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.
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.
When it comes to employee performance reviews, conventional wisdom has pretty much accepted the idea of 360-degree feedback—collecting appraisals from colleagues and internal clients in addition to managers—as a profound improvement on previous standards of evaluation. However, this concept has not yet made its way into the mainstream for recruiting, where data suggests there are benefits to soliciting references from a candidates’ coworkers as well as their managers.
Researchers from SkillSurvey, a company that provides online reference checking, conducted a text analytics study comparing the kinds of comments that appear in job references from managers and coworkers. They surveyed 20,000 references across 5,000 candidates on jobs ranging greatly in level, pay, industry, and function. Overall, they discovered, coworker references provide a very different view of candidates than those that come from bosses.
When looking at areas of improvement, coworkers most often cited issues related to overwork, such as perfectionism and how a candidate handles stress, whereas managers focused more on experience and being proactive. In terms of strengths, managers tended to list task-oriented items such as dependability, independence, and meeting deadlines, while coworker references offered much more insight into the personality of the candidate, focusing on strengths like friendliness, listening, and compassion.
In their Harvard Business Review article summarizing the key findings, authors Disha Rupayana, Cynthia A. Hedricks, Leigh Puchalski, and Chet Robbie conclude: