A new approach to data-driven performance reviews leverages social recognition.
By Eric Mosley
The traditional performance review is frozen in time. Its design is outdated and its implementation is typically mediocre. Unless you fix it, your company itself will perform—as the review itself might say—below expectations.
Problems with the traditional review are serious and structural. There is no quick fix. As we will see, there are culture-killing flaws embedded in the traditional review system’s design. Improving execution of a broken practice won’t eradicate the problems, for the pathology has already been strengthened by decades of repetition.
In theory, a performance review rewards good performance and stimulates underperforming employees to improve. This is supposed to create a cycle of ever-improving work performance based on objective criteria, raising morale and profits across the board. In practice, the traditional review often produces the opposite effect. Too frequently, performance reviews create discouragement, mistrust, bewilderment, cynicism, and low morale. Worse, in today’s workplace, the traditional review fails to recognize and address critical changes in the way we work.
Let’s consider the qualities that make the traditional review so problematic by imagining a standard performance review as it is today. It is a dull, predictable, and dreaded ritual.
Employee and manager meet once a year to discuss the employee’s work goals and behavior. The employee is rated on how well he or she has performed over the previous 12 months. There is a form, typically rating the employee along a numeric or phased scale (meets expectations, exceeds expectations, or does not meet expectations). There is feedback and perhaps a salary increase. And the next formal conversation on performance won’t take place for another year, when formal performance review time rolls around again.
While technology, management techniques, and organizational models have undergone revolutionary change over the past few decades, the performance review has plodded along in the same format since it was invented. Even technical enhancements, such as the use of online forms, have only mimicked the old model.
Let’s imagine a new model that still has structure and formality, but has changed to include real-time, ongoing crowdsourced input and data. The people with whomâ¨the employee interacts have judged their performance, augmenting the single judgment of their manager. Instead of creating a one-time evaluation of performance, the manager is informed by a yearlong narrative of the employee’s accomplishments, skills, and behavior.
This crowdsourced review overcomes frustrating weaknesses of the traditional performance review using technologies and even habits that have appeared recently in the workplace.
Three innovations give rise to this new model:
The spread of crowdsourcing information of all kinds. In the last decade we’ve seen the rise of a fascinating trend: the marriage of data from multiple sources and individual opinions to create an entirely new form of decision-making called crowdsourcing. It’s everywhere, from star rankings on Amazon.com’s product pages to services like Angie’s List, Zagat.com, and TripAdvisor. Now people make decisions based on feedback from dozens, hundreds, or tens of thousands of other people. And these crowdsourced conclusions are replacing “expert” opinions because they are more accurate.
The universal adoption of social media. In the same decade, the spread of social media has opened new channels and habits of communication. Facebook, Yammer, Yelp, LinkedIn, and other services make crowd communication a matter of many people sharing information with many others in innumerable ways and represent a new language of business.
The rise of culture as a competitive advantage. For more than a decade, business thinkers have emphasized the importance of culture as a competitive advantage, as other advantages (such as factories or even patents) lose their power to confer a leading position. Managing culture is now a central concern of both HR and C-level executives.
Enter Social Recognition
When we bring these three innovations of crowdsourcing, social media, and culture as a competitive advantage together for the purposes of talent and culture management, the result is social recognition, a systematic set of practices in which many people consider and recognize an employee’s performance on a daily basis.
Many of the most powerful attributes of social recognitionâ¨are also seen in online star ratings. In fact, you could say that social recognition adds to performance reviews what starâ¨ratings add to online shopping. Like those critical rankings, social recognition harnesses “the wisdom of crowds” to judge performance. That is, it aggregates the opinions and thoughts of many individuals to arrive at a richer, more accurate observation of performance than one person alone could provide. The phenomenal growth of such crowdsourced information in the past 15 years is remaking markets and changing the way we do business.
The crowdsourced performance review adds social recognition to the traditional performance review, making it superior to the traditional review in four critical ways.
1. It is based on data. The new review contains a record of specific instances in which employees are recognized for great performance, and how it connected to company values. Even “soft” skills like leadership, innovation, and quick learning can be noted.
Data gathered about positive specific actions can provide insight into the performance of individuals, groups, and companies. These data can be generated through hundreds or thousands of recognition moments by thousands of observers—the employees themselves as well as managers. These moments, when analyzed by the right tools, tell more about overall performance than any number of traditional review reports. With this data, managers and HR professionals can quantify an employee’s performance and progress—or lack thereof—objectively, rather than just relying on opinion.
2. It has multiple sources of feedback. In the traditional review, an employee is judged entirely by his or her manager. In the new format, informed opinion can be contributed by everyone with whom they come into contact, from peers to managers in different locations or departments. This shared responsibility inspires the employee’s trust of and engagement in the process as well as engagement in his or her job.
3. It reviews performance in real time. Because employees and managers are recognizing specific accomplishments throughout the year, feedback is continuous. Constant feedback is a best practice that busy managers too often let slip in the press of urgent business, but in this case, responsibility for feedback is distributed and quick.
4. It uses technology to make reviews more efficient. Whenâ¨the traditional review was created decades ago, managing feedback about employees took months, and employees received only a snapshot of reaction once a year. Even a diligent middle manager spent an arduous week once a year filling out forms, ranking his or her employees’ effectiveness, and then forgetting about the whole process for the next 51 weeks.â¨Now, using databases and management tools, HR can respond quickly to positive and negative performance information about individuals, groups, and entire divisions of a company.
Today, a performance review system can be much more thanâ¨a faster, automated replica of a 1970s paper-based process. With all the tools at your disposal, you can expect a system that matches the vast changes in business trends and technology.
Meeting that expectation requires rethinking performance management because the traditional performance review has not kept up with the profound changes in business over the last three decades.
Eric Mosley is the CEO of Globoforce and the author of The Crowdsourced Performance Review, How to Use the Power of Social Recognition to Transform Employee Performance. The above is an excerpt from that book.