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The annual manager-employee review process is so firmly entrenched at many organizations that it can be hard to imagine a different approach. Now with the rise of social performance management, many HR managers are evaluating their review processes through a new lens. But should performance reviews really be socialized?
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In his book The Crowdsourced Performance Review: How to Use the Power of Social Recognition to Transform Employee Performance, Eric Mosley, CEO of Globoforce Ltd., a vendor of cloud-based social recognition tools, breaks down the value proposition of implementing a social recognition program and incorporating peer-to-peer feedback into the review process. This Q&A with Mosley delves into some of the book's most important themes and offers valuable advice for HR managers interested in applying the "wisdom of crowds" to performance reviews.
What is a crowdsourced performance review?
Eric Mosley: In performance management, crowdsourcing is about bringing the community in by getting the input of all the people [a person] interacts with on a weekly basis and making sure that everyone has a voice. The main mechanism for that is social recognition programs, and they revolve around [people] nominating their colleagues for awards when they see great performance. By giving that [ability] to the workforce, you allow them to catalog everyone's performance over a long period of time and then management can incorporate that information into the performance management process.
What's wrong with the traditional performance review process? How can crowdsourcing help?
Mosley: What currently exists at the vast majority of companies is the annual performance review process, which has a lot of problems. It's somebody casting a subjective opinion of their subordinates' performance, meaning they're a single point of failure and if they don't do a good job, it can have long-term ramifications for the employee. Also, it's infrequent. It's a yearly mechanism, so it doesn't change with the changing business landscape.
There have been some false dawns in terms of new approaches. For example, the 360 form of traditional performance review [pushed] the single point of failure out to one or two other people who get involved. Also, HCM companies have Web-enabled the process to provide a more efficient way of execution. [But] these innovations haven't actually changed any of the problems.
[However], there are also some benefits. It's a compulsory process, whereas other forms of social feedback are not. So the fact that it's mandatory means that all employees are [accounted for]. Also, there are regulatory and governance issues. From a legal standpoint, large multinational public companies like to have some form of employee performance audit trail, especially where they might take action. The traditional review process gives them that.
Most organizations won't throw out the traditional performance review, but they get to fix problems associated with it by bringing more people's opinions to the table.
What role does technology play in crowdsourced performance management?
Mosley: With the advent of Facebook, Twitter and LinkedIn, the world has become more familiar with Web- and mobile-enabled tools for social interaction. So the crowdsourced performance review is enabled by the ease of using social tools to [provide] feedback. If you have an employee base that's familiar with mobile applications and social networking, it's much easier to mobilize them to give feedback quickly and frequently. That's the main benefit of technology in this area -- it makes it frictionless to get feedback into the system. Wherever you are, you can nominate your colleague for an award from your phone which gives a long-term record of that piece of performance.
But no matter how easy it is to get feedback into a system, a social performance management initiative won't be successful unless people actually use it. So how should organizations drive participation?
Mosley: Well, it is a project, and something that has to be taken seriously. Companies that achieve it best [make] it a high-profile project, have communications plans to advertise these programs, and have goals and a measure for adoption. If they don't hit those goals, they further invest in marketing until they do. The great news is once you hit a certain level of activity in a social recognition program, it becomes self-perpetuating.
In general, a social recognition program that gives awards that have dollar values attached to them tends to be successful because people value [those awards] and feel good about winning and giving them. In [that] environment, it's a lot easier to have mass adoption.
Is there a benchmark for how many people need to participate in a social recognition program to ensure success?
Mosley: You need to get around 80% of your organization participating, and the reason for that is if you want to get the voice of the crowd, it's not enough to interact with just a small percentage of the company. Ideally, you want everyone participating. One of the concepts of the book is applying the wisdom of crowds to performance reviews, and that [concept] says the more data inputs you get into a problem the closer you'll get to solving it, and ultimately, the closer you'll get to the actual truth. So you want to reach as many people as you can in the organization.
You spend a lot of time in the book talking about the link between performance management and corporate culture. What's the connection, and why is it important?
Mosley: A lot of management gurus today say having a high-performance culture is the Holy Grail for any company. When you have a high-performance culture, you outperform your competition because culture is a set of behavior norms, and it becomes apparent in your company that the normal behavior is high performance. Then you find that the company itself -- which is the aggregate contributions of all of the employees -- performs at an incredibly high level, which enables it to win in the marketplace.
Performance management is how you deliver culture -- you evaluate each individual on how they exhibit the values of the corporation. Where they do, you congratulate and reward, and where they don't, you encourage behavior along those value lines. When you do that across the organization, you should see your core values being exhibited many more times. So performance management is the front line in culture creation. The [output] of social recognition and crowdsourced performance management is really culture management.
Many young companies define their values and put them on a poster in the kitchen area. That does nothing -- an employee might read it and then forget about it. [But] if you're constantly evaluating people on how they exhibit values, they will conform or leave the company. Over time, the company evolves towards those values, and then you have the culture you want.
How should an organization get started with social recognition programs and crowdsourced performance management?
Mosley: The first thing is to look at how the total rewards budget is split amongst the different forms of payment, and make sure that some form of it comes from the people. Managers approve and give out bonuses and commissions, but you should always have some percentage that can come from the crowd. Then I would try to formalize a recognition culture. Most companies have recognition programs, but they're fragmented, locally driven or informal.
I would take an approach where I would say all of our informal recognition activities need to be shut down and replaced with a more structured program where we get maximum return on our investment. By doing that, you will create a database of performance history in the company which is concise and all-inclusive. Then you're halfway there: You have a payment structure and the recognition culture. Now add all of that input to your traditional performance review process.
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