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.
A new survey released last week by Willis Towers Watson illustrates the key factors driving US companies to reassess and change their compensation practices. In explaining why they were making these changes, employers cited cost, manager feedback, changes in the marketplace, and employee feedback as the most common motivations. WTW’s Getting Compensation Right Survey, conducted in April 2018, surveyed 1,949 employers worldwide, including 374 US employers whose total workforce comprises more than 5.2 million employees.
Among the US employers, nearly half said they were considering or planning on redesigning their annual incentive plans, while more than a third said they were changing criteria for salary increases. This highlights a trend we’ve been seeing over the past few years, in which employers are rethinking the traditional annual raise and opting for more targeted and differentiated increases or bonuses to reward and incentivize performance. Many employers also told WTW that they were refocusing performance management to include future potential and possession of skills needed to drive the business in the future, as well as introducing recognition programs to provide on-the-spot rewards.
One move many companies are making is toward greater pay transparency, with 53 percent of respondents saying they were planning on or considering increasing the level of transparency around pay decisions. Our latest research at CEB, now Gartner, also finds that transparency is a growing concern among rewards functions. One driver of this trend is the increasing amount of information available to employees and candidates about what other people are earning in their roles, both within their organization and at other organizations, through external sources like Glassdoor or LinkedIn.
In our employee survey, we found that 42 percent of employees who had consulted one of these online sources for pay information had thought about leaving their current employer as a result. These external forms of transparency are making it increasingly important for employers to be more forthcoming about their pay practices and take control of the narrative around compensation at their organization to get ahead of employees who might find (potentially inaccurate) information elsewhere and draw their own conclusions.
Effective onboarding often makes the difference between a successful hire and an early quit. To better understand the causes of attrition among recently hired employees, Microsoft created a survey that was given to new employees after their first week and again after 90 days to find out about their experiences and first impressions of the company. The tech giant’s workplace analytics team also compared anonymous calendar and email metadata with engagement survey data from around 3,000 new hires.
At the Harvard Business Review last week, Dawn Klinghoffer, Candice Young, and Xue Liu revealed what this investigation uncovered and how it shaped Microsoft’s decisions about how to improve new hires’ experience. One thing the survey revealed was that having a working computer and access to the building, email, and intranet on day one was important for new hires to be productive and engaged from the very beginning, making an important first impression that colored their overall experience. Their more complex analysis produced another insight: New employees who had a one-on-one meeting with their manager in week one were more successful than those who didn’t:
First, they tended to have a 12% larger internal network and double network centrality (the influence that people in an employee’s network have) within 90 days. This is important because employees who grow their internal network feel that they belong and may stay at the company longer. For example, employees who engage internally intend to stay at a rate that’s 8% higher on our intent-to-stay measure. They also report a stronger sense of belonging on their team while maintaining their authentic self.
Although our research at CEB, now Gartner, has found that organizations with flexible working programs realize an increase in employee engagement and productivity, the stigma against flexible work persists and employees often fear that their colleagues and managers will question their competence or commitment if they ask for parental leave or remote work options.
In a recent piece at the Harvard Business Review, Joan C. Williams and Marina Multhaup offered some suggestions for how to mitigate this challenge. The authors recommended that workforce policies be designed in a way that is wholly inclusive, from parents who have to pick up their children from daycare to employees who have to tend to their sick grandparents. Although people’s reasons for needing flexible work arrangements can differ, they write, organizations should adopt a clear set of principles for managing that flexibility and ensure that it is fairly applied regardless of the reason.
Williams and Multhaup’s ideas for creating an inclusive policy are sensible, but the problem remains that organizations often don’t promote their flexible work policies effectively. In fact, our research indicates that flexible work practices are underutilized even by employees who value flexibility. In order to better enable workers to take advantage of these options, managers need to create an environment where they are not only used, but encouraged.
When United Airlines announced earlier this month that it was replacing its quarterly performance bonuses with a chance for eligible employees to win prizes in a quarterly drawing triggered by reaching certain performance goals, the blowback from employees was swift and fierce, forcing the airline to quickly backtrack on the plan. By swapping out the modest quarterly bonus for a chance of up to $100,000, United President Scott Kirby had hoped to make the bonus program more exciting for employees, but the Kirby and the rest of United’s leadership misjudged how employees would react to what many saw as a cost-cutting measure that would make it harder for most of them to earn bonuses.
What happened at United can serve as a learning opportunity for other CEOs and rewards leaders, underlining the risks the come with using gamification to motivate employees. Workplace games can sometimes be more effective motivators than cash, as “winning” offers a form of social recognition that financial rewards don’t. Employees can write off losing out on a cash bonus as the price of taking it easy at work, but recognition that is visible to one’s co-workers and serves a social function can motivate them in a different way.
Gamified motivation tactics can also be cheaper and more cost-effective than extra cash, the New York Times‘ Noam Scheiber points out, even if the only prize the game offers is a compliment from the boss. United’s mistake was not in introducing a gamified element to their rewards program, per se, but rather in what it took away to make room for it. In other words, the psychological rewards of winning a competition can be motivational when they come on top of regular compensation, but they can’t be a substitute for it:
“Shareholders and management get the monetary rewards, and ‘meaning’ and ‘excitement’ are consolation prizes that go to workers,” said Caitlin Petre, an assistant professor of media studies at Rutgers University who has examined similar practices at media companies. “This is very much in line with my understanding of how the gamification trend in workplaces operates.” …
United Airlines President Scott Kirby issued a memo to employees last Friday unveiling a new rewards program to replace its quarterly performance bonuses for all eligible employees. Lewis Lazare reports at the Chicago Business Journal that, according to the memo, the “core4 Score Rewards” program would have replaced the company’s operational bonus and perfect attendance programs with a chance for eligible employees to win prizes in a quarterly drawing triggered by the reaching of certain performance goals. Those prizes would have included luxury cars and vacation packages, as well as cash awards from $2,000 to $40,000, and even a $100,000 grand prize for one lucky employee.
Sources within United told Lazare that the memo “quickly ignited a firestorm” among employees. Amid the ensuing backlash, United said on Monday that it was putting the plan on hold, according to CNBC’s Leslie Josephs:
In a forthcoming paper in the Journal of Applied Psychology, Harvard Business School professor Teresa Amabile and her former doctoral student Andrew Brodsky, now a business professor at the University of Texas at Austin, make an attempt at measuring the economic impact of employee downtime in the US workforce. What they found surprised them: The time American workers spend idle could be costing employers $100 billion a year. Michael Blanding profiles their research at HBS Working Knowledge:
With the help of survey firm GfK, Brodsky and Amabile took a representative sample of people across 29 occupations—including lawyers, managers, agricultural workers, and soldiers. They found that 78 percent of employees reported experiencing some kind of idle time. Moreover, in every one of the 29 occupations, at least 50 percent of the GfK respondents experienced idle time.
Converting those hours into wages, the researchers conservatively estimated that such idle time costs businesses a whopping $100 billion a year.
By idle time, Amabile and Brodsky don’t mean loafing or procrastination, but rather time when employees should be working but are unable to, whether because of excess capacity, misallocation of work, or malfunctioning equipment. The researchers also examined how people respond to having nothing to do at work—not well, it turns out: