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Feedback 4.0 – The New Normal in Performance Management

“The least effective feedback came at my second-year review.  [It] was incredibly generic and some of her specific stories were about a different analyst... that was the moment when I decided to start looking for an opportunity to leave the firm.”

-Ben S., MBA candidate

We recently surveyed a group of young MBA candidates about their experience with performance reviews and feedback. The above response, in particular, caught our attention.

When a rising star is willing to leave a prestigious firm due to poor performance review practices...Houston - we’ve got a problem. Yet how many hours have you spent on performance management and wondered if you’re getting a bang for your buck? Performance reviews are a practice undertaken by some, avoided by many, and represent an opportunity for all. In spite of our best intentions, it’s easy to perceive reviews as difficult and time-consuming. But good news! There are trends that can make the performance management process easier and more engaging for both managers and employees.

In much of our work with clients, good feedback and effective employee evaluations are integral to effective change management. We’ve seen companies ditch the annual review in favor of a feedback style that is streamlined, less subjective,  and more consistent. More and more, our clients are interested in evaluating their approach to employee engagement. This edition of Changing Times looks at early adopters and helpful practices for developing employees - and will give you tips to introduce change in your company culture - we’ll call it Feedback 4.0.  

Deloitte made a big announcement a few years ago. They would cease annual reviews and begin using a process that was fast, engaging, and easy to use. Their reasons were simple: they had counted performance management hours accumulated in a typical year and found they spent 2 million hours talking about employees - and that the discussions were too subjective to engage those employees in future goals.

After a systematic review of current science and of their organization, they came to a simple solution. Their new review would be completed by Team Leaders and team members directly involved with the employee’s projects. It has just four questions: 

  1. Given what I know of this person’s performance, and if it were my money, I would award this person the highest possible compensation increase and bonus.
  2. Given what I know of this person’s performance, I would always want him or her on my team.
  3. This person is at risk for low performance.
  4. This person is ready for promotion today.

Questions 1 and 2 are ranked on a 5-point scale from “strongly agree” to “strongly disagree” and were asked of both the team leader and team members. Questions 3 and 4 are answered simply “yes” or “no” were asked of the team leader alone.

Deloitte’s genius is threefold. First, the questions are easy and quick to answer, making the process much more accessible and nimble. Second, humans are more consistent with our opinions of ourselves than our opinions of others. By focusing on what the feedback provider would do with the employee, rather than what they think of the employee, they are more likely to make a reliable assessment. Third, the questions reframe the focus from past performance to future goals, allowing fluidity and real-time performance feedback. This is especially important for millennial workers, who have grown up with a near constant response to their work - at home, at school, and in their social lives.

“Our question now is not ‘What is the simplest view of you? but ‘What is the richest?

Adobe, Accenture, Microsoft, and Patagonia have also revamped their evaluation processes. When talking about previous annual performance review approaches, Adobe’s Head of HR, Donna Morris, offers: “It’s a process that looks in the rear view mirror, that’s focused on what you’ve done a year ago. That just isn’t current with how I think we’re working and how many of the employees that we’re looking to attract or grow have been raised.”  Millennials, who make up the largest cohort of the workforce today, are major drivers of this change toward more timely feedback. The stereotype that millennials want “participation medals” simply isn’t true - they want substance, and they want it regularly. They are willing to make changes, and to stay with a company who values and engages them - but they aren’t willing to wait a year to find out how they’re doing. That kind of change is good for everyone - because it’s easier to correct a course as you go rather than trying to move a titanic-sized problem once a year.

Even the perennial leadership organization GE has changed their legendary system.  Performance management at GE was often lauded and imitated but Susan Peters, GE’s VP of Human Resources, wanted to fix some glitches and achieve more, faster. The old system assigned employees a performance number which was used to compare them to peers. According to Forbes, this meant that on any team, even a near perfect one, there had to be clearly identified losers.”  GE wanted a system that looked forward, rather than back - and that could create change in real-time - so employers and customers could benefit from changes quickly. The new process, Peters explained, provides a contemporary, powerful way to accelerate your growth in real-time, strengthen our culture of meritocracy and customer intensity, and secure our position as the world’s premier digital industrial.” In short, real-time feedback leads to a better employee, customer, and shareholder outcome.

“The world isn’t really on an annual cycle anymore for anything. “It’s the way millennials are used to working and getting feedback, which is more frequent, faster, mobile-enabled.”

Susan Peters, Vice President of HR, GE

This trend is paying off.  A report from NeuroLeadership found that “among 27 companies that adopted continuous feedback systems, 100% said the quality of performance conversations improved, and 73% saw an increase in employee engagement.” These are numbers that companies of all shapes and sizes can’t afford to ignore.

You may be asking yourself - “That’s great, but I don’t have Deloitte’s research resources or GE’s tech team to build an app. How could I shake up my annual review process?” It’s true that these companies invested extensive time, money, and energy to develop new systems. It’s also true that, as with any big change, there is a learning curve. Patagonia noted that revamping their system took years of education and re-skilling - especially for the HR department. But the results speak for themselves: “The new [performance management] process has generated better financial performance, improved individual performance, and strengthened engagement,

Adopting these changes will differentiate you from other employers - when you want to attract new talent, and more importantly, retain it.

... the most constructive feedback traditionally was actually off-the-cuff feedback, mid-project. I’d say that the majority of my learning/growth from feedback was while working side by side with my supervisors on a deliverable.”

-James G., MBA candidate

What might a new feedback system look like in your organization? It is important to be clear that while the process of performance management is changing, the core content you’re using shouldn’t.  The precept that feedback should be timely, specific, and observable - has not gone out of fashion. To implement a Feedback 4.0 process in your team, department or company, look to several common threads in the plans of other business. Feedback 4.0 is fast - employees get coaching on the job -  usually as frequent check-ins. The agenda is current work and future goals. This way goals and results are fluid and easy to link with consumer or client needs. Companies that retain an annual review, coupled with this check-in process, find that employees are less surprised at “the big evaluation”, and conversations are less awkward - because performance has been discussed continually. Feedback 4.0 looks a lot like coaching and less like score keeping. It’s about how to do better the next time, and less about combing over the past.  Feedback 4.0 is also a partnership. An athlete shows up to practice with the correct gear and a willingness to work. The coach has prepared drills and scouted a good location. It is a perfect example of the mentor/mentee relationship. The person giving the feedback and the person being coached should be prepared with projects to discuss, numbers to review, and ideas to take development to the next level. In a continuous feedback model, the feedback provider and the feedback receiver can initiate discussion or bring items to the agenda. Lastly, Feedback 4.0 should be like a “consumer technology” - that is, designed to be simple, quick, and above all engaging to use” 

"It completely changes how employees feel about their jobs and opportunities. Feedback is now viewed as a gift.”

-Donna Morris, Senior Vice President of HR, Adobe

Employees don’t want to hear what they already know, nor do they want to be dramatically surprised. Perhaps that is why moving to frequent, short check-ins have led to reports of greater employee engagement. Adobe’s move, for example, led to a 30% decrease in the number of employees quitting and a 50% increase in involuntary departures.  Their success is evident because those who are staying are highly productive and more engaged. Those who aren’t working out “are dealt with more quickly and directly”. The new performance management process is a study in efficiency and intentional presence that will pay off - in better use of hours, higher morale, and improved employee performance and retention.

For more information, check out these articles from our archives: 

These practical tips will help you develop a coaching relationship.

A great list of easy ways to think about feedback, so that “Robert, can you step in my office?” doesn’t strike fear into the hearts of your employees.

To talk more about your unique needs, contact us.

We'll be releasing more on this subject soon, with tips on how to implement Feedback 4.0 in your organization.

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