amazon Web Services, Sean Boyle says, "Data creates a lot of clarity around decision-making. Data is incredibly liberating."
So is performance management at Amazon about liberating employees to make the best decision on behalf of the customer or is it as ruthless and unfair as the Times suggested? The answer depends on who you ask. (More on that in a minute.)
“You can work long, hard or smart, but at Amazon.com you can’t choose two out of three.” — Jeff Bezos
At PerformYard, we're strong believers that every performance management process should have a clear reason for existing. Whether you're pro or anti-Amazon, you have to admit, its performance management purpose is clear: always demand the best.
Amazon's 14 leadership principles serve as clear performance guideposts. And almost all of them focus on an individual's ability to own and objectively test and defend their ideas, as opposed to "softer" things like collaboration or development.
But how does this play out in practice?
From what we were able to garner from a limited amount of public info, Amazon uses a "stack ranking" (a.k.a. "rank and yank") performance management process in which employees are rated against each other in an annual review.
As Don Weobong President of Telania e-learning platform puts it, "every aspect of a worker’s performance is measured and ranked — from the earliest stages of the onboarding process, employees are also treated as data subjects in every respect. At the end of the day, employees are only kept if their metrics add up."
But here's where it gets interesting. Amazon also uses continuous feedback via its "Anytime Feedback Tool". This is an internal platform where workers can anonymously praise or critique colleagues. While the majority of the business world grapples with annual vs. continuous feedback, as if it's an "either/or" debate, Amazon boldly powers ahead with both.
And for employees who literally don't stack up?
Amazon uses a 3-month "Performance Improvement Plan," (or "PIP") to help the employee get back on track. You can guess what happens if they don't.
If scathing accounts like that of the Times are to be believed, you might be thinking, "No wonder turnover at Amazon is so high."
And it's true. Median tenure at Amazon is just 1 year. But at Google, it's 1.1 years — not much better despite its cushy 5-star perks and seemingly well-rounded performance management model. So what do employees love and hate about working at Amazon?
Here are a few anonymous Glassdoor testimonials that can help shed some light.
“Keep doing what you're doing. The reason such a big company can still operate successfully is because it runs as a start-up, and you can see that in every part of Amazon. Every Day is Day 1.”
“The culture demands that you're able to defend your views or decisions in a rigorous, data driven way, and accept criticism constructively without taking it personally. This doesn't suit everyone, however if it does, then both these things become significant Pros, adding to your experience and growth.”
“You work with smart people, you work on exciting projects, you are pushed to your limits...which can be rewarding when you accomplish great things. The diversity of the potential work and innovation can be very alluring. I've often called Amazon my 'Sexy Mistress'...she's emotionally abusive, but she's so sexy that I go back for more punishment."
“The management process is abusive, and I'm currently a manager. I've seen too much ‘behind the wall’ and hate how our individual performers can be treated. You are forced to ride people and stack rank employees...I've been forced to give good employees bad overall ratings because of politics and stack ranking.”
“You're responsible for your own career progression and finding the places and teams that are doing the stuff you want to do. No one is going to take you by the hand and help you with that.”
“You have to be self motivated. NO ONE will hold your hand and tell you that you're doing a great job. If you need constant affirmations from management, this company isn't for you.”
Then there's the most famous employee review. The one that virtually cemented Amazon's reputation for "purposeful Darwinism".
“Amazon is built, quite deliberately, to be Darwinian. The strong survive and the weak perish (metaphorically speaking) and the 'bar' is constantly increasing. The level of performance that would have been acceptable five years ago will get you canned today. It’s a kinda crucible that will help you develop a harder edge, if you can survive, that will service you well in your career and in life.”
Diverse challenges, breakthrough performance, zero hand-holding — these are attributes that may work well with a specific type of high-performer, and they definitely seem to match Amazon's unique position as a fast and fearless innovator.
And there is some indication that respect for this approach is growing. The average company rating on Glassdoor from current and former employees is a 3.4 out of 5. As of 2018, Amazon receives an above average rating of 3.8 — up from its score of 3.4 in 2015.
But not every company has the kind of magnetic employer brand that can be considered the "Sexy Mistress" of professional growth. While Amazon's clarity of purpose and hard focus on objective, data-driven feedback are solid performance management principles, smaller brands who need to hang to their people might be better off leaving the "ratings politics" and "emotional abuse" at the door.
Amazon 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.
We've all heard the epic stories of game-changers like Jack Welch who seemingly pull off the impossible by getting 250,000 employees to "pull in the same direction" and reach record-breaking levels of success in their business. We've seen the stats. We've read the headlines. We get it.
Performance management matters.
For many of us, the question isn't whether or not to use a performance management process, it's: Where the heck do you start?
(Check out our getting started guide too!)
For most of us, what performance management is clear. We do reviews, encourage feedback, and set goals. But beyond these activities, what's the point of doing it all? Why does your organization do performance management?
Taking a hard look at the purpose of your processes is REALLY important. As great as performance management can be, it can also go horribly wrong.
When we talk about performance management gone wrong, there's always one underlying theme uniting these cautionary tales: Businesses veer off-track because they've lost sight of the why.
From launching a new service to enabling human life on Mars, every awe-inspiring mission starts with a compelling goal — or, "north star" — to keep its supporters firmly on track.
In fact, a study by Korn Ferry titled, “People on a mission" found that consumer companies that focused their employees on the organization’s purpose boasted annual growth rates that were nearly triple the annual rate in their sector.
If you want to prevent your performance management process from becoming just another blip in a miles-long HR paper trail, you need a clear goal to keep it on track.
But if you're like most businesses, you probably have multiple goals, objectives and values guiding your business. Which one should be the focus of your performance management process? It's a tough call. And the answer will always depend on the unique culture of your organization and the industry you're in.
From classic innovators to the new and "unusual", here are 9 examples of companies with a clear goal for their performance management processes. Hopefully, these examples will inspire you to create the one that's right for you.
In 2015, Deloitte radically revamped their performance management system from the traditional annual review system which, like so many others, had a north star of "accountability" based on past performance.
The big four consulting company now uses a quarterly review system with the overriding goal of coaching and developing its employees. In shifting their focus from past to current and future performance, Deloitte shed a floodlight on one of the biggest intrinsic challenges in employee reviews, striking a balance between development and accountability. In the words of one Deloitte manager, "The conversations are more holistic. They’re about goals and strengths, not just about past performance."
Like Deloitte, GE is another major name in performance management. Jack Welch's famed "Rank and Yank" approach to performance management has become synonymous with competitive 1980s business culture. But in recent decades, the company has shifted its PM process from one of ruthless evaluation to goal-setting and aspirational guidance (drivers which some would argue were always there.)
Though the rank and yank model was effective in improving performance and encouraging candor between managers and employees, it fueled an element of competition that proved counterproductive to the collaborative way in which most businesses must now operate. In perhaps one of the most extreme examples of a performance-management-180, GE now uses a continuous feedback approach. Managers and employees use a performance-tracking mobile app (called PD@GE) that allows managers and employees to make text or audio notes, attach documents and upload handwritten notes which they can later discuss in their next check-in.
Like Deloitte, Accenture is a giant in the consulting world. The management advisory firm is also a regular on Fortune's best companies to work for rankings. And like Deloitte, Accenture moved away from a rigid performance management system, shifting from evaluation to development. It was again, a massive undertaking, “Imagine, for a company of 330,000 people, changing the performance management process — it's huge,” said Pierre Nanterme, CEO of Accenture in a 2015 interview with The Washington Post. “We're going to get rid of probably 90% of what we did in the past.”
While Accenture's approach looks very similar to that of Deloitte and others, the company's PM strategy has one clear differentiator — employees work with managers to set goals for themselves. At first glance, it can be tempting to view this as just another thinly veiled approach to rank and yank, but for Accenture, this focus on individuality is fundamental to coaching employees to "know thyself" and encourages a greater sense of passion and dedication at work.
It's one thing when a millennial-run tech startup bucks an ongoing HR trend — it's a whole other thing completely when a giant like Microsoft does it. In 2013, the software giant was under increasing heat from former employees to eliminate its cutthroat stack ranking system, prompting Microsoft to become one of the first big-name brands to ditch employee ranking. Instead of sticking to forced timelines and rating curves, Microsoft created a performance management process called “Connects”. Similar to PD@GE, Microsoft optimizes their workflows to accommodate for timely feedback based on the rhythm of each part of their business — rather than following one timeline for the entire company.
While there is definitely an element of collaboration and development in Microsoft's new system, the real goal is to eliminate the many silos that exist in a company their size and foster a better sense of teamwork in order to act more quickly on changes in the market and avoid becoming the proverbial business Titanic. "The changes we are making are important and necessary as we work to deliver innovation and value to customers through more connected engagement across the company," said former EVP of HR, Lisa Brummel.
If it weren't for Adobe's fearless approach to performance management, companies like Microsoft and GE might still be stuck in a rigid ratings-based system. The company is credited "killing annual performance reviews," in keeping with the famous “Agile Manifesto” and the idea that annual targets are actually pretty irrelevant to the reality of day-to-day business operations.
In 2012, they introduced the concept of "Regular Performance Check-Ins", an informal system of ongoing, real-time feedback. Under their game-changing system, there are no deadlines and no forms to fill out and submit to HR. Managers decide how and when to set goals and give feedback. In removing the red tape from the performance appraisal process, Adobe allows teams to act more independently and more quickly in response to changes in the business and market. Since implementing their agile approach, the company has seen a 30% decrease in voluntary turnover and a 50% increase in involuntary departures.
Ok, enough with the Fortune 500 examples. The best inspiration doesn't always come from the biggest names. Take The Stanley Clark School for example. This independent, private school serving children from preschool to eighth grade in South Bend, Indiana shows how a clear performance goal can help you punch above your weight. Schools across the US are plagued with toxic working environments, which undoubtedly has a negative impact on students. In her guest post for Gibson, Melissa Grubb, Head of School at The Stanley Clark School explains how they set their unique goal for a performance system and culture to rise above.
"First , a word about the assumption made as we embarked on creating a new process. We assumed each employee is competent and that the process should support our expectation of continuous improvement. Our interview process lasts for days in most cases and, if we make a hiring mistake, we correct it as soon as possible regardless of the evaluation cycle. We assume the process is designed for the employees we wish to keep, not the occasional bad fit."
Because they removed the accountability factor from the process completely, Melissa and her team can firmly focus on developing the employee within the context of the school's unique cultural values. Employees are given 6 questions and 30 positive statements to review before each performance-related meeting in order to help spark a productive conversation about their performance and how it fits into the greater whole.
In case you haven't heard of Valve, they're the billion-dollar company behind some of the world's most popular video games. With no hierarchy, no set performance metrics and no seating chart, Valve's unique company culture (referred to as "Flatland") is designed to get maximum creativity out of its employees. So what purpose does its performance management process serve?
For a company so "out there", Valve uses performance appraisals in surprisingly traditional sense. The company creates a team of employees who then conducts performance interviews with each individual in the company, asking them who they worked with and what their experiences were working with that person. They then anonymize the feedback and present it to employees in what is a fairly typical 360 review system. When performance issues arise, they work with the individual to try to find a solution. If firing is the consensus, they make an attractive severance offer and attempt to part on amicable terms. For Valve, using their PM process to enforce accountability at the group level is a great way to loosen the reins in the day-to-day.
Gap is another company considered an early innovator in the world of performance appraisals. The company has a firm commitment around maintaining a growth mindset — the belief that everyone can be learn from their success and failures. While traditional performance management almost always begins with a lofty, passionately-worded goal, the high street retailer focuses on short-term quarterly goals supported by real time feedback, regular check-in and annual “GPS” (Grow, Perform, Succeed) meetings.
At Gap, there's no annual review and no ratings. By coupling short-term goals with individual accountability, the retailer puts growth front and center in their performance management strategy.
Tech startup Asana doubles down on the idea of aligning values with performance expectations in their famous AOR (Areas of Responsibility) framework. Instead of a traditional hierarchy, managers (a.k.a. "AOR-holders") trust their people to make the best decisions for the business.
And their performance management system is a clear reflection of their culture. Instead of annual or quarterly reviews, Asana gives face-to-face feedback often, and with zero paper trail. The company has a self-review at the end of each year, in addition to a biannual review of the company’s general direction where teams take weeks out of the office to discuss goals and performance-related issues and hold regular feedback sessions with peers and managers in a closed retreat-like setting (not unlike Microsoft's famous Think Weeks).
The focus on autonomy and objectivity are upheld through regular one-on-ones where AOR-holders and leaders ask personal development questions like, "What are you feeling?" and "What are your long-term human aspirations?". It may sound a little woo woo for those of us who have been in the game since the pre-Facebook days, but with over 20K+ paying customers and plans to go global, the company seems to be onto something.
The performance gap is one of the simplest but most overlooked business concepts out there. Miss it, and you could be putting the very survival of your company at risk.
Simply put, a performance gap is the difference between intended and actual performance. This can happen at any level of the organization. For example there can be a performance gap with one particular salesperson who doesn't hit their target, with an entire sales team who falls short of the goal, or with the sales process itself not responding promptly to requests.
Performance gaps are a real problem and you'll need to bridge them if you want to stay profitable long after the competition has come and gone. Let’s take a look at a few common causes for performance gaps and how to avoid them altogether.
Let’s start with one of the most common causes of a performance gap: Lack of clarity.
Despite rampant advice to establish clear goals and expectations from day one, many employees feel completely left in the dark about what is and isn't ok at work. In a 2015 Gallup survey, only 50% of the American workers surveyed said they firmly knew what was expected of them at work.
Employees can’t meet performance standards if they don’t know about them. By simply setting and maintaining clear performance targets for your people, you can prevent many of the most common (and costly!) performance gaps.
The first step to closing a costly performance gap is to get crystal clear what the real goals and expectations are in your organization. (Hint: They are NOT the same thing.)
Not sure what goals and standards to set, change or replace? Why not ask the people who know you best? Start with your customers. Ask them why they continue to work with you and what they want to see more of. Then, it's time to check in with your employees.
By reaching out to employees (through surveys, one-on-ones and regular performance reviews), you can get an accurate assessment of what standards to set. You'll also get a clearer picture of the standards that aren’t being met, and the exact steps to take to prevent future performance gaps.
With real-world insight at your fingertips, it will be much easier to set challenging yet reachable goals. When setting goals, be sure to make them SMART: specific, measurable, achievable, relevant, and time constrained. These five categories keep you away from the type of flimsy goals that are inherently prone to misinterpretation. (Values like, “Always try your best” are great ideals, but they're nowhere near clear enough to be bona fide goals.)
Clear goals are a must, but sometimes the problem can be a simple lack of skills or tools.
A skill gap occurs whenever the goal can’t be reached because some part of the company, whether that be an individual employee or a whole branch, lacks the skills needed to reach it.
Skill gaps are pretty common — especially when industries shift. Coders have to learn the latest cutting-edge platforms, customer service pros need to stay up-to-date on the latest best practices, and so on. Anticipating a skill gap takes the kind of research and high-level thinking few of us have time for. Luckily, closing them is a bit simpler.
For the most part, you can either train or hire your way out of a skills gap. If your business is running well overall — meaning there are no major problems in leadership, management, staffing, etc. — feel free to train away! But if your business is understaffed, overworked, or simply pointed in the wrong direction, no amount of training can help close those gaps.
In those situations, a focus on performance makes all the difference.
Even if you're convinced your employees know exactly what targets to hit, and that they have the skills to hit it, they will miss if they don’t feel like pulling the trigger in the first place.
Business consultant and author of Good to Great, Jim Collins says it best in brief. The question isn’t, “ ‘How do we motivate unmotivated people?’. It’s, ‘How do we lead in such a way as to not demotivate people?’ ”
To avoid demotivating people, Jim recommends three strategies:
Building performance expectations on a foundation of clear, data-driven goals will earn you a ton of respect from your employees and keep them motivated to steer clear of performance gaps. Instead of arbitrarily expecting them to hit targets they don't understand, you're using data-backed insights to set metrics that matter.
After that, all you have to do is follow up to let them know you care enough to keep paying attention and ensure that they have the skills and tools they need in order to get the job done.
When those boxes are ticked, you’ll be closing gaps well before you fall into them.
There is a large body of online content offering general tips and guidelines on performance management. And sure, they can be helpful. But they can also be a bit...one-size-fits-all.
Performance management should be unique to the needs of your organization. Rather than speaking in broad terms about what makes for a great performance management process, let’s take a deeper look at three examples (extreme examples) of performance review processes, and the management strategies that support them.
The story of Jack Welch and his epic "rank and yank" system is one for the business annals. To date, it just may be the biggest examples of stack ranking in the workplace (not to mention the most extreme).
For decades, Jack Welch and the leadership team at GE ranked employees into three categories — top performers, underperformers, and normal employees. The top performers comprised the top 20% of employees, the bottom 10% were labeled underperformers, and the remaining 70% were neither here nor there.
And those poor underperformers. Under Jack's ruthless leadership, those 10% of employees were often fired on the spot — and the feedback given was very candid. Welch felt that "failing to differentiate among employees — and holding on to bottom-tier performers — is actually the cruelest form of management there is."
To be fair, Jack didn’t use rankings solely for firing. Ranking was as much about growth as it was about assessment. He called his process "differentiation" and paired it with tools and coaching approaches to build up the 90% of employees that were performing up to par.
Business writer and consultant Ron Ashkenas notes that Jack’s differentiation “assumes that most people have the capacity to continually grow if they are stretched, challenged, and developed.” To match that belief, Jack offered in-depth assessments, rotation programs for new hires, training programs for new managers, and mentoring.
Though it's not as headline-worthy, ranking and yanking could actually be secondary to coaching in the legacy of Jack Welch. After all, he even had a campus where he brought high-potential executives and employees for intensive training and lectures that he sometimes led himself.
While it's tempting to view GE's rank and yank as a cold and detached way to manage employee performance, a case could also be made that it's actually a very human and hands-on approach.
Asana is an innovative tech company and popular team communications platform. And like the name could suggest, they have a surprisingly zen approach to performance management.
Rather than approaching feedback annually or linearly, Asana does feedback often and in very different ways (for example 100% face-to-face and with 0% paper trail).
According to a deep dive into the company from Rachel Zurer at Conscious Company Media, Asana has a self-review at the end of each year, on top of a biannual review of the company’s general direction. During the biannual review, the team takes weeks out to discuss specific goals and performance-related issues and hold regular feedback sessions with peers and managers in a closed retreat-like setting.
But a performance management process this hands-off could never exist without a strong culture to back it up.
Throughout the year, Asana maintains a strong focus on growth, transparency and trust. Instead of a traditional business hierarchy, the company is broken down into what they call AOR’s - Areas of Responsibility. An AOR might be "marketing", or "customer service", or any other area within the business. Asana’s founders offer opinions to AOR-holders, but ultimately trusts them to make the final call.
To manage their AORs, and all the feedback given, Asana actively works to keep the load lighter and the human contact tighter. New managers only have 4-6 employees (or, "reports" as they call them at Asana) and experienced managers have 8-10.
It's tempting to see Asana as being on the other side of the spectrum from GE, but their focuses are similar. Both companies want to grow their employees, but each company looks very different (startup vs. massive manufacturer) and as such, they arrived at very different solutions.
As you would imagine, it's a wildly creative company. To stay that way, Valve shed all hierarchy and created what they call, “Flatland”. Valve writes in their employee handbook that, “when you’re an entertainment company that’s spent the last decade going out of its way to recruit the most intelligent, innovative, talented people on Earth, telling them to sit at a desk and do what they’re told obliterates 99 percent of their value.”
In Flatland, employees create teams as needed. Their desks come equipped with wheels so they can rearrange their space. Hiring is also an employee initiative and they're encouraged to interview candidates and help make hiring decisions.
Valve creates a team of employees who conduct performance interviews with everyone in the company, asking them who they worked with and what their experiences were working with that person. They anonymize the feedback and present it to employees. It’s a fairly standard 360 system.
According to their former economist-in-residence, Yanis Varoufakis, "It is important to understand that such spontaneous order-based enterprises rely to a large extent on individuals that believe in the social norms that govern their existence. So by the very nature of the beast, you don't have people there who try to hide and who try to somehow create a smokescreen around the fact that they're not very good at what they do."
When someone can’t quite fit in, they talk to the the employee to find a solution. If firing is the consensus, they make an attractive severance offer and part on amicable terms.
Flatland, rank and yank, or AORs might not fit for many businesses, but they're a great reminder to try new things and commit to the unique "extreme" that works for us.
Ever since the HR world woke up to the idea that the workplace is dependent on humans and not red tape, the idea of using behavioral insights to guide business decision-making has been gaining traction.
Behavioral economics is one of those HR "trends" that we know is important, we just don't know how...exactly. We're going to take a closer look at one of the main principles of behavioral economics to get a firm handle on how it might be helping or hurting.
Here's a straightforward definition from Wikipedia:
"In psychology, heuristics are simple, efficient rules which people often use to form judgments and make decisions. They are mental shortcuts that usually involve focusing on one aspect of a complex problem and ignoring others."
In psychology circles, heuristics are also known as rules of thumb — mental decision-making hacks that help us make a call faster.
In her article for Psychology Today, cognitive behavioral therapist Alice Boyes gives some practical examples of heuristics in daily life.
"Rule of thumb: If it's the third time I've thought about a small decision, it's time to make the decision then and there. Specific example: A piece of mail came in about something in my neighborhood where the public could make submissions. I had it sitting around, and needed to make a decision about whether to read it properly or not. After glancing at it twice, on the third time, I ended up putting it in the recycling without reading it."
How much easier would life be if you always knew exactly when to scrap the junk mail? Or when to address (or NOT address) a situation with a top-performing employee?
Heuristics are a crucial behavioral tool because they give us the ability to practice the kind of snap decision-making that's often necessary in the fast-moving world of business.
But shortcuts can be dangerous.
Heuristics are naturally prone to bias and, due to their quick nature, they can sometimes tempt us into making a rush decision at times when a slower, more rational approach would lead to a better outcome.
Here's a closer look at the pros and cons of heuristics in the workplace and in the world of performance management, specifically.
There are plenty of healthy heuristics your organization might already use, like “trust your team” and rank and prioritize problems according to their impact on customers, etc.
But as mentioned, heuristics do create problems. In fact, that’s part of why they came under the spotlight in the first place. In their groundbreaking research, behavioral economists Amos Tversky and Daniel Kahneman found that heuristics often make us prone to making poorer decisions, without even knowing it.
(Funny enough, this is part of what makes people fear sharks more than mosquitoes, when in actuality, mosquitoes kill many more people than sharks. Anyone who's ever watched Jaws will agree that shark attacks are much more vivid than an unseen virus carried by a mosquito.)
Whether it’s jumping on a flash-in-the-pan HR trend or letting recent strong performance get in the way of a holistic assessment, heuristics can creep into parts of the workplace that are better left to rational thought.
And the racial, gender, and demographic biases holding businesses back? Yes. Those are heuristics, too.
The best way to use heuristics is the best way to use any tool: intentionally.
Don’t let your rules of thumb lurk under the surface. Take an honest look at your heuristics and ask yourself a few objective questions to see how well they work.
In the words of cognitive behavioral therapist Alice Boyes, "Use rules of thumb to make your decision-making better, not perfect."
Rules of thumb can help you stay flexible, but not when you’re all thumbs and no thought. Acknowledge your own heuristics and those of your managers, and you may end up with a more just, rational and productive workforce.
Carl Reichardt is one of those epic CEOs business authors love to write about.
In the late '80s, he famously led Wells Fargo through an historic cost-cutting exercise that delivered returns of 33.5% to shareholders, despite a massive real estate crash that put many of his competitors out of business.
Carl was ruthless. He froze executive pay raises, closed the private dining room and sold the corporate jet. His penny-pinching ways ultimately earned him the title of, "The Banker Who Would Be Scrooge".
"There's too much waste in banking. Getting rid of it takes tenacity, not brilliance," he proclaimed. It was a mantra that would go down in business history.
Which got us thinking…
What's the real difference between tenacity and brilliance? Can a business succeed with one and not the other?
Lindsay McGregor and Neel Doshi are co-authors of Primed to Perform: How to Build the Highest Performing Cultures Through the Science of Total Motivation.
In researching for their book, Lindsay and Neel asked 2,823 US-based employees whether they have the ability to find new ways of working. Only 27% said yes.
That's because the vast majority of businesses only measure an employee's tactical performance. That is, the steps, process and standard operating procedures that can be easily tracked from one day to the next. Number of widgets produced per hour is the classical example of a tactical performance metric that can be found in almost every business system.
The ability to consistently complete these tasks to a highly efficient degree is what constitutes a company's "tenacity". So it follows that this is how most employees should be measured.
But there's another type of performance that often gets overlooked.
Adaptive performance is an employee's ability to innovate a better process, standard or SOP. When an employee comes up with an idea for how to shorten the number of steps in the assembly line, or veer off-script to creatively upsell a client — that's adaptive performance in action. Some might even call it brilliance.
In the words of Lindsay and Neel, "Essentially, tactical performance is how well you stick to your plan, and adaptive performance is how well you diverge from your plan."
Carl Reichardt's cost-cutting crusade was clear, consistent and easily measured.
It's success was largely due to executing simple ideas.
Before Carl, Wells Fargo had exuberant culture that would have surely led to its demise. The Scrooge CEO rolled up his sleeves, did the simple things with tenacity and saved the company in the process.
Many employees don't have the luxury of CEO-level autonomy.
That's why it's important to consistently encourage (and measure) both an employee's tactical and adaptive impact on the business.
(In an ironic twist, Wells Fargo's overemphasis on tactical goals may have been part of what led to its recent account fraud scandal.)
A balance of tactical and adaptive performance is what helps even the scales between goals and expectations so employees don't feel pressured to compromise the business values (or their own morals) just to hit a target.
Tactical and adaptive performance are the yin and yang of every high-performance business.
In order to free up your employees to innovate new efficiencies, you must protect their time. That means delivering the tactical performance structures that help them produce quality work faster so that they have time and energy to think creatively about how to do things better.
To strike that balance, spend some time thinking about which specific aspects of an individual's role absolutely must be measured on the tactical level versus those that can be opened up to adaptive performance.
For example, could you grant your new business team the autonomy to spend up to X amount of money in discounts, refunds or gifts without manager approval? How does this affect your NPS score and close rates?
Look beyond the non-negotiables to identify clear places where employees can act autonomously. Then focus on the impact their adaptive performance has made on the organization. And if you're ever in doubt, simply sit down with your team and ask for their ideas.
Here are some questions to think about:
Build the balance into your culture by making these sit-downs routine. Next time the proverbial "stuff" hits the fan, you'll be glad you did.
Sometimes it can feel like we’re forced to choose; between a tightly managed stack and rank annual review system, or thoughtful in-the-moment feedback from manager coaches. Popular headlines are often about “Dropping the Performance Review” in favor of feedback, or “Why X Company is Going Back to Performance Reviews.”
The reality is that most organizations choose to land somewhere in the middle. HR finds ways to provide the right amount of structure to achieve the organization’s goals, while still giving managers and employees the flexibility to engage in one-to-one feedback. For more, we created a guide all about designing the performance management process for your organization.
With this in mind we asked 4 practicing HR influencers, from 4 very different organizations, to tell us how they think about structure and flexibility when setting up a performance management program.
Director of Human Resources at Compassion-First Pet Hospitals
It depends on your culture and needs. It’s not so much the structure as it is the comfort level of the people delivering the feedback and the utilization of the tools available that makes the difference. Prior to implementing any new system or tool, talk to your managers and find out what they are currently doing, and what is a pain point for them. If your shiny new system or process can address a pain point, that’s a win for everyone. What works for one organization may not work for another. No system will solve world peace – or even organizational peace, so have realistic expectations. Any new system or tool must be accessible, easy to use, and be perceived to make the manager’s job easier – not harder. HR can’t be the sole driver of the process. Your most influential people can be your greatest adopters and champions of your system if you utilize them as your pilot testers. Then HR isn’t telling others about this great new tool we love. Of course we love it, we’re HR. This is cool to us. If other managers love it, tell their peers, and adoption spreads, you will have more guaranteed long-term utilization.
Nicole is currently holding down her dream job, combining her love of animals and passion for HR, as Director of Human Resources at Compassion-First Pet Hospitals, a family of more than 30 emergency and specialty veterinary practices with locations across the country. Drawing upon more than 14 years of proven experience throughout Human Resources, specifically in the manufacturing, telecommunications, and veterinary medicine industries, Nicole has a proven record of establishing HR as a vital business partner with an earned reputation as an intuitive, wide-ranging HR Generalist. Nicole is a proud member of the SHRM A-Team, and she is on the Board of her local SHRM Chapter, GCHRA. Nicole has a blog, HR Without Ego, where her faithful sidekick, Maximus the Minimus – her 10 lb Shih Tzu serves as mascot.
Senior HR Business Partner at Otak Inc.
I recently joined a firm that is implementing a formal performance review system. It’s given me a great chance to reflect on the best way to give feedback.
As large corporations like GE, Google, Microsoft, and Netflix have ditched their annual performance reviews for a more fluid system, many HR professionals have been wondering whether unstructured feedback systems will result in decreased performance. How do we decide annual pay increases without a stack and rank system?
I prefer a performance management program that is a little of both structured and unstructured feedback. I suggest that managers have a casual goal-setting discussion once a quarter, with biweekly or monthly casual conversations. Then once a year, they can evaluate the year and progress toward goals. I’ve found that most employees still want a structured review, just not all the time.
This structure gives employees an opportunity to manage their time and create their own goals. Knowing they have an annual structured review helps motivate them to meet their goals.
This system provides the right balance of unstructured and structured feedback and has allowed our firm to grow and become more consistent while preparing for the future.
Keith works at Otak Inc., an architecture and civil engineering design firm that is headquartered in Portland, OR where he is a senior HR business partner. Keith obtained his bachelor’s degree at Portland State University and his MBA from the University of Phoenix. Keith is recognized as a leader in the HR industry and participates in the Portland Human Resources Management Society and SHRM and has SHRM-SCP and SPHR certifications.
Vice President of Human Resources and Marketing for the Key Family of Companies
Having a structured program in place to cover all the bases doesn’t mean that you shouldn’t still engage in ongoing informal feedback. It is easy to fall into a trap of either setting up too many structured meetings that it becomes unrealistic or going the other way and making it so informal that nothing gets done. Having a baseline of structured meetings that incorporate ongoing informal feedback can be a good balance and creates a realistic expectation that both sides can manage.
Getting the managers on the same page early on and communicating the expectation for the performance review program and its delivery is key.
I would recommend just maintaining a good balance and defining the expectation for both managers and employees up front so that the process and delivery is consistent between departments and across the organization.
Craig Frazier is a lucky husband, proud dad, culture leader and small business advocate and works as the Vice President of Human Resources and Marketing for the Key Family of Companies. @craig_frazier
VP of Human Resources for Berner Food & Beverage
It is important to understand that a formal system is used for a certain purposes and frequent coaching is useful for other purposes. Sure there is a link but when you consider the reasons for both you will see that we are talking apples and oranges. A formal process is usually used to document and justify annual merit increases, satisfy some arcane need rank everyone and/or to continue a process that the ownership feels is how things should be done “because we’ve always done it that way” (yeah….that last one is fun). Frequent coaching feedback sessions are for improving the employee’s performance, growth, goals and engagement. We easily see which of those things are more impactful to both the employee and the organization, but reality is that most of the companies in this country are stuck in doing some type of formalized review process.
One creative way to accomplish both is to design your formal system that summarizes the frequent coaching sessions. If you have quarterly coaching sessions, the “annual” review form could be used to just summarize those coaching sessions. So rather than ranking on the five or ten qualities that represent performance, you can grade employees on progress toward their goals or just categorize them into groupings as needed. Be creative. It may not look like the old standard review form, but it can satisfy the need for both performance management concepts.
Ed Wood has been active in Human Resources for over 30 years. After receiving his degree from the University of Wisconsin Ed began his career as an officer in the U.S. Army. Over the years, he has held several positions in Human Resources in a variety of industries including manufacturing, hospitality, and media. With over 30+ years of a wide variety of HR and operational experience in numerous industries, I have found that regardless of the company or industry, it still comes down to leadership and people.
The Colorado Health Foundation is bringing health within reach for all Coloradans by engaging closely with communities across the state through investing, policy advocacy, learning and capacity building. The Foundation’s mission is to improve the health of Coloradans and is grounded in the belief that health is a human right.
Today over 60 employees work together in the Uptown neighborhood of Denver, Colorado. Their roles vary from technology to communications and finance to philanthropy/grantmaking.
The Human Resources (HR) team has implemented a truly thoughtful performance management program they call Staff Excellence. The program provides the structure for regular conversations between employees and their managers while also giving every department, team and person the flexibility to make it work for them. Most importantly, it is a perfect fit for the Foundation.
We sat down with Alison Jeske, Human Resources Manager, to learn more about the program.
PerformYard: How did the team decide on the current performance management program?
Alison Jeske: When I started with the Foundation, the HR Director was leading the revamp of our performance management process. It started with a group of representatives from across departments, including employees and managers. We wanted to make sure we were hearing from voices across the organization.
Our goal wasn’t to create something from the top down; it was to create something that would be effective for our organization, which meant starting with input from our staff. The HR team said to employees, “This is your process; we are here to support and facilitate.” And we asked the Foundation’s managers, “what do you need to be able to evaluate the performance of your employees?” We asked employees, “what do you need from your managers and how can the process support your development?”
HR’s role was to educate, facilitate and balance everyone’s needs. For example, it was not clear what the right frequency would be. In the beginning the design team wanted monthly check-ins, and managers were saying, “Monthly seems like a lot, but I am willing to try it.” For the first year we operated with topic specific conversations every month, and now we do them quarterly.
[PY] So the program has continued to evolve?
[AJ] Exactly. Especially in the beginning we were asking ourselves, “What is this going to look like?” and we realized that it needed to evolve as the needs of the organization evolved. Everything was driven by our experience going through the process. So we would do the initial monthly conversations and get feedback from the Staff Excellence and Leadership team. That is what drove the edits and changes along the way.
I’m glad we started with monthly because after the first year staff felt heard, but everyone also agreed that we should try a more condensed version of the process. We continued much of what we did in the first year but we just did it in fewer conversations.
That’s one thing I think anyone about to go through this journey should expect. Year one, two and three may look very different, and that is okay.
What does your performance management process look like today?
We do four “conversations” a year between each employee and their manager. The first conversation sets goals for the year. Those goals flow naturally from the last conversation of the previous year. The middle two conversations focus on varying topics based on business needs, in addition to reviewing goal progress.
At the beginning of the year the HR Director will present the annual conversation topics to the leadership team and get feedback. For example, we’ve prompted employees to talk about any barriers they’re facing and discuss possible solutions, and we’re planning to dedicate a conversation this year to reviewing job descriptions.
The topics are planned in advance, but they’re also dynamic. A manager might say, “Actually this idea came up, can we add it to the next conversation?” – and we do that.
What happens in these conversations?
We created a form with a single long-answer box. Above the box we prompt a conversation by using a variety of guiding questions to encourage discussion around a specific topic. Some use the questions verbatim and others simply use them as a guide. Both are completely acceptable. The goal is to have a rich and productive conversation and the questions are just there to help, if needed.
It is really about stepping away from the computer. Rather than focusing on a large and complicated form, today we focus on a topic and have a dynamic face-to-face conversation between the employee and manager. We like that discussions can flow off-topic based on each individual’s performance needs. As long as the employee and managers are having a conversation and documenting it, that’s what’s important.
Then the next step is to put the notes from your conversation into PerformYard. We encourage folks to record what is important and relevant. They don’t need to write a novel or answer each question, just key takeaways. Each conversation form is initiated by the employee and they put their notes into the form. The manager reviews the notes, adds additional comments and signs off on the form.
Was the flexibility of your program an important part of the design?
Yes, we were previously using software that was driven by structured annual goal setting and it did not work for us. It was a product that drove a process. We needed to design a process that fit our organization and find a product to support that.
How do you use the data you collect from these conversations?
Employees are referring back to the signed-off conversations to carry over goals, questions or follow-ups to their next conversation. They also have the ability to easily access previous year’s notes and discussions.
Managers are using the conversations as supporting documentation and references for the year-end performance review and merit increases for their employees.
We see the program continuing to grow and evolve to include new measures.
A huge thank you to Alison Jeske for taking the time to share the Colorado Health Foundation’s performance management program with us. We are so impressed with how their team has iterated on a process, and arrived at something that is a perfect fit for their organization.
When your top HR VP publicly speaks out against your current performance management process, you know it's time for a change.
In fact, that's exactly what happened with Adobe’s Donna Morris when, jet-lagged and pressured by a relentless interviewer, she accidentally told one of India’s biggest newspapers she wanted to scrap their performance management system. It was a major slip-up, but one that ended in Adobe’s epic performance management transformation.Truth is, most of us can "feel it" when our performance management system isn't up to snuff. But how to you turn a hunch into insights you can act on? One word: Testing.
Testing gives you the real-world data to back-up your performance management decisions and create a system everyone can be proud (and loud) about.
To be fair, execs at Adobe knew a change was in order. After all, it was taking more than 80,000 hours to get annual reviews done. And on top of that, the tech giant saw an immediate increase in turnover after wrapping up the review process each year. (Yeah, it was BAD.)
But with so many new tools, philosophies and trends flooding HR, how do you know what really needs fixing? You don't want to overhaul your entire process only to find the real issue is one bad seed in the managerial team. Worse, what if you jump the gun and migrate to an entirely new system that everyone hates more than the last one?
Experimentation is awesome because it lets you look before you leap and know exactly where to tweak your process.
If you're a regular here on the PerformYard blog, you know we love a good goal. (How else are you going to know when you've won?!)
