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How is Performance Management in the best IT companies

Each leader is faced with questions: 

  • How to increase team productivity in order to do one and a half times more at the same time? 
  • How to motivate people to burn with their work?
  • How can a valuable employee recognize weaknesses and give him a developing feedback?
  • How to objectively evaluate who should be raised, raise salaries and award a prize, and who should find a replacement?

Everyone has personal recipes, but how do the most successful IT companies approach solving these problems? Having asked this question, I studied the practices of Google / Microsoft / Adobe / Netflix / Intel.

All in one form or another have 4 components:

  • Culture Fit Evaluation (eg Googleness / Netflix culture code)
  • OKR (objectives and key results)
  • Peer review
  • Performance review

Let's consider them in more detail.

Assessment of compliance with cultural values ​​(Culture Fit)


How much people follow the values ​​of the company How he achieves his goals. This is something that is not always easy to describe, but easy to recognize in a person. For example: strategic thinking, openness in communication, curiosity, courage in decision-making, passion for one’s business, integrity, focus on results. Laszlo Bock, senior vice president of People Operations at Google, describes it this way:
Such qualities as love to have fun (and who does not love?), A certain level of intellectual modesty (it’s hard to study if you can’t admit that you may be wrong), a high level of consciousness (we are waiting for co-owners, not performers), comfort with uncertainty (we don’t know how our business will change) and confirmation that you have chosen several bold or interesting ways in your life.
Here are more detailed descriptions of the cultural values ​​of Google , Netflix , Amazon .

Objectives and Key Results (OKR)


OKR (objectives and key results) - a system for setting measurable goals within a company. This concept was first described by Andy Grove, Intel CEO. Larry Page, co-founder of Google, said OKR has helped them grow tenfold more than once. Inspired by the success of Google, the system also began to use Linkedin, Twitter, Gett and Uber.

The objective of OKR is to combine the global goals of the company with the team / personal goals of each employee.

Key Features:

  • goal must be measurable;
  • short planning cycles (month / quarter / year);
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(Peer Review)


At this step, the employee receives a comprehensive assessment from several sources: team members, the head, subordinates, employees of other departments. This helps to increase the objectivