Making the Case for Performance Reviews
Why we at Compass, a real estate tech start-up, continue to conduct employee evaluations.
As a People & Culture (or “HR”) nerd for nearly a decade and a half, I enjoy reading articles on workplace trends and research. While I’ve seen statistics indicating that many employees and managers don’t feel performance reviews are effective, what is even more interesting is the strength with which these opinions are often voiced. I’ve seen “hate,” “despise”, even “revolution.”
I personally don’t “hate” performance reviews, but I do understand why many people do. I have administered and participated in a variety of flawed approaches to reviews, which are generally used to provide feedback to employees (and often score and rank them against their peers). In my previous job as a HR Business Partner at GE, I administered a well-known and very structured performance review program, which near the end of my time there, GE started to radically dismantle. Joining Compass in 2014 as its Head of People & Culture, I was no longer part of administering a system; I had to own and iterate one in partnership with our COO and CEO and set out to do something our team wouldn’t “hate” or “despise.” For a fast-paced, quickly expanding startup, it can feel like a no-brainer to save precious time by getting rid of performance reviews completely. This is especially the case when the press coverage seems to support that decision and portrays reviews as anathema to a progressive company. But for Compass, we ultimately decided that we should do what we believe is best for our employees, until we, or someone else, finds a true improvement to the process.
Would employees really be happier if we got rid of annual performance reviews?
When you pay close attention to these articles, you see that many organizations are not simply eliminating the performance review to save the time; they’re instead experimenting with what they believe will be easier and more effective ways to provide ongoing feedback to employees.
One big trend can be characterized as “Provide Feedback But Remove Ratings.” Does it work? In my favorite article on performance review trends so far, The Washington Post spoke with the Corporate Executive Board (a workplace data and insight organization) and reported that “CEB surveyed more than 9,000 managers and employees across 18 countries and found that those who worked for organizations that had scrapped ratings from the review process actually scored the performance conversations they had with their managers 14% lower.”
There’s also another somewhat popular variation on the “Provide Feedback But Remove Ratings” trend, which I’ll call “Still Rate Employees But Don’t Show Them the Ratings.” While there are many good points on how this approach avoids negative feelings (more aptly covered by my peer Joris Luijke when he was VP, People at SquareSpace), it simply doesn’t feel right to me to categorize people in a way that affects their careers and not be transparent about it.
Long story short, among the biggest reasons employers retain a rating system is help direct decisions about your pay. Most companies believe in “Pay for Performance,” that is, varying people’s salary increases based on how well they contribute to the company. We at Compass also believe in “Pay for Performance”, and so we feel that showing everyone their ratings provides maximum transparency around how their contributions impact compensation decisions. For us, performance reviews are used as an input in conjunction with ensuring fair pay in accordance with the market and their peers.
Which Trend Do We Agree With?
I’ll call this one “Managers Should Give Feedback More Frequently Than Annually.” Perhaps the worst type of performance review is one in which the content is surprising to the person receiving it. The intent of a good performance review should be to allow time for dedicated reflection on how to continue to grow and develop, grounded in the understanding of how you performed over the look-back period, so that you can learn from reflecting on past examples.
Conducting reviews does not preclude providing more frequent feedback. To ensure our managers touch base regularly with their direct reports, we make it part of our Compass Manager Expectations. In addition to asking each leader to make positive and constructive feedback a daily practice, we also set monthly, one-on-one meetings to coach them on how they’re managing and motivating their teams. Despite all of this, we do find that some managers, despite the best of intentions, get caught up with other priorities and don’t always dedicate as much time to delivering feedback as they should. So we set up a rhythmic quarterly process of sitting down with each employee and providing verbal feedback on what he or she can continue, stop, and start doing in order to keep growing and succeeding.
I’m also really interested in how technology can be utilized to encourage managers and make it easier for them to provide more frequent feedback. For the past year, I’ve served as an advisor to a start-up in this space, Uppercase HR, whose tool integrates with email and popular tech-industry communication tool Slack to allow managers to quickly tag feedback and progress towards goals without having to leave their inboxes.
How Do We Conduct Reviews?
For those curious about our annual performance reviews at Compass, I’m happy to share the 2016 version. (We believe in constant iteration and utilize feedback from managers and employees to make changes to our process following each cycle.)
First, reviews should feel like feedback that is going to help employees improve, not the answer to who would win a popularity contest with their manager. To reduce rater bias, we allow employees to designate up to five additional reviewers. The peer insights are structured to answer what behaviors and tasks coworkers should Continue, Stop, and Start, ensuring the feedback is forward-looking so it can best be used to improve future performance.
We also have each manager’s drafts coached by a People & Culture partner who’s worked closely with the team, is aware of the feedback the employee has received in the course of the year, and can ensure the relevant stakeholder voices are incorporated into the review. Final performance ratings (on a five point scale, with 0.5 intervals utilized starting this year) are then reviewed by the leaders of each department, in addition to me, the COO, and the CEO.
How Do We Coach Managers?
As our People & Culture team coaches each of our managers to write constructive performance reviews, we look for common ways to make reviews more productive. Here are the main things we promote among our managers:
Be Objective:
Don’t assume intent. For example, don’t write “You didn’t care enough about the deadline to turn the project in on time.” Besides being impossible to prove, unless the person being reviewed would readily agree, he or she is likely to become defensive, which is not the first step to accepting and learning from feedback. The same point can easily be rephrased objectively by sticking to the facts and explaining the effect of the behavior. In the example used above, we would suggest the manager rewrite it as “You missed more than half of the deadlines, which caused other teams both frustration and the need to rush through the project.”
Research has shown that people will receive feedback much better when it’s about their behaviors as opposed to their characters. My least favorite word in reviews is “struggles,” often used with innocent intent in sentences such as, “You struggled to bring the project to timely completion.” Such language is likely to trigger something most of us have felt frustration that not only does your manager not understand all the things that made it seemingly impossible for you to get things done, but that they are underestimating your capability. When our People & Culture team see “struggles” in a review we ask the manager for more information on what exactly happened in order to help them arrive at a phrasing that won’t raise defenses, such as, “While your strategy was compelling and well-communicated, ultimately you were accountable for ensuring the project was brought to completion on time to ensure a successful overall result.”
Be Forward-Looking:
A performance review that simply sums up the past is probably deserving of all that performance-review-rancor, as it is likely to create defensiveness and not accomplish much to help you learn how you can improve. Reviews should include actionable recommendations for how you could approach a similar situation in the future. So, directly following the sentence that summed up the result, the manager should add some advice, such as, “Going forward, I’d suggest you map out milestones and check-ins and ensure you come to me promptly if you need help clearing any roadblocks.”
Avoid Hyperbole:
Criticism can’t be constructive if you use extreme adjectives. When there’s a behavior someone could improve, saying “always” or “never” is unlikely to be 100% true and is extremely likely to raise defenses. And while I’m a People & Culture professional and not a therapist, you might want to try removing “always” and “never” from any arguments in your personal life as well. A good example of how to qualify the feedback could be, “You present well to teams the majority of the time, but on two occasions showed behaviors that might indicate you were nervous, such as speaking very quickly.”
What is the Future of Performance Reviews?
I don’t know what performance reviews will look like in the coming years. All I know is that there will be many more articles to read and research to dissect. I’ll be following the trends and trying new approaches, continuing to believe that everyone benefits from constant self-improvement.
Interested in joining us as we build the future of real estate? Meet the team and view Compass opportunities.
Before coming to Compass, Ciara alternated back and forth between large companies and start-up environments, enjoying contributing her HR skills in very different settings with all different types of people.