First, take the temperature of your current performance management process to figure out exactly what it is that's not working and set a clear goal so that you'll know when it's fixed. Your metrics will vary depending on your business and industry but you might want to look at sales, employee turnover, customer satisfaction, etc. (For more on that, check out this post.) And remember, numbers are great, but don't forget your biggest assets are your people. Survey your employees to find out what they really think about the performance management process and what they want from it.
HR expert Ruth Mayhew recommends going a step further to review your exit interviews for complaints. Whether it’s a lack of coaching, meaningful rewards, or upward mobility, the exit interview is where you're most likely to find those juicy gems of truth.
Once your vision for change is crystallized, the real work begins. Testing and experimentation is a BIG area. There's a lot of different methods out there.
Whatever approach you choose, there are some solid fundamentals worth keeping in mind. We like HR consultant Arne Van Damme's three great tips for testing:
1. Hypothesize Well - Come into an experiment with an idea of what you’d like to prove and how you’d like to do it. Don't just throw the latest software at the wall to see what sticks.
2. Test Entire Groups - Take an entire team, say the whole finance team, at one branch and give ALL of them the new system. Testing a smattering of individuals makes for a much worse sample because you're not controlling for variables. The team culture in finance is NOT the same as in your marketing team. On the other hand, when you see a variable across an entire sample, you can better understand its effect on the system at large.
3. Experiment Deeply - For those in the experiment, fully bring on every aspect of the new process or system. Pretend like this is the big launch. Go for optimal buy in. Get them excited. Then, set a solid time period to run the change and let your teams adjust to it. Good experiments take time, honesty, and effort.
Testing a new performance management process can deliver insights to help you drive success throughout your company and make you a true HR hero. It can also turn up information that shows you crucial mistakes in your business. You need to be prepared for both.
Change is almost always hard, and almost always worth it.
If you'r ready to get started read our guide to designing modern performance management systems.
Are you managing your employees with the same level of care you afford your business balance sheet?
In Google's first letter to investors, the founding team explained that, “it is easy to be penny wise and pound foolish with respect to benefits that can save employees considerable time and improve their health and productivity.”
But people are much trickier to manage than any number in a spreadsheet. If your performance management system is suffering from a lack of efficiency, you could be letting time, money and talent slip through the cracks.
Before looking at what a bad system can cost you, it's important to know what a bad system looks like. Here are some of the classic failings of a poorly run performance management system:
In an effort to bypass the HR bottleneck, many managers try to reinvent the wheel themselves.
But a fragmented and siloed approach only ends up making things less fair. Employees in the same job classification get reviews at different times, self-assessments get skipped and there's no guarantee that the review criteria are subjective. Now your employees are skeptical of their managers, not just HR.
The cost of employee turnover can range from between 6 months of the position's salary to 2 years for highly paid executive roles. And these are just some of the hard costs.
The fact is, the way your employees feel has a lot to do with the way your customers feel. And while the soft costs can be trickier to measure, they definitely have an impact on your bottom line.
In fact, according to Gallup, engaged employees are more likely to improve customer relationships, which results in a 20% increase in sales. Of course, the amount of energy and excitement your employees feel at work has everything to do with the approach of your managers.
But do they have the tools they need to lead effectively?
Okay. We now know that a bad performance management system is pretty awful. But what does a good system look like?
A good system will make it easy to:
As you'd expect, a great performance management system is truly the opposite of a poorly run system. Instead of costing you money just to keep it running, it's actively driving value throughout your organization.
Research firm McKinsey found that organizations with good talent management outperformed their peers by 22%. And Watson Wyatt found that similar good practices could increase company value by 30%.
Whether you boil it down to lower turnover rates, better productivity or increased revenues, the one thing that ties it all together is a commitment to practical, real-world employee recognition. (After all, there's a reason Fortune’s '100 Best Companies to Work For' regularly outperform the S&P 500.)
A truly effective performance management system goes beyond the generic everyone-gets-an-above-average-rating review system to giving you a structured approach for connecting with your employees in a focused and practical way.
And while it's not necessary to hire chefs for in-office meals or fit the rec room with the latest high-tech meditation pods, it IS important to accept that your people are your biggest assets. And it's people (not investors, numbers or algorithms) who make sure that companies like GE, Google, and even your own organization, consistently outperform the competition.
Thinking about designing a modern performance management strategy for your organization? Start here: Getting Started with Modern Performance Management
Amy is an HR manager at a firm that isn’t tanking but isn’t exactly succeeding with flying colors either.
The company’s performance management system was outdated when Amy became head of HR four years ago. Since then, Amy has updated the system twice and swapped it out entirely three times. And for the time, money and energy it takes to get a new system up and running, it hardly seems worth it.
Amy’s problem might not sound unfamiliar. In fact, a large survey of organizations from Deloitte found that 89% of respondents either recently changed their performance management system or planned to in 18 months. Only 10% of the firms surveyed thought that their performance management system was "excellent" and succeeded in driving employee engagement and high performance.
Clearly, a change is in order. But is testing yet another performance trend really the answer?
The problem that most execs and HR pros keep making is that they're too focused on finding an easy ticket to better performance management by way of the hottest new trend or tool in the market. But the real magic comes from the decidedly unsexy task of constantly aligning (and realigning!) your performance management strategy with your organizational strategy.
It's not hard to see why people like Amy get stuck. There are so many ways to design a performance management system and so many different HR platforms to choose from. It can be tempting to grab up the latest game-changing idea from other best-in-class companies in the hope that almost overnight, THIS will become your awesome new MO.
Harvard Professor Michael Beer explains that this only deepens a company’s troubles. He argues that many companies don’t try to align strategy with change and so they “develop many disconnected initiatives to bring about change — initiatives that by their piecemeal nature are doomed to failure.”
So let's say Amy sees that Netflix focuses mostly on regular 360 reviews, so she tries that for one year. The problem is, she’s doing it through two new HR platforms while also adopting Google’s upward feedback model to try and improve managerial performance.
It's a lot. Her HR department and managers feel overworked by the extra load of learning new review processes and platforms. Her execs aren't used to a bottom-up review structure and have become so accustomed to a revolving door of HR experiments, they don’t put their full weight behind it. In the meantime, her employees are totally confused about what performance metrics matter most and are quickly becoming disillusioned with the entire process.
Amy and her teams haven’t taken the time to align their performance management strategy with their business strategy. The result is a Frankenstein’s monster of mismatched HR policy pieces and platforms.
It’s easy to talk about strategic alignment but actually fixing a misaligned performance management system takes some serious elbow grease. Luckily, plenty a business leader has been there. Here are some solid experts and examples that can help.
Over at investment firm Betterment, CEO Jon Stein aligned his performance management system and business strategy through a series of measured adjustments (and continuous calm).
At first, he started with an OKR-based approach like what he saw Google do. When that put his teams on objectives they didn’t agree with, he refocused to a system that gave his teams more agency to make narrower goals. When that system made his teams too inwardly focused and myopic, he adjusted again and made flexibility a goal.
Rather than throwing out an entire system, he tweaked each strategy and approach within his current system, letting his strategy (and people!) adapt to changes in the business over time. He followed up with his teams after giving each new strategy a little time to sink in to see what went wrong, what went right, and what could be done to make their performance management system even better.
At Deloitte, research is a big part of the business, so naturally it factors into their performance management system. The top-four firm rebuilt their performance management strategy using the smart data crunching they're famous for and redesigned their employee review process to be faster, more open-ended and less prone to bias by removing many of the major bottlenecks (and ahem, paperwork) in the system.
For businesses like Betterment and Deloitte who have succeeded in removing the headaches from their performance review systems, keeping everyone abreast of the changes and the vision behind those changes was important.
An ability to stay steady, resist shiny object syndrome and focus on doing more of what works and less of what doesn't was crucial to developing and maintaining a winning performance strategy.
There is no shortcut to great employee performance. But what if, instead of immediately jumping from one performance trend to the next, we take a little extra time to think about what is right for our business and our people?
You might find that your days of constantly revamping your systems are finally over.
Ask any HR expert and they'll tell you the performance review process has two main goals — employee accountability and employee development. But that's not the whole story. A truly great performance review strategy will also drive inclusion.
Inclusion and performance go hand in hand. In fact, experts like Bernadette Dillon, Inclusion Specialist and Director at Deloitte, report that companies with an inclusive culture are “twice as likely to meet or exceed financial targets” and eight times more likely “to achieve better business outcomes.”
Fairness is fundamental to a diverse and inclusive company culture, yet according to Gallup, only 29% of employees strongly agree that their performance reviews were fair.
And it only gets worse once you start digging deeper into the data. For example, one study found that African Americans and women were less likely to get good ratings, and that ratings were more favorable for people that shared the same race as the rater.
Another survey found that 41% of African American women managers felt they needed to outperform their male counterparts in order to help offset bias in the review process. Unfortunately, that’s just the tip of the iceberg on the well-documented problem with performance reviews and diversity.
Despite their unfortunate track record, performance reviews don't have to be a barrier to diversity and inclusion. In fact, they can be an essential tool to help you create the kind of company culture that embraces diversity in a real, practical and performance-driven way.
When launching into a new diversity and inclusion initiative, experts often talk about the need to "rewire" your systems, so that you can rewire your behaviors. Well-designed performance reviews help you do just that.
With the right tools and questions, your performance review system can help you discover and eliminate bias in managers, workflows and talent management processes, and even help you collect data on diversity and inclusion measures that you may not have otherwise known where to find or how to track.
And of course, by focusing on clear and tangible goals, performance reviews can be a great way to get an objective view of each individual contributor on your team, while naturally creating a regular time and place to acknowledge the unique skills they bring to the table.
