Four Companies that Reinvented their Employees Performance Reviews
By: Dona DeZube
Companies of all sizes and across industries are successfully replacing their employee performance reviews with more frequent results-oriented conversations. These four firms tackled the challenge of engaging employees with aplomb:
United Shore: Large Mortgage Lender Augments Annual Reviews with 1:1 Meetings
United Shore Financial Services, a Troy, Michigan wholesale mortgage lender, shows you can improve employee performance by scheduling more frequent opportunities for employee feedback, even if you retain annual reviews.
About two years ago, the company implemented YourTime -- an in-house program that schedules one-on-one meetings between the company’s 2,000 team members and their direct leaders.
Each month, the system prompts team members to log in and submit three topics to discuss. “It can be anything,” says United Shore Communication Strategist Brad Pettiford. “Opportunities to take on additional responsibility, how to advance their career, the big football game this weekend, etc.”
After going over the team member’s topics, the leader covers the employee’s performance strengths and opportunities for improvement.
In the two years since implementing the system, United Shore has seen a 20% increase in internal ratings it collects to gauge the strength of client service relationships and a 25% increase in external ratings. The only ongoing cost associated with the program is the time spent in the meetings, Pettiford says.
North 6th Agency: Small Firm Develops an In-House Program
North 6th Agency, Inc. (N6A), a 43-person New York PR firm, built an incredibly robust performance review system five years ago to take the ambiguity out of the review process. The system creates key performance indicators (KPIs) for each employee based on their roles in the organization and customer satisfaction ratings from clients.
“Staff members have their own portal to get their KPIs and can customize their own analysis,” says CEO Matt Rizzetta. “You can see how your performance ranks compared to others at your level, what the trend line looks like.”
The gamification angle allows employees to see how they’re doing compared to the top performer (but not any particular co-worker).
Managers use the system when they conduct monthly employee performance assessments about strengths, achievements and areas to improve. It even determines who wins awards, earns perks, and get expedited salary reviews. For annual reviews, the system rolls up 12 months of data.
Rizzetta says the $100,000 price tag to create the system was well worth it for two reasons. First, performance has improved across the company. “The average rank today is 30% higher than where it was when we started using it five years ago.”
Second, N6A uses the system’s transparency as a selling point when clients ask how the agency measures success.
Llamasoft: Growing Software Firm Surprised by Pushback
As a young supply chain software company driven by innovation and creativity, LLamasoft decided more frequent performance conversations would better support the company’s pace of change.
After looking at the options for off-the-shelf software, LLamasoft Vice President of Employee Success Craig Wigley opted to use a platform built on what neuroscience says about how we learn and what engages us.
It took Llamasoft about three months to prepare its 400 employees for the new performance management system. Wigley was surprised by the pushback he got from managers who worried that moving from once-a-year to once-a-month performance conversations would take too much time and effort.
He sold the system as a way for employees to improve their management skills. “Being better leaders requires more time with employees, more goal setting, more touch points, and more coaching,” he told his managers. “The trade-off is we provide this piece of software that will make it easy.”
He advises HR pros who plan to implement a similar program to expect to continue communicating with managers well past the start date.
“You can’t over-communicate this stuff,” he says. “Once you get the system out there, follow up and communication will keep momentum going and drive adoption in the weeks and months immediately after the launch.”
Udemy: Global Firm Democratizes Feedback
Udemy is a global marketplace for learning and teaching online with 20,000 instructors who teach over 45,000 online courses. Their aim was to democratize feedback two years ago when the company shifted from annual performance reviews to “Udemy Conversation,” a real-time feedback system with a goal-setting focus.
“It’s less about improving weaknesses and more about developing strengths,” says Gelena Sachs, Udemy's Director of People Operations. Using data from a 360 feedback tool that costs less than $10 per employee per month, managers and employees discuss opportunities for growth and learning and how those could lead to new projects over the next six months to a year.
Sachs says it’s not the tool that makes the program successful; she’s run effective performance feedback systems using only a spreadsheet and a list of questions to help managers generate feedback.
What makes the Udemy program work well is having a company culture that supports feedback. “A lot of it comes from driving and training employees on what it means to be authentic when delivering feedback, how to receive feedback; how to just listen, absorb, and appreciate the feedback and what I can take from it that helps me in the long run,” she says.
Sachs points to a 100% completion rate as evidence the Udemy Conversation program works. In prior positions, she dealt with old-school annual performance review systems that managers and employees dreaded.
“We were lucky if we got 60% completion rates,” Sachs says. “When you give people a framework on how to communicate feedback effectively, that’s where the magic happens. It’s transparent and effective.”