There are few rituals as universally dreaded in companies as the performance review. While reactions range from being merely annoyed by the process to detesting it, overall the traditional annual review—like some of the employees gauged by it—consistently fails to meet expectations.
Managers complain about how time-consuming performance reviews are. And many harried managers will admit that they can barely remember last week, let alone a whole year’s worth of one individual’s performance.
Meanwhile, employees are unsatisfied with the paltry feedback and support they receive and the lack of a line of sight between their goals and the broader objectives of the organization. Many workers—particularly those among the feedback-conditioned Millennial generation—want more-frequent dialogue about their performance. Yet many employees will attest that their manager has often said to them, “You write your own review; if I agree, I’ll sign off on it.”
Today’s organizations move more quickly than ever and often require collaboration to get things done. They can no longer afford to wait 12 months to get feedback on employees’ progress toward goals. As the workplace evolves, we need to find new processes that support contemporary business challenges.
A handful of employers are pioneering a new technology-based approach called social performance management (SPM). Inspired by social media sites such as Facebook, LinkedIn and Yammer, SPM systems allow employees to exchange information quickly and easily, fostering ongoing dialogue, coaching and recognition. Regardless of their level in the organization, all employees can share information ranging from goals to feedback to positive recognition.
“[Performance management] is an outdated concept,” says Debbie Cohen, vice president of human resources for Mozilla, an Internet solutions company in Mountain View, Calif. “The entire conversation and mindset needs to change.”
The Case for SPM
Gone are the days when individuals could work in virtual isolation. In today’s globalized, interconnected world, nearly all organizations use teams in some manner. Successful teamwork necessitates interaction and dependencies. Given that team members are frequently scattered geographically and may never meet face to face, it’s essential to have a tool to ensure that they’re on track with their individual deliverables and that they’re knowledgeable about how the team is tracking against all of its goals. Today’s performance management processes rarely provide up-to-date information on performance that motivates and informs teams about their progress.
While some old-style managers would like to control the flow of information, that has become increasingly difficult to do in the modern workplace, and many employees have come to expect immediate access to data and feedback.
These are some of the reasons Mozilla decided to go social with its performance management process. “Mozilla was experiencing large, global growth,” Cohen says. “We needed iterative, ongoing dialogue on the impact of contributions. At the same time, we wanted to build community and recognition.”
At fast-moving Hootsuite, a social media management company in Vancouver, Canada, six months is too long to wait for a midyear review, says Ambrosia Humphrey, vice president of talent. “We could have hired 200 people in that amount of time,” she notes. The company uses the 7Geese platform, and employees say it makes them “feel like they have ownership of telling their own story.” After a project, employees can request a 360-degree evaluation from their peers if they choose.
“The main shift in SPM is … away from a one-time snapshot and onto continuous feedback and the social components,” Humphrey says.
How Does SPM Work?
Given the intuitive navigation and the way individuals have ownership over their “profiles,” SPM systems can be likened to Facebook, LinkedIn, Yammer and other social media platforms. Since most employees use social media to communicate in their discretionary time, the ramp-up time for SPM is minimal. Employees view these types of social systems as a means of feeling connected.
Social performance management systems allow managers and employees to establish and share goals with each other and track progress in real time. People at all levels are able to provide timely feedback and recognition, making it spontaneous and interactive. The process resembles having a conversation rather than capturing records after the fact. Similar to Facebook, people can comment on or “like” individual recognitions or other content.
“I would not call it performance management; it is a performance dialogue,” Cohen says. “It is about feedback loops. [As a process, it provides] a chance for the employee base to talk about the impact they have.”
Mozilla’s system, Work.com, allows anyone to ask for feedback anytime. It also gives employees the opportunity to recognize others for demonstrating company values in the moment, providing a resource that can enhance the team culture, promoting collaboration and improving performance, in addition to showing a record of how people are progressing toward their goals.
What SPM isn’t is an open forum for criticism. The public feedback is all about recognition. In fact, many companies stream the recognitions live on large screens throughout their facilities. Constructive feedback is personal and thus is shared only with the recipient. Similarly, an employee’s performance toward his or her goals is visible only to relevant individuals that the manager and employee agree upon in advance (generally team members).
In situations where employees are falling very short of their goals—and may be at risk of getting fired—HR and the manager must work together to handle that process separately and offline, perhaps using conventional tools such as verbal and written warnings and/or a performance improvement plan with specific deliverables and timelines included.
Implementing A Social System
Although SPM systems are software-based and easy to use, setting up such a system is far from “plug and play.” The HR function must engage the C-suite for support and must carefully consider the realities of its specific organization’s culture before adoption and implementation. Many of the companies using SPM, including Mozilla, Hootsuite, Salesforce.com, Spotify, Gilt Groupe, MediaAgility and Conquer Mobile, have employees who are highly tech-savvy and accustomed to social tools.
Before making a decision about adopting an SPM system, organizations should consider the following essential questions:
• Is your culture conducive to the open dialogue demanded by a social process?
• What is the viability of the performance management system already in place?
• What are you trying to achieve by making your performance management process more social?
• Will senior leadership support and use such a system?
• Is there clarity about the rules of engagement for the new SPM system? Some organizations develop guidelines to ensure that comments are constructive and do not constitute negative venting online.
• How simple can you make the system’s accessibility and usability?
• Are there early adopters you can leverage to build momentum around using the system?
• Should you encourage participation through “gamification” or limit the system’s use to the genuine exchange of feedback?
Humphrey advises fellow HR professionals to be realistic about what type of system suits their organization. “Really put in something that you can handle,” she suggests. “Start small and know where you are going. We have a two-year road map. At the end of that time, we expect to iterate the process.”
She also says you need to know your own people. “No one should throw down a social HR strategy to check the box,” she explains. “This has to be right for your company. We are a social media company, so this works well for us.”
Gilt Groupe, an online retailer located in New York City, is using Work.com to replace the “dreaded annual review” process. Gilt Vice President of Engineering John Quinn says he initially used the software with just his six direct reports and found that the system was a painless way to gather feedback.
“I have so many one-on-ones that it’s important that they’re short and I [derive] a lot of value from them,” he says. “With Work.com, I can create a structure around my one-on-ones.”
Later, Quinn pitched this SPM system to Gilt’s head of HR, Brian Christman. Within six months, Gilt had replaced its existing performance management process. Now, all 700 employees use SPM to manage their goals, provide continuous feedback and recognize great work.
Following good change management
10 Reasons Traditional Performance Review Systems Are Broken
- Conventional review systems operate on the assumption that setting goals annually is an effective way to manage business.
- Systems encourage employees to set goals independently of one another.
- Processes are built on the premise that the same manager will be in place 12 months later to review an employee’s performance.
- Inherently, they assume the manager knows more about what the direct report is doing than the employee or his or her peers know.
- Matrixed management is on the rise. Employees no longer work for just one manager.
- Traditional systems rely on the notion that annual or semiannual reviews are enough to motivate and retain employees and to correct performance when necessary.
- Employees are less invested in a single manager’s opinion of them and their work than in how they are perceived within broader teams and the organization.
- Managers must be able to track and remember everything employees have contributed throughout the year.
- Processes assume that knowledge workers’ performance needs to be “managed,” which isn’t always the case and doesn’t address whether they are inspired or motivated.
- Fairness of the process is questioned each year when true performance meets the ugly reality of performance-based pay and justifying a rating tied to compensation.
practices about getting input and buy-in is critical. When Hootsuite was considering switching its process, HR spent a lot of time asking people what they wanted from a new system. “We had a lot of key stakeholder meetings to understand what they wanted,” Humphrey says. “We bounced ideas off of employees, and this collaborative approach really works for our organization.”
SPM and Engagement
Social performance management systems differ from other HR automation systems in a fundamental way: Since most employees already use social media voluntarily—to share photos, keep up with family and friends, or express their likes and dislikes—using an SPM system feels different to them. It seems genuine and relevant.
As opposed to feeling “managed” or “controlled,” employees feel connected and engaged. They feel as though their peers, managers and others are listening to them. Although the desire is not exclusive to younger employees, many Generation X and Millennial employees want to be heard and seek timely reactions—recognition as well as constructive coaching—for their contributions. Because they’re receiving input from project team members and people at varying levels, communication no longer feels one-way. When individuals are acknowledged for their performance in a timely fashion, they feel more valued and motivated.
“MediaAgility was growing rapidly and was in need of a way to align individuals and teams with the company objectives,” says CEO Rajesh Abhyankar. It decided to roll out objectives and key results and to use 7Geese to track them. “MediaAgility adopted a top-down goal-setting approach by ensuring that all individuals and teams were made aware of how they could contribute to achieving the company objectives,” Abhyankar explains. “This kind of alignment gave every employee a sense of belonging.” Based in Princeton, N.J., MediaAgility is a cloud-based technology solutions consulting firm with offices globally.
Adds Angela Robert, CEO and co-founder of Conquer Mobile, an enterprise mobile applications developer based in Vancouver, Canada: “One of my biggest frustrations with managing the company using our [former] one-page [business] plan was that it sat in an Excel spreadsheet and was hidden instead of being communicated widely to the company.” She believes that using SPM has helped increase employee engagement, company culture and team morale.
A 2012 study by McKinsey Global Institute reports that two-thirds of the value creation offered by social technologies lies in improving communications and collaboration within and across enterprises. McKinsey estimates that by using social technologies to improve communications about goals and collaboration in the achievement of them, companies could see a rise in productivity by knowledge workers of 20 percent to 25 percent.
Humphrey shares one lesson she learned when implementing SPM at Hootsuite: “One thing that worked well for us was reaching out to organizations that have systems that work and having a conversation with them. What looked good from a marketing standpoint might not really work. People are so willing to share their experience, and that was very helpful.”
Cohen concurs. “My wish would be that HR professionals really pause and consider what serves [their] organizations’ best interests and the people,” she says. “We need to meet them at their point of need and keep the focus on the people and recognition of their impact … and less over orchestrated processes.”
Will SPM systems replace conventional annual performance reviews? Probably not, at least not right away or completely.
But the positive examples of many pioneering firms, combined with compelling data pointing to the benefits of using social technologies, suggest that HR professionals have an opportunity: They can lead the way in supporting approaches that address the changing realities of business. While technology alone cannot change culture, many leaders attest to the power of social media tools in making communication and feedback more timely, relevant and convenient. Given the pace of change, social technologies can help drive organizational improvement and performance. What’s not to “like”?
Edie L. Goldberg, Ph.D., is the principal of E.L. Goldberg & Associates in Menlo Park, Calif., and the chair for HR People & Strategy, a SHRM affiliate.