Handling biases is tricky business and you'll need to be very intentional about how you design your performance review system to help weed bias out of your organization. Whether based on race, gender, or other unconscious prejudices, our biases don’t always sit on the surface. According to bias-reduction trainer Sondra Thiederman, “bias is an attitude” — it can be tough to spot from the outside.
A great way to start checking for biases on a deeper level is to simply be aware of what they are and how they can manifest in the workplace. Here's a list of some of the most common performance management biases from the experts at Diversity Best Practices.
Set up your performance review system with the goal of rooting out these biases as much as possible. Make it known to your teams that the system was designed (or revamped) with the goal of supporting the company's vision for diversity and inclusion and help them understand why it's important to the bigger picture.
You can also help your managers learn to spot their own biases by hiring a professional to come in and workshop with your teams. Tests like Harvard University’s Implicit Association Test (IAT) can also help you and your team leaders identify your own biases in a way that's more private and personalized. Remember, this is a challenging subject for almost everyone. If you're using tests like the IAT, make sure you allow each member of the team to keep their results confidential so that no one feels shamed, blamed or singled out.
Your performance management system can be a catalyst in creating a more diverse and inclusive culture, but it isn’t the end point. A winning diversity and inclusion strategy is one that never reaches a finish line. It's a continual process of evaluating and handling our own biases and it requires a constant re-commitment to stepping up and doing what's right for our people and our business.
When it comes to performance metrics, the business world loves a good acronym. KPI, KRI, KRA, OGSM, OKR and so many more swirl in and out of the business zeitgeist — it can easily become more confusing than helpful.
No one wants to be surprised by a new acronym during an important performance meeting, so we’ve compiled handy list of the most popular ones and added a quick, plain-english explanation of how to use them.
Let's start with one of the most (if not THE most) popular terms in business, the KPI (a.k.a. KSI). This handy little metric will show you whether your business, department or team is on track. Basically it's just a shorthand number that shows how well you're organization is doing
KPIs will vary based on industry, organization, or even department. For example, your sales department might use Average Profit Margin, while HR could look at Employee Churn Rate.
KPIs include many other terms you’ve probably heard of, including but not limited to:
And many more. The important thing is to choose a set of KPIs that will give the clearest picture of whether your team (or business) is on track.
If KPIs are the performance metric you use to show you how well things are going, your Key Risk Indicator (KRI) is there to make sure things keep going well. In a nutshell, a KRI is any indicator for trouble, failure, and risk — whether that's within your team, department or business at large.
KRIs can be a bit broader than KPIs and can include things like disruptors and wider industry risks, rare and black swans events, and common issues that need tracking, such as logistical and supply chain risks. Of course, KRIs will vary greatly depending on your unique line of business but you can look at them as the inverse of KPIs. For example, employee turnover for HR, server lag/network volume for IT, and number of deals lost for sales.
Simply put, a Key Process or Key Process Area is one of the most critical functions of the business.
This is the section, or handful of sections, that must keep running like a well-oiled machine in order for everything else to be smooth sailing. Remember when Facebook’s servers used to crash regularly and the site would go down all the time? No? That’s because the teams at Facebook have identified IT stability as a KPA.
The Key Results Area (KRA) and Critical Success Factor (CSF) metrics are a bit like the KPA, but wider.
A KRA goes beyond processes and looks at general areas where results are necessary in order for the business to succeed. Use a KRA to set down some broad areas necessary for long-term success, then define your Critical Success Factors (CSFs) within those areas in order to stay on track to hitting your KPIs.
For example, KRAs can usually be summed up in one or two words such as: Productivity or Cost Management. The CSF is the specific action you and your team members must take in order to drive progress in that area. For example, 'focus on developing product for 2 months without distraction', or 'reduce waste from our distribution process'.
Ah, the OKR. This goal-setting framework was popular even before the likes of Twitter and Google started using it.
This performance metric aims to strike a balance between the qualitative and quantitative. OKRs first articulate a goal without worrying about measurability. Something like "Aggressively increase revenue." That's the objective. The second step is to decide on several metrics that will track progress towards the goal. For the revenue goal above we might want to 1) Increase revenue 50%, 2) Keep our profit margin above 5%, and 3) maintain the R&D budget. These are the key results.
OKRs are great for setting big gnarly hard-to-measure goals, and then placing concrete guideposts that define success more quantitatively. For example is we weren't using OKRs in the example above we might try to increase revenue by investing the R&D budget in not-so-successful advertising campaign. That would increase our revenue, but it's probably not "success" the way we originally imagined it.
The Objective, Goals, Strategies and Measures (OGSM) model basically takes the KRA and builds a more structured outline out of it. With this performance metric, you take on an objective as the largest frame. So for example, the mission statement of your company or your biggest long-term business goal.
Then you set goals that are steps leading up to that objective. Strategies are the ways to reach goals, and ultimately, your main objective. Last but not least, you need to measure whether everything falls in line — if the strategies satisfy the goals, which then help reach the objective.
And for that, you need good measures. Your measures, bringing us full circle, are likely to be your KPIs.
As you can see, there's plenty of overlap in these performance acronyms. The acronyms themselves are mostly only good sounding smart, but the underlying ideas can be a great way to bring structure to your discussions of performance.
Finally, don't be afraid to stand up to jargon. When you don't understand something, just politely ask what it means. The other person is either being intentionally confusing in a self-obsessed attempt to appear important or they're using a useful shorthand that you should know. Either way, asking is better for everyone.
The idea of upward feedback, or employees giving managers feedback, is on an upward trend. And how do we know it's an upward trend? Because Google's doing it.
Google releases a 15-question/statement, mostly quantitative survey asking employees to rate their bosses. They base their questions on the eight factors they’ve seen consistently in their mostly highly effective managers — things like being a good coach, taking a personal interest, and being a good communicator and listener.
That might sound fitting for a company whose slogan is "Don't be evil", but does it make sense for everyone?
Google's upward feedback survey tackles a big business problem: Bad managers.
Bad managers have become such an office staple that they’re basically the face of corporate malaise in pop culture. (Well them, and the office printer.)
The only thing worse than working under a bad manager, is working under a bad manager who has absolutely no clue how bad they are, let alone how to get better. It just makes sense that business all-stars like Google would want to keep a finger on the pulse of what's happening on a managerial level. But there are some important things to consider before launching your own upward feedback initiative.
Google’s survey is a good example of how to ask about a manager’s soft skills as well as their specific, company-aligned strengths. Google gives 13 quantitative, strongly disagree to strongly agree statements that cover their eight goals.
For example, statements like, “My manager gives me actionable feedback on a regular basis” can effectively indicate how communicative a manager might be. Statements like “My manager assigns stretch opportunities to help me develop in my career” get at the more Google-specific desire to have managers present fun challenges and growth (stretch) opportunities for employees.
Then, Google uses two open-ended questions:
1. “What would you recommend your manager keep doing?”
2. "What would you have your manager change?"
These open-ended questions give the employee a chance for qualitative responses. It's interesting to note that Google’s questions are open, but also also slightly specific, similar to the types of feedback questions recommended by the Harvard Business Review.
In short, Google does a lot of things right with their upward feedback survey, but Google’s model isn’t the only one.
For some offices, it might not be comprehensive enough, or it might be too specific to Google’s values. The Society for Human Resource Management offers an example survey of their own that fits a bit more generally. They ask more questions and break their questions down into groupings that get at different managerial qualities, such as “valuing diversity.” These questions might be easier to align to your own business culture.
An employee survey like Google's could be a great way to get a real read on your managers. That said, surveys and quantitative data have problems of their own.
First, managers have an obvious power over employees and employees quite reasonably, fear that. In fact, Amy Gallo, editor at Harvard Business Review, recommends employees not give feedback to managers who can’t handle it. As much as we may want the feedback, it's unfair to ask an employee to risk their job in order to give it to us. While many workplaces surveys are anonymous, the “Ask a Manager” advice column over at Inc.com notes that the anonymity often feels, or is, see-through and doesn’t actually protect employees.
Second, not all data is good data — and having no data might be better than collecting bad data. Sir Andrew Likierman, Dean of the London Business School, wrote that it’s easy to fall into traps of over-trusting numbers, number-based systems, and metrics. Andrew points to the tendency for businesses to overvalue data that doesn’t actually say much, using popular but inapplicable scores and systems, and applying quantitative values to things that don’t have them.
Sometimes the best approach could be qualitative instead of quantitative. That could mean a brief qualitative survey, stopping in to sit with your teams for a while, or sitting down with employees for a private face-to-face meeting. There are many ways to train and develop strong managers. Just because the data isn’t there, doesn’t necessarily mean that it has to be.
We've all met the star performer who resigned shortly after being promoted.
For most of us, we see situations like this as wasted potential or a massive missed opportunity (and yes, it is both those things), but the truth is managing a team involves a very different set of skills than being an individual contributor — and just because a specific role or promotion is considered the gold star of workplace opportunities, doesn't mean it's right for everyone.
Same goes for the employee with a stellar skill set who's walking around the office with eyes glazed over. If you're ready to make your employees feel switched on — even proud — to work for you, consider letting them decide what job is best for them. Not the other way around.
For most organizations, that's going to require a major change in thinking. But companies like Facebook, Walmart and Managed by Q are already making the shift and reporting big returns in terms of happier, more loyal employees and a healthier bottom line.
It all comes down to one critical question:
Would you rather keep this person in this specific role, or would you rather keep this person, period?
Let's assume you want to retain your best talent.
If you want engaged employees in any role, start by figuring out what energizes them.
Energy and focus are the power combo leading to a state of flow — or, in organizational psych terms, 'absorption' — that in turn, leads to a highly productive workforce.
For some high performers, the thrill of a meeting a new person, hitting a major deadline or closing a deal can be the fire that keeps them moving forward. For others, it may be more about supporting coworkers, or using a set of established tools and information that makes them feel competent and valued.
The question is, does the position they're in match up?
In the vast majority of organizations, there's an age-old expectation that employees must be promoted after X number of years. This belief is so ingrained that it's not uncommon to see leadership, management and even the employees themselves, demand a change in position without ever stopping to consider whether they would actually enjoy the new role.
Here are some questions to think about (and ask!) when weighing up a change for your employees:
As much as we hate to admit it, there is always a tradeoff between work and home.
In researching for his recent book, Great at Work: How Top Performers Do Less, Work Better, and Achieve More, UC Berkeley professor Morten Hansen reviewed over 200 academic papers, piloted a study on 300 subjects, and developed a framework which he then tested on 5000 participants across industries and backgrounds. (Phew! Talk about work!)
Morten's extensive research confirmed that high-performers who leverage a deep sense of passion and purpose to skyrocket their success, experience an undeniable reduction in work-life balance.
But you already knew that.
The question is, how can you deliver better balance for your employees without sacrificing the important work that needs to be delivered each day?
And the answer is, you probably can't.
But you can help them feel excited, fulfilled and supported at work by giving them freedom and flexibility in their role.
Here are some guiding questions to help you map out some creative employee work-life harmony solutions:
A little extra effort to determine what is and isn't working about a job can go a long way in helping you keep your best people. And you might be surprised how a simple shift in responsibilities can make it so much easier for them to hold their heads high.
High performance company culture can be a tough thing to nail.
While it's always tempting to play follow-the-leader, it's tough to copy/paste something as unique and fluid as culture. Developing a strong corporate culture is more a matter of finding the right focus for your business — but a little inspiration never hurts.
Netflix unapologetically (even ruthlessly) builds its unique working culture entirely around talent.
The revolutionary company seeks only the most talented employees and will send “adequate performers” home with a “generous severance package” to help them find new employment. Ouch. But on the flipside, Netflix empowers the talent they hire with unlimited vacation time, tons of creative control, and very little micromanaging. They cultivate talent with policies of open discussion and honest but respectful feedback. If you've got the talent, why not step aside and let them work?
AgileThought was named #16 on Fortune's Best Small and Medium companies to work for. The 213-person IT company strives for a fun above all else, with little distance between the CEO and employees. AgileThought gives employees plenty of perks, including snacks, beverages, playrooms and massages, on top of standard benefits like PTO, 401k, medical, and dental. But the real cultural insights are in the little things. According to CEO Dave Romine, his favorite part of working in the AgileThought office is the laughter.
It seems like everything Asana does is meant to recognize and lift up their employees. They have some pretty unique awards, like the orange narwhal, benefits that cover 100% of insurance premiums, built-in mentorship, daily yoga sessions, and three free meals. And the way they do performance reviews is all about letting go of ego to get the most honest and objective feedback possible. It's all about peace, love, and merit-based insights.
Management consulting firm Point B believes work and life go hand-in-hand. They even go as far as to say that the company “exists for the benefit of [its] people.” And indeed, employees at Point B get stock options in the company, making it employee owned. CEO Mike Pongon makes employees feel appreciated the old-fashioned way. He goes out of his way to interact with employees through simple hallway conversations, lunches and happy hours, and face-to-face meetings to learn everything he can about them. No wonder the company topped Fortune’s list for top 100 Best Medium Workplaces
Like Point B, West Monroe is an employee-owned business that focuses on giving its workers a lot of responsibility and trust. West Monroe is a business and technology consulting firm that focuses on a blend of diverse voices and workers to match its “uncommon blend of business-savvy consultants and technical experts.”
Zappos puts together a workplace that’s hard to believe. The online shoe retailer has a 10-point culture guide that focuses on surprising and delighting its customers, along with fostering employee creativity, positivity, growth, and weirdness. Zappos has a ton of great standard benefits as well as a campus with a gym, life coach, nap room, sand-floored conference room and more.
It might surprise you to see an airline on the list but Southwest is dedicated to being the best, making its mission to be the most beloved and profitable airline around. And to be the best, that's exactly what the company asks from its workers, putting, “strive to be the best” right at the top of its values list. To help workers be the best, Southwest offers some cool training perks like leadership development programs, letting employees spend time in other departments, and tuition reimbursement.
Lessonly is a small 105-person startup and employee training platform. At Lessonly their employees’ dedication does the talking. They give employees unlimited time off and the option to work from home out of trust for their employees love for the company. Lessonly believes the employees make the business and the culture.
This mattress company was made off the back of a bad experience with an expensive mattress that did not live up to the hype. Ever since, Tuft & Needle puts high-priority on integrity—a smart move for any business in e-commerce. Tuft & Needle moves away from a lot of fun and glitzy perks and instead focuses on tried and true benefits like paternal leave and PTO.
Ray Dalio is a guy with a relentless focus on performance. The multi-billionaire hedge fund investor, founder of Bridgewater and author of #1 New York Times Best-Seller, Principles, leads with a philosophy of radical truth and thoughtful disagreement in order to create meaningful work and great outcomes. Bridgewater's not a place where you can go in and expect to keep your head down, maybe that's why it has over $160 billion in assets.
Last but not least, CARFAX puts it's people first by minimizing policy and paperwork as much as possible. They focus on building a shared vision to help their people be even more amazing. And of course, with video games, a putting green and all kinds of outdoor activities, there's plenty of fun in the mix, too.
“I’m motivated” versus “I’m determined”.
In a lot of conversations, you could probably say either sentence and get the same idea across.
Yet, there is a difference. To put it in the words of executive coach Jamie Douraghy, “Motivation is what gets you started. Determination is what helps you finish what you started.”
If we’re determined to do something we’ll stay on it, even after that initial motivation disappears. For most c-level and HR leaders, that's exactly the kind of drive you dream of seeing in your employees.
So why does the highly motivated, truly determined employee seem so elusive?
There are thousands of articles on how to motivate your employees.
Most of the traditional advice focuses on encouraging more fun at work, recognizing individual contributions and, if you really want to go big, integrating some sweet perks into the mix.
And that all makes sense. After all, can you imagine a workplace where everyone communicates clearly, thanks each other (both verbally and with rewards), and works in an office with a fully stocked kitchen and and the latest ergonomic workstations?
It would be hard not to feel motivated at a place like that, right? Or would it?
The truth is, both motivation and determination probably come from somewhere much simpler.
Professor Edward Deci and clinical psychologist Richard Ryan created the basis for something called the self-determination theory. Like the name suggests, the idea is that most people are already intrinsically motivated and determined. The trick is to sustain it.
Self-determination theory suggests that fostering a sense of “autonomy, competence, and relatedness” helps make sure people don’t lose the intrinsic determination they start with. But doing that in the hustle and bustle of a busy workplace is a whole lot harder than it sounds.
It can be easy to think of employee motivation in terms of giving.
Giving employees proper feedback, acknowledgement and rewards, all contributes to their level of motivation. But if we already have an inherent sense of determination, then maybe employee motivation is more about simply not taking anything away.
Business consultant and author of Good to Great, Jim Collins reverses the framework and suggests that people usually start with motivation and end up demotivated. He goes so far as to say that a boss thinking they need to motivate you is, “discounting what you really are as a person.” Instead, he suggests ways to avoid demotivating.
Here are Jim's three strategies:
According to Jim, these factors help keep the motivation on your side. He argues that it's the opposite—avoiding problems, making decisions before asking for input, and pointing to intangibles—that robs your employees of the natural motivation they came in with.
At the end of the day, it might not be a question of how to motivate through performance reviews, but how to make sure your performance review process doesn’t demotivate your employees.
Consider whether your review process and management style gives employees a greater feeling of autonomy and whether you're really ready to listen with open ears to what they have to say. If you're taking the time and steps necessary to address problems head on, and use tangible data to backup your decisions, the rest will take care of itself.
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.
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.
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.
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.
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.
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.
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.
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.
Ever since "needy" Millennials joined the workforce and Silicon Valley giants started offering more and more gimmicky perks, the concept of employee engagement and fighting turnover has gone off the rails.
Some say we jumped the shark when Ask.com introduced drag-racing tricycles into the office as part of their “funnovation” initiative.
There is nothing wrong with these perks, it’s just that they are beside-the-point.
That's because our goal shouldn’t be just to have happy employees who don’t leave the company. We should be building organizations of extremely productive employees who are also happy and don’t leave the company.
To achieve the latter we need to do something much more difficult than building a yogurt bar or calling the extra conference room the “meditation room.”
If we want our employees to be both productive and happy the source of the happiness must be the work itself, not peripheral perks. This could mean the work feels purposeful, or the work could feel fun, or the work could be an exciting challenge.
Are you still with me? If so, here are 5 foundational ideas for increasing employee engagement.
One of the best ways for employees to find meaning in their work, is when they feel like they are advancing towards who they want to become as a person.
In a paper appropriately titled, “The ideal self as the driver of intentional change” researchers found that when working towards our own personal ambitions we achieve a unique degree of intrinsic motivation, engagement, and fulfillment.
How managers create this alignment will be different for everyone, but the first step is always the same. Managers must understand the personal ambitions of their employees.
Most of us are competitive, it’s human. We see our success in relative rather than absolute terms and so we are always trying to be not just better, but better than our peers. The American Satirist H. L. Mencken famously said wealth is, “any income that is at least $100 more a year than the income of one’s wife’s sister’s husband.” (or husband’s brother’s wife).
When cultivating competition it is important to respect its power and not let things get out of control. There are countless examples of perverse competitive environments where incentives become misaligned with company goals. One way to prevent this is to think about who is competing and who they are competing against. The simplest solution is to frame the competition as the whole company competing against peer companies.
There is an interesting paper called, A Theory of Action Identification, which looks at how we identify our actions. For example at a low level I’m currently typing on a computer, on a higher level I’m helping people around the world live happier lives by becoming more engaged at work.
When employees are disengaged they’re often saying things like, “I enter numbers into excel documents all day,” or “I push paper.” A manager can help energize employees by walking them up a ladder of purpose, connecting their work to more intrinsically meaningful things it contributes to. This technique can help people find meaning in even the most mundane tasks.
It is important to be able to see how every job in your organization could be meaningful. If you can’t, then you might be better off getting rid it.
Almost any job can meaningful, you just need to be willing to invest in making it so. Harvard Business Review is currently doing a great series called A Case for Good Jobs on how companies like GAP and McDonalds are investing in their front line jobs to make them more appealing for employees.
If through some lack of creativity you can’t make one of the roles at your organization a “good job” you are probably better off contracting that work out, because disengagement is contagious.
The truth is not everyone is looking for a meaningful relationship with work. There are some people who just want a paycheck from their job and nothing else. Don’t be afraid to part with these people, because again, disengagement is contagious.
However, remember that most disengaged employees are just the victims of bad jobs and bad management, and they have become disengaged over time. Work closely with them using the techniques above and you’ll find they quickly come back to life.
Asana, is a silicon-valley startup founded in 2008 by former Facebook developers, Justin Rosenstein and Dustin Moskovitz. (Fun fact: Rosenstein was one of the developers who created the Like button.) And in 2017 Asana ranked #2 of the top 100 Best Mid-Size Workplaces in the country by Fortune Magazine.
The company is well-known for its offerings of top-notch employee benefits like unlimited PTO, a culinary program, yoga, and Uber credits, but where it really shines is in the area of employee self-improvement, Asana describes self-improvement as fundamental to its culture.
The 297-person company offers employees external mentorship and life coaching. The program includes an all-star list of coaches to help with anything from improving interpersonal relationships to hands-on engineering apprenticeships.
One reason Asana invests so much in employee growth is that they give them a large degree of personal autonomy.
Rather than a traditional business hierarchy, the company uses "areas of responsibility" or AORs to delineate the roles of its employees. Each department is documented as an AOR with one person as its "directly responsible individual", or DRI. While everyone in the AOR is expected to take full responsibility for the tasks within it, the buck ultimately stops with the DRI.
The role of the manager is to be a coach. Rather than directly approving or directing decisions for the DRIs, managers empower them to make their own calls and give them the direction for the future.
Asana is completely mission-driven. Rather than focusing on the wheels and bearings of 'how', each and every project is led by their overarching 'why'. But that doesn't mean they're completely free of a structured appraisal process.
On the contrary, Asana's leaders regularly engage with employees to increase employee happiness and keep performance on track.
Every six months, the company halts all normal business operations for its Roadmap Week. This is the time for every member of the organization to step away from the daily grind and reflect on the big-picture progress made over the last six months.
They consider it a kind of organizational meditation—a time to sit, reflect and gain deeper insight on the business. During Roadmap Week, Rosenstein and Moskovitz will either lead a session, or simply sit in on DRI and manager-led sessions in order to get a better feel for what's happening on the ground.
In addition to the bi-annual Roadmap Week, select teams at Asana hold a regular Friday Product Forum.
The goal of the Friday Product Forum is to share observations and offer guidance—but managers and DRIs are trained to detach from any need to have the last word. In an exclusive interview with Conscious Company Media, Moskovitz described their transparent, bottleneck-free philosophy as, "Strong opinions weakly held." This approach allows them to challenge employees to do their best work, while remaining agile as an organization (a typical Friday Product Forum can take as little as 15 minutes per team).
Asana also uses regular peer reviews and conducts an annual employee survey via a third party. They even go as far as to share negative feedback publicly, and commit to making changes quickly. And according to their head of people ops, Anna Binder, this is the real reason behind their 4.9 star rating on Glassdoor.
“Our employees say wonderful things about us on Glassdoor. That doesn’t mean that we’re perfect, or pristine. What it means, what I believe that it means, is that we’ve created channels internally for people who have unhappiness to speak about those unhappinesses in a direct way.”
In keeping with its emphasis on personal growth, the company has regular one-on-ones between reports and managers. But instead of focusing on status updates and deadlines, these meetings are meant to address employee satisfaction and engagement.
Here are some of the common questions an Asana people manager will ask:
Compared to traditional performance review structures, Asana's approach may seem a little out-of-the-box, even hokey. But with 99% employee satisfaction in virtually every area, it would seem its enlightened approach to appraisals is working out pretty well.
Asana 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.
At PerformYard we serve mid-size organizations (50-500) that are tired of their homegrown performance review system. Their old process is often a combination of paper forms, clunky excel docs and maybe an under-supported feature from their payroll provider.
Before our customers come onboard their performance reviews are-
Costly: with weeks of HR’s time and many hours of managers’ time spent facilitating the movement of forms and tracking down the right information.
Hated: with outdated ideas and cumbersome busy work that makes managers and employees frustrated and uncomfortable.
Unhelpful: with no system for efficiently collecting and managing the data, performance reviews are a huge initiative every year that has little to show for itself.
The question of what to do about this problem is often complicated by discussions of recent HR research and ideas from TED Talks, but the answer is actually very simple.
The first step to fixing performance reviews? Stop spending so much time on them.
Even if your ultimate goal is to create a world class and innovative performance management strategy you have to start by being more efficient with your existing review process. That is why so many mid-size companies love PerformYard. There are two things that break a review process, more employees and more complexity. When your review process is already breaking and your company keeps growing the answer is definitely not to implement a bigger and more complex review strategy from the latest issue of Harvard Business Review.
PerformYard first and foremost streamlines any review process you want to run. By design we do not force anything on our customers. If you want to do annual manager reviews or are going to try weekly 360 reviews it can all be very simply managed in PerformYard. Give our customer success team your forms, timelines, employee hierarchy and in a few days your manual and time consuming review process will be digital and running on its own.
An efficient review process unlocks a tremendous amount of time for our customers and gives them the flexibility to improve their performance management strategy however they see fit in the future. To see PerformYard in action and get an estimate of just how much you should be saving let’s have a five minute conversation right now - (888) 745-0761.
There is a revolution happening in Performance Management. It is easy to see at corporate leaders like Adobe, IBM, Microsoft, Deloitte, Accenture, GAP, and General Electric, but the revolution is happening everywhere.
The revolution is being driven by employees. The traditional end-of-year performance review has not fit with modern company and employee goals for many years now and employees are demanding a change. This has forced many HR departments to design new modern performance management strategies.
For more read:
A Deloitte manager described their old review process as “an investment of 1.8 million hours across the firm that didn’t fit our business needs anymore.”
Performance management can go one of two ways. You are either putting structure in place to force accountability (Jack Welch asking the bottom 10% to leave) or you are creating an environment that helps employees grow. If you have a once-a-year process that emphasizes financial rewards and punishments, whether you want to or not you are focusing on holding people accountable for past behavior rather than improving current and future performance.
Accountability and growth are both important, but as the labor market heats up the need to go beyond just accountability is more important than ever.
An employee has little to no motivation to participate in a system that is just about accountability, and managers don't like it either. Beyond that, it is an impossible task. How is anyone supposed to summarize a years worth of work into a single conversation.
Employees want a focus on growth. This often takes the form of regular checkins where the conversations can be about fixing issues going forward rather than revisiting issues from the past. Managers also prefer a growth focus, research has shown that managers are far more likely to give regular feedback than year-end feedback because it feels more natural and can be framed as a growth opportunity rather than a reckoning.
However, despite overwhelming support for moving away from traditional accountability focused performance appraisals, there are many issues that remain. In fact many of the industry leaders we mentioned in the first paragraph have returned to numerical ratings and some sort of year end review, but more on that in a moment.
The four biggest challenges of moving away from a structured system are...
The most progressive companies which all started removing qualitative year-end performance reviews a few years ago have begun to bring them back for the reasons stated above, but that doesn't mean they've returned to their old ways.
Companies have adopted a third way. Now companies like General Electric are having their managers meet regularly with employees as part of the natural flow of the business. This means at the end of projects, when roles change, or when issues arise. These natural checkins are recorded in simple technology solutions like GE's PD@GE which allows managers to quickly jot down notes after meetings without all the traditional paperwork overhead associated with HR meetings.
Then at the end of the year the manager can compile a years worth of real-time feedback with the press of a button, add a quick summary and give the employee a more accurate rating of their performance. This end of year meeting also become less of a reckoning and more of a simple qualitative summary of past discussions.
While accountability and development are the most common goals of performance management systems, there are more. Read: The Purpose of Performance Management (5 Options)
Interestingly, one of the challengers to this new way in performance management has been HR departments. Despite understanding the benefits the process has not been achievable with their outdated systems for managing reviews.
The answer is technology. The industry leaders we've been discussing have all turned to software to manage the continuous feedback and end-of-year feedback processes. This has left HR to spend less time cajoling managers and forcing through review sign-offs on time and more time on creating a review process that is effective at driving growth and accountability in the company's employees. Companies like GAP have seen an increase in the coaching they can provide to managers on the best way to mentor and lead their teams to improvement since implementing their performance management software.
PerformYard was designed for whichever review process your prefer, whether it focuses on accountability or growth, or whether it is year-end, continuous, or both. PerformYard removes the time-consuming paper logistics work that bogs down so many HR departments, so that if it is time to reform your review process you will finally have the time and technology to make it happen.
If you are interested in scheduling a demo with one of our team members to discuss your performance management process and how PerformYard can help, just click the button below.