It is every HR leader’s dream to build an organization where employees happily do their best work day in and day out without having a lot of “hand holding from management.”
Over the past few years, many organizations have done away with the traditional annual performance review in favor of real-time feedback. Rather than looking to the past, more organizations are putting in place mechanisms that focus on employees’ on-going growth and development.
Below, we’ll talk about some companies that have established creative alternatives to traditional performance reviews.
1. Amazon’s White Paper Process
When it comes to motivating employees, many HR leaders have talked about the importance of communicating the company’s mission, values and vision. The idea is employees will work harder and smarter if they feel a connection to a purpose that’s greater themselves.
Amazon has taken this a step further. They’ve decided that while principles and values are important, it’s just as important to establish the right mechanism to “nudge” people towards desired behaviors.
“Good intentions don’t work, but mechanisms do,” said their founder and CEO, Jeff Bezos.
One of the mechanisms they’ve developed is known as the white paper process, according to Beth Galetti, Amazon’s Sr. VP of WorldWide Human Resources.
To make decisions (when someone comes up with a new idea for a business or service), Amazon asks them to write a paper. As Beth Galetti explained in her interview with Gallup:
This paper outlines their reasoning and approach, anticipates and addresses tough questions, and states what else the person has considered and rejected in developing this suggestion, and even includes a draft press release that showcases the customer experience at launch.
When the document is developed, team members sit together to read the white paper. This happens before any further discussion begins — so that everyone understands the full perspective of the author and discussions are grounded on a common set of facts and assumptions.
By using this process, the author has to be disciplined in their thinking, consider the objections and how to overcome issues. This prevents people from falling in love with sub-par solutions. With this white paper process, Amazon has had an incredible track record of launching new products to success.
What’s really interesting is that the process isn’t just for making business decisions, it’s also a core part of Amazon’s pay increase/promotion process. It’s how the company ensures that one of their values — “constant learning” — is put into practice.
For many organizations, the way promotions are decided is based on the employee’s accomplishments and successes. But not the case at Amazon. When a manager is looking to promote someone, they are required to write a white paper that documents the employee’s successes, failures and how the person has grown in the process. The manager sponsoring the promotion needs to identify people who have worked closely with that employee, get specific feedback and incorporate it into the white paper.
According to Beth Galetti, Amazon’s review process “attempts to collect data on each individual employees’ superpowers and areas of strength.” The manager who is sponsoring a promotion must gather the “superpowers” for each individual employee as part of their peer and manager feedback, and request areas for growth for the employee to work on.
To make sure this feedback isn’t cumbersome to collect, they keep this process brief — 60 words or less each for the superpower and growth questions.
Related Resources: Creating an environment where employees receive regular performance feedback is a key part of retaining great people. The other part is making sure you’re compensating employees appropriately for their performance. For guidance on how to use your compensation plan to motivate high performance, check out these resources:
- Variable Pay Playbook (ebook)
- The pros and cons of using cash vs. non cash incentives (webinar)
- Using Compensation to Motivate Performance (ebook)
2. Google OKRs
Formal rankings had never been part of Google’s performance management philosophy. Instead, the company focuses on employee-goal-setting. KPCB’s John Doerr originally brought this style of goal setting, using objectives and key results (OKRs), to Google from Intel, when the VC fund invested in Google.
The idea behind the OKR, according to John Doerr, is that employees would have a “beacon or north star every quarter to help set their priorities,” and every employee would be able to see how their work is tied directly to the company’s goals.
What Are OKRs?
The “O” in OKRs are the Objectives that you want to accomplish; these should be aligned, supported by the organization and aspirational (e.g. not so easy to achieve). Key Results explain how you’ll get there. They should be measurable, limited in number and have a deadline. The way the OKR system works is that the company as a whole would set specific, measurable goals every quarter. Then, each team and individual would set their own goals which would focus on what they can do to help the company meet its goals.
According to Doerr, goal setting is important for businesses because they help the entire company focus; rather than listing 20 goals, through a disciplined process of writing and brainstorming, the group ultimately selects 3 to 5 goals it deems to be the most important ones to the success of the overall business for the upcoming quarter. Further, goal setting helps with accountability and coordination between teams.
Although goal setting is nothing new in the corporate world, Google has done a few things differently to ensure that OKRs were implemented successfully.
- Buy-in from everyone
According to Doerr, the entire company must have conviction around goal setting, meaning that everyone from the CEO to the junior developer have chosen to commit to it. At Google, OKRs were initially introduced to the entire company gathered in one room and immediately embraced by the leadership team.
- Assign someone to shepherd the process
Ensure that one person takes ownership for getting everyone on-boarded. This person is responsible for educating the team, tracking and grading progress and making the necessary tweaks to the implementation. This can be the COO, Head of Human Resources, an engineering leader, or anyone else on the leadership team.
- Set measurable goals
Google’s OKRs are quantifiable; they use measurable targets (e.g. shipping a certain number of products or hitting a release schedule). However, OKRs are considered, tracking is part of the accountability piece.
- Make it part of the corporate DNA
OKRs, whether at the corporate level or the individual level, should be visible throughout the company. New employees at Google receive formal training on the OKR system.
- Do not tie OKR goals to bonus payments.
At Google, OKRs are not tied to bonus payments, except for sales quotas. They chose this because they wanted to “build a bold, risk-taking culture.”
Here’s a detailed guide from Google on how to set goals with OKRs.
3. Netflix: “Context, not Control.”
Netflix believes that employees are fully-formed adults who can handle anything as long as they’re told the truth. Part of this philosophy is that employees don’t need to be told what to do; they can make sound decisions on their own when they have the full context. When setting goals, managers should make their employees aware of the organization’s overall goals, the relative priority of the goals, key stakeholders and the definition of success.
On performance, according to Patty McCord, co-author of the Netflix culture doc, in an interview with Harvard Business Review, explained that Netflix believes that regular, candid conversations about performance are best:
If you talk simply and honestly about performance on a regular basis, you can get good results — probably better ones than a company that grades everyone on a five-point scale.”
4. Give employees software to facilitate year-round feedback
Many companies, including Google, Hubspot and Facebook, have placed great emphasis on peer reviews and they’ve given employees social software to help facilitate the process. For example, Facebook has given employees access to software that allows staff to “recognize, acknowledge and show appreciation for people who have done great work,” and “ensure that each person is getting feedback from all the colleagues they work with most regularly,” according to its VP of People Lori Goler.
Tell us what you think
Has your company revamped your performance management process? What are you doing differently? How is it working? Share your experience with us below.