A recent article at the Economist described Uber’s user rating system for drivers as a strategy for supplanting traditional performance management, arguing that these ratings “increasingly function to make management cheaper by shifting the burden of monitoring workers to users.” Uber has an interest in ensuring that customers have a consistently good experience and thus is harmed when drivers perform poorly, but instead of devoting resources to monitoring and managing drivers’ performance, it counts on customers to assess it instead. Meanwhile, the platform gives drivers a strong incentive to earn high marks, “aligning the firm’s interests with those of workers,” with the risk of being deactivated if their average rating falls too low.
This type of outsourced performance rating has expanded outside of the gig economy, the author adds, pointing to the ratings and feedback companies increasingly solicit from customers online after they interact with employees, such as in a customer service call.
As the Economist points out, user ratings systems are an attractive method for crowdsourcing the monitoring of employee performance without having to spend the time, money, and effort of having managers do it themselves. And it’s no surprise that organizations are looking for an easy way out. Our own data at CEB, now Gartner, shows that 55 percent of managers believe performance management is too time consuming, and only 4 percent of HR leaders believe their current process accurately assesses performance. With all the effort that has ostensibly been wasted trying to fix performance management, leaving it up to the wisdom of the crowd sure is tempting.
This makes a lot of sense for Uber, which treats its drivers as contractors and will never need them to perform a task other than driving. Customer ratings may be all the performance information Uber needs to decide whether or not to allow a driver to continue working on its platform. With more conventional models of employment, this usually isn’t an option, so most organizations that choose to integrate user ratings into their performance management process must do so more carefully.
Whitnie Low Narcisse, head of advisory programs at First Round Capital, has run three rounds of mentorships since launching the venture firm’s mentoring program in 2016, bringing together 100 mentor-mentee pairs. First Round Review passes along some of the key lessons Narcisse has learned about how to cultivate a successful mentorship. Her first rule? Don’t call it a “mentorship”:
A little ironic for an article all about mentorship, but nearly all of the mentors we spoke to identified use of the word as the number one reason they were dissuaded or disinclined to talk to someone. It carries some negative connotations with it: it’s a time suck, it implies a very close relationship with someone you may barely know, it sounds like a long-term commitment. Direct asks like, “Will you mentor me?” are a universal turn off. …
To this point, if you’re a mentee sending an ask, you want to be very clear and explicit about why you targeted this person. Do enough homework to briefly explain why you’re looking for guidance relevant to their experience. That way, you don’t have to use the word ‘mentor.’ Instead, you’re inviting them to apply their considerable knowledge on something they’ll find intellectually engaging and impactful. That’s how people want to feel — not that they’re taking on an additional obligation.
Narcisse recommends an approach to mentorship that is formal yet flexible. Mentors and mentees should commit to a series of regularly scheduled meetings, mentees should prepare a focused agenda for each meeting, and the pair should set specific goals together and measure progress—but the schedule shouldn’t be too rigid, meetings shouldn’t feel like lectures or question-and-answer sessions, and goal-setting doesn’t mean homework. Most importantly, mentorship shouldn’t be a one-way street.
Much of Narcisse’s advice can also apply to the challenge of asking someone in a more senior position in your company, especially your manager, for help and feedback in the context of performance management.
Most employees say that they want to know exactly where they stand with their employer. They ask questions around how they are doing, how much of a raise they will get, and are they likely to get promoted. The reality, however, is that most employees don’t get that level of transparency: Our research at CEB, now Gartner, finds that fewer than 40 percent of employees say their organization is fully open and honest.
The investment firm Bridgewater is famous for its culture of radical transparency, and its founder Ray Dalio is going public with how he actually achieved that within his company via the publication of his new book Principles. His approach, which he outlines in a TED talk and in a recent interview with Fast Company’s Marcus Baram, is based on the concept of an “idea meritocracy” in which all ideas have the potential to be implemented (or criticized) regardless of who has them. Radical transparency serves that meritocracy by ensuring that everyone is free to speak up to, disagree with, and criticize their peers, their managers, and even Ray himself.
The immediate reaction from many in the HR community is that Dalio’s ideas are interesting, but just too radical to work at my organization. While simply applying his approach in the exact same way might not work, some of the underlying ideas and concepts might well be applicable across other companies.
One of Dalio’s ideas that is getting the most attention is the Dot Collector, a tool Bridgewater uses to have employees constantly provide quantitative scores of how other employees are doing on a close to real-time, always-on basis. HR executives have raised several concerns about this approach. In particular, they are concerned that 1) it can put employees in a fear state from being constantly evaluated, and 2) feedback coming from so many people who have limited interactions with someone can be too inaccurate to be useful.
Goldman Sachs Tower (Andrew Cribb/iStock)
In its latest innovation to its performance management process, Goldman Sachs is introducing a system of ongoing feedback in which employees’ annual performance reviews will be augmented with regular check-ins with their managers and peers. Edith Cooper, the investment bank’s head of human capital management, tells the Wall Street Journal’s Liz Hoffman that annual reviews will remain central to determining promotions, compensation, and bonuses, but with more frequent feedback, the company hopes to make these reviews somewhat less nerve-wracking and more productive:
Goldman’s new system is based on software the firm already used in a few divisions last year. It is now being extended to the rest of Goldman’s 35,000 employees. … The idea is that after a big client pitch or product launch, employees can get quick feedback instead of waiting until year-end, Ms. Cooper said. A real-time sense of where they stand allows employees to make improvements and avoid feeling blindsided later on, she added.
Goldman has been on a mission to retool performance management since last year, when it rolled out an updated version of its performance rating system and announced other changes meant to make feedback more timely and descriptive, and the process of giving it less laborious for managers and peer reviewers. Many companies, including competitors of Goldman Sachs such as Morgan Stanley and JPMorgan Chase, have adjusted their approaches to performance reviews over the past two years, and building more continuous feedback systems has been a key component of many of these changes, enabled by new technologies that make feedback easier to deliver.
At the Wall Street Journal last month, Wharton management professor Peter Cappelli challenged executives to think differently about their approach to employee performance and potential. The core of his argument is that these talent processes are less dynamic than the speed of the business. Business needs change, who you work with is different from project to project, expectations evolve, and personal circumstances or other factors can affect an employee’s potential contribution at any given time. Rarely, he argues, is an employee always an A, B, or C player:
Broad categories miss a lot of subtleties, so people’s true talents and strengths often get ignored. They also make it hard to recognize when people improve or stumble in their performance. The notion that good performers are always good also contributes to what psychologist Edward Thorndike called a halo effect, the mistaken belief that if you were an A player in one thing, you will be an A player in another. …
That means we assume A players perform better because they have more ability or talent than the others. But we don’t consider that, for instance, they might have gotten a string of easy projects where they could shine. Or maybe we think they’ve done a good job simply because we expected them to do a good job. Likewise, we assume that people performing poorly in their jobs are C players rather than people who are struggling with problems outside of work or have just been given an impossible assignment. Or again, maybe we judged them as performing worse than they actually did because we expected them to do poorly.
The cornerstone of his advice to solve this very real problem is to assess employees more frequently and objectively. He’s right about that, but this is just one of three things organizations need to do in order to improve their performance management strategies. They must also:
- Expand the number of people from whom managers receive feedback. Performance today is more collaborative, interconnected, matrixed and horizontal. In order to better determine the contributions that someone is making, managers need to ask more people.
- Make the feedback more forward looking. Rather than simply telling an employee how well they performed in the past, the best managers use past performance as a vehicle for talking about what they should be doing differently in the future. This approach lets managers use performance feedback as a development and evaluation tool.
The evolution of performance management is at an inflection point as businesses look for new ways to accurately measure employee performance and give the right kind of feedback to improve it most effectively. Over the past year and a half, many major employers have either abandoned or radically reformed their performance rating systems, moving toward more qualitative and continuous feedback, and in some cases scrapping the the traditional annual review entirely.
The rationale behind these changes has been to engage employees more constructively in the performance management process, but CEB research has cast doubt on whether this really works. Looking at companies that have ditched ratings, we found that less than 5 percent of managers were able to effectively manage employees without them, while getting rid of ratings had a negative impact on the quality of manager conversations, employee satisfaction with pay differentiation, and overall engagement.
Performance management is in need of reform at many, perhaps most organizations, but simply getting rid of ratings doesn’t seem to do the trick. Ultimately, ratings tell employees where they stand in a way that qualitative feedback can’t always match. At TLNT, Natalie Trudel suggests some ways to square that circle, retaining the most useful aspects of ratings but making them more timely, relevant, and specific:
For convenience, the same rating scale is often applied to all areas of an employee’s evaluation; from goals to competencies. This is more often than not a 5-point rating scale (5 – Outstanding, 4 – Exceeds Expectations, 3 – Meets Expectations, 2 – Needs Improvement, 1 – Unacceptable). The problem is that you can’t rate certain evaluation criteria using this scale, and it isn’t fair to expect managers and employees to do so.
As many employers rethink their approach to performance management, one approach many organizations are trying is to replace or supplement the traditional annual performance review with more frequent check-ins. As companies work to meet the demand among their employees for more continuous and detailed feedback, Sarah Kessler at Quartz takes a look at the growing market for technological systems that enable these more frequent conversations:
Startups like Lattice, TinyPulse, and Zugata take the concept to the extreme with quick reviews that are often meant to be completed every week and sometimes coordinated automatically. TinyPulse CEO David Niu, whose customers include Facebook and IBM, promised that a new product launched in February would capture “all the real-time data people crave to measure performance, all while keeping it fun.” By fun, he meant, for instance, that managers and employees can assess progress on their goals with a Tinder-like swipe-to-rate system. …