I was lucky to be invited to speak on a panel hosted by Impraise, the performance management software company out of Amsterdam.  On the panel were the Heads of People from Updater (ex-Tumblr) and Pond5 (ex-Grubhub/Seamless).

We received some of the questions in advance, but the moderator, Arthur Woods from Imperative, went off-script which led to a much more fruitful and thoughtful discussion.  I had an epiphany about how to approach performance appraisals which I’ll share in a later post.

But in case you are interested in what the original questions were and what I had planned to say, see below….!

1 – We’d like to hear from all three of you about a time where you were working with a disengaged employee, and what you did to turn the situation around.

As it relates to the workplace, I would say there are 2 types of engagement — engagement in the role, and engagement in the company.  And these can be mutually exclusive, so as People professionals, we need to make sure we are addressing both through our efforts.

I’ll focus on ‘engagement in the role’ here because that’s more relevant to today’s discussion.  Not to get all theoretical, but I think there are 3 necessary components for this type of engagement:

• Growth opportunity
• Skills to be successful
• Passion for the job

If you have only 1 or 2 of these, then you don’t have someone who is deeply engaged.  For example, if you have the growth opportunity + passion, but not the skills, you may feel overwhelmed and frustrated. If you have skills + passion but no growth opportunity, you may feel stuck… and frustrated.  And if you have the growth opportunity + skills, but no passion, then you’ll get bored. …And probably frustrated.  😖

Every time I think of an employee who was disengaged or unhappy in their roles, it was for one of these reasons.  And, when they are disengaged, they don’t perform to their potential. 

In your opinion, what’s the key component that would boost engagement?

As I mentioned above, it’s all three — growth opportunity, skills for success, and passion.  Assuming in the case of start-up employees, passion is what led them to the company and role, the primary levers we have in HR is to help them identify or to create growth opportunities and to build skills for success.  This is where performance management practices matter.

2- How’s the performance management process in your company? How often do people receive feedback?

Since I joined my current company this year, we have reinstituted performance reviews as a semi-annual practice.  This should ideally be separate from the regular feedback people receive from each other, but we use performance reviews as a way to ensure that people are getting holistic feedback at least once every 6 months.

Our process is pretty basic so far (and every iteration is and will likely be different as we get feedback on the process and improve on it):

• Self-assessment that asks for significant achievements + self-evaluation across our company-wide and function-specific tenets for success in role
• Peer reviews from 3-5 others with similar questions — requested by person being reviewed, then edited by manager for relevance and exposure, then re-edited by the People team to balance out peer review loads
• Manager reviews along same questions after they receive all of the inputs from self and peer.  Plus an overall summary assessment of performance + potential.
• Then 1:1 discussions between manager and employee about results — ideally structured to include: holistic feedback about strengths, areas for development, and specific actions / opportunities to develop over the next 6 months.  THIS IS THE MOST IMPORTANT STEP OF REVIEWS YET IS THE HARDEST TO TRACK.  All of the preceding stuff is data to inform this discussion.

3- What are the risks of removing the annual performance review without having a new system in place to replace it?

Unless you come from a company with a history and infrastructure of giving feedback as a matter of course (like big management consultancies, probably companies like GE, etc.) the risk is that very little feedback is delivered — and employees become disengaged, performance falters, and this eventually affects business outcomes.  While I can’t say we got to that dire level at the company where I work, when I joined, the previous HR team had discontinued formal reviews in lieu of self-managed 1:1s between managers and employees.  They had read all of the misleading headlines about how big companies were abandoning the formal review, and so decided to do the same.  The major difference was that our managers weren’t equipped to run effective 1:1s that included regular feedback; and more importantly, they didn’t buy into the value of giving feedback because they themselves had received so little in their brief careers to-date.  

So these 1:1s became irregular if they happened at all.  And they focused on the work at-hand, not about development.  

This came through loud-and-clear through our employee engagement survey last November, where 10% of respondents unsolicitedly made a comment about wanting clearer, more actionable feedback from their managers.  

This last survey, which we ran in October, had perhaps 1 comment about feedback being an issue.  

4- How did you manage to get people to give constructive, actionable feedback to each other? Which were the main results in terms of productivity and engagement? Which were the obstacles/ biggest challenges?

In addition to reinstituting regular performance reviews, we:

• Held 6 workshops for managers and non-managers about the importance of giving/receiving feedback, and gave them tools to do this themselves.  (Our plan going forward is to hold these workshops every quarter for new hires.)
• At the same time, we launched a ‘real-time feedback tool’ from Reflektive that made giving feedback easy through a Gmail integration
• This also allowed employees to showcase their positive (not any constructive) feedback on a public feed
• Reinforced this behavior by highlighting 1-2 of these at weekly All-Hands

In terms of big obstacles — I think it’s really embedding the practices of giving good feedback so that it becomes second-nature.  Specifically, I’ve noticed that because managers are confrontation-averse, they will often skip the feedback step where they have to explain the unwanted behavior and the impact of that behavior, and go straight to “giving advice”.   That’s something we’ll continue to work on with manager training and by continuing to beat the feedback drum.

I think we shouldn’t solely focus on constructive feedback.  The impact of having positive feedback and giving recognition is powerful — research suggests that focusing on strengths leads to better performance outcomes than reminding people about their weaknesses.  Also, other research suggests that high performing teams thrive on 5 pieces of positive feedback for every 1 piece of negative feedback.   

In terms of results for us, I’d say it’s still too soon to tell.  As I mentioned, in general, the comments about needing more feedback have subsided but our overall metric on receiving high-quality feedback is still pretty low.

4- What are the main challenges with coming up with a new performance management system. Which was your main source of inspiration for this?

Main challenges are:

• Balancing effectiveness with ease of use.  I’d say that our tool may have been overly watered-down this last time to make it easier for the user.  Since we were asking for peer reviews, we cut out the open-ended question for managers and employees about what the development plan is for the next 6 months.  Instead we asked managers to talk about it during the 1:1, but that means we don’t have anything captured in writing.
• Embedding consistent and calibrated expectations for performance.  Right now, everything is too subjective — one manager’s definition of high performance is not another manager’s.  And even trying to frame things in terms of ‘top 10%, etc’ doesn’t help because these managers don’t have that level of oversight.  I think having consistency is important for core skills you want to see for your company or your function.  This creates a sense of fairness but also clearer expectations for performance and accountability.  I feel like some of the very ‘simple’ review models that only ask the basic “Stop/ Start/ Continue” questions — while appealing in their ease and their personalization — may be overly solipsistic and self-referential.  And while you may end up with positive growth for everyone, it may not be at the pace required for a high-performing start-up.

((I’m still mulling this last bit over.))  It’s interesting because a recent article in HBR, The Performance Management Revolution, talks about how the purpose of performance reviews have shifted through time from accountability to learning, and back again…and then back again.  Right now — due to the challenges of recruiting and retaining good performers, companies are trying to maximize the talent they have right now by focusing on learning.  But a few companies — including some of those that declared they were abandoning formal reviews just a few years ago — are shifting to find a middle ground because accountability can’t NOT be part of an employee’s review.

My main source of inspiration for the performance management approach we have at my current company is what I experienced at McKinsey, which — while overly rigid and conforming to just 1 type of employee — essentially outlines what behaviors and outcomes it requires for advancement and then educates all managers and employees on what those  behaviors are and how to achieve them.  And it was there where I witnessed incredible growth in employees in short amounts of time — people advancing to partner within 7 years of graduating from college.  

5-  How do you foresee performance management in the near future? Do you see the link between development and compensation will break off? Why/why not?

As I mentioned in this recent HBR article, it talks about how performance management practices change as the labor markets shift.  I expect that will continue to be the case going forward, and — should it become easier for us to recruit talent — I’d expect that companies will reinstitute ratings and more formal processes to be able to identify the best.  

As teams become more of the organizing structure for how work gets done, perhaps we’ll move away from one manager’s review towards a team-based review — both a 360 and relative to other teams?  I just made that up but I could see that happening.

Re: performance and compensation — unless you have an independent compensation philosophy like Netflix — where you aim to pay top of the market; or like a hedge fund — where you pay a % of what you earn — then I don’t see a fair way to break the link between performance and compensation without making other employees feel that the wrong people are getting rewarded or vice versa.  

6- It’s undeniably useful for managers to receive upward feedback from their team members. But there can be issues surrounding people’s reluctance to give it. How would/have you tackled this problem? In your experience, would anonymity be a solution to this?

Ours is anonymous to the manager but not anonymous to their manager.  That way, the manager’s manager can follow up with the appropriate person for more detail, or, if they have other information that frames the feedback differently, they can apply it.  

People don’t necessarily trust their manager’s manager to not disclose the feedback, I find.  That’s tragic.  But I understand that this is a real issue.  But this isn’t about feedback — it’s about trust within the organization.  Which is another and potentially larger issue altogether.

Managers may also discount anonymous feedback, assuming that the negative stuff comes from the one disgruntled person.  So this may lessen the impact of this kind of upward feedback.

That said, I’d rather leave it anonymous so that there is a chance employees can be candid and straight-up.

7-  What would you say HR Managers should change for us to finally achieve an engaged workforce that makes people feel they can speak openly and develop themselves and their performance on a real-time basis?

There’s a lot here.  One thing we are actively trying to promote at my company is to have individuals feel responsible for their own development.  They are the ones who have the most at stake, and so shouldn’t look to their manager to take the lead.  

If we can get folks to embrace this, then THEY can ask for feedback, follow up if they don’t understand how these lead to action, etc.  I’ve had too many conversations with employees who complain that their manager doesn’t give good feedback.  I tell them, “Well, figure out what you want to know and then ask the manager how you are doing along these dimensions!”  It’s each our job to make giving feedback easier — and I think anchoring questions like “How am I doing?” or “Can I have some feedback” in specific behaviors takes a huge cognitive load off of your manager.