What's After Annual Performance Reviews? Never-Ending Performance Reviews
Every season is performance-review season at Instacart. The grocery-delivery service mandates the traditional twice-a-year checkups with management, complete with 360 feedback and self-evaluations, but employees and bosses are also encouraged to rate each other's work nonstop—all day, every day.
Instacart uses a "real-time feedback" tool called Reflektive, which lets anyone working at the San Francisco startup leave real-time messages about any colleague's accomplishments. Feedback can be entered into a discrete website or proffered on the fly using a special e-mail plug-in. "It's very of the moment," said Shelby Wolpa, who is Instacart's human resource director. "Things that happened yesterday, as opposed to a traditional performance review, where you're assessing a year's worth of work and the manager can't remember what you did two weeks ago."
More feedback, more often is the future of the dreaded performance review. Meeting with the boss once or twice a year to assess your past, present, and future is beginning to seem quite quaint. Some organizations, like Instacart, are moving to a hybrid system that bridges the old and the new. Others have decided to ditch the annual process entirely. Pinterest, which also uses Reflektive, is in the midst of completely moving away from what the photo-focused social network calls "traditional reviews and performance ratings." The best thing for workers, argued Mike Joyner, the people operations manager at Pinterest, "is to get aligned on goals and ensure everyone is consistently getting feedback."
Traditional corporate giants are getting weary of the practice, too. The number of employers who have done away with numerical rankings or chucked performance reviews entirely jumped to 12 percent in 2014, up threefold from 2012, according to a Corporate Executive Board survey of Fortune 1,000 companies. This summer, for example, Accenture and GE both abandoned the practice. The Gap, Adobe, and Microsoft are among the growing ranks of big employers that have already thrown out mandatory, yearly check-ins. "Morphing from an annual review to a series of on-going conversations about performance, that certainly has been the trend," said Ravin Jesuthasan, a managing director at Towers Watson, a benefit and HR consulting firm.
Performance reviews have earned a very warranted bad reputation among employees, managers, and HR professionals. A 2013 Bloomberg Businessweek article arguing for their demise called them a "worthless corporate ritual." Few people respond well to negative feedback—yes, there's research to prove this rather banal observation—and workers complain of "rater bias" in which evaluators don't accurately dole out scores. Research by Towers Watson has found that only about half of employees find performance reviews useful for career development and training.
Even HR managers find the old-school process costly and cumbersome. In a 2014 survey from the Society of Human Resource Management, almost 75 percent of those surveyed gave their company between a "C" and a "B" when grading their own organizations on how they handle reviews. "HR doesn’t like having to force everybody to do the review, it’s not something that is fun for them to do," said Reflektive Chief Executive Rajeev Behera.
The idea of mentoring and managing workers traces back to the 1930s. Elton Mayo, a Harvard Business School researcher and forefather of the human relations movement, determined that happiness and productivity is correlated to performance. The practice in its current form, an annual numerical ranking system, is often blamed on legendary General Electric CEO Jack Welch, who in the 1980s pioneered a "rank-and-yank" rating system. Managers were given a rigid scale to rate workers, and the bottom 10 percent of performers got fired. GE phased that out in the mid-2000s, but many companies still use a less regimented form of grading employees to determine pay, promotions, and firings.
Yet HR professionals and managers still want the intel, and employees want feedback. The solution, astonishingly, is just more performance reviews in smaller doses.
Under the old system, Instacart simply asked employees to fill out a short questionnaire about their work. "It was a complete mess," Wolpa admitted now. "There were version control issues, and there was little accountability on managers, because it was unclear who had done them." Now, after switching to Reflektive earlier this year for all employees reviews, submitting a public comment about a co-worker is as easy as sending an e-mail. When review time comes around, in July and again in January, those comments auto-populate an employee's performance evaluation.
"Managers have their own perspective on a person and their own interactions," explained Wolpa. "What is fantastic is it provides them other perspectives that they maybe didn’t even know and [highlights] a much broader picture of their direct report." The managers then use those comments as well as more traditional review methods to evaluate an employee.
The argument for never-ending reviews is that they offer a more accurate picture of how an employee is performing. In addition to pushing for more regular, personal check-ins, many companies have adopted tools such as Reflektive, which just secured $3.5 million in funding from Andreessen Horowitz. The field of rival "any-time" performance review services is becoming crowded. GE, ever the innovator in employee evaluation, has shifted a chunk of its 80,000-strong workforce to a home-grown app called PD@GE. One feature called insights lets employees give or request feedback whenever.
Amazon.com, as chronicled in this New York Times story about its workplace culture, uses software called the Anytime Feedback Tool for this purpose. Workday, Impraise, Engagedly, and SuccessFactors have also built constant feedback mechanisms into their performance review software. "You can see all of this great feedback over the course of a year, as opposed to the annual cycle stuff, which drove everyone crazy," argued Jesuthasan at Towers Watson.
Of course, there's the potential for abuse. At Amazon, according to the Times report, employees used the anonymous feedback mechanism to sabotage each other. “I can’t stand here and defend you if your peers are saying you’re not doing your work,” one woman who left Amazon recalls her manager telling her. On the other hand, Jesuthasan points out that "you get a lot more honesty with anonymous feedback." And honesty is often what bosses want about their employees' performance.
Reflektive sits on the other end of the spectrum—nothing is anonymous. "We don’t want constructive feedback to be sent digitally," said Reflektive's Behera. For anything negative, people can send private peer-to-peer messages, or the software encourages people to take it off-line. Complete transparency has the potential to skew too positive. "One concern I did have was it going to be too vague, kind of fluff," said Instacart's Wolpa. "It’s been the opposite of that. People are very specific in thanking people for a specific action or things that they did to help them."
With any of these tools there's also the potential for feedback fatigue. In addition to e-mail, Reflektive can be integrated into workplace chat tool Slack to make giving feedback as seamless as possible. Reflektive cites internal research that 39 percent of employees, on average, across the 50 companies using its service will engage with the employee review software every month. Of those people, most send an average of four comments per month.
At Instacart, with 305 employees, so far about 20 comments have been left each month. Pinterest said that so far employees feel "neutral to positive" about the new system. "Most think the user interface is simple and easy to follow," said Joyner.
Even if employees can't hope to escape the evaluation process, there's hope that a shift toward bite-size feedback might stop short of provoking a constant crush of employee reviews. "That’s when you get that feedback fatigue," said Jesuthasan. "You’re thoughtful when you get to the first five. When you get to the last 20, it’s one-word answers."
(Correction: An earlier version of this story incorrectly said that Amazon uses a software product made by the company Workday and misspelled Rajeev Behera's last name.)
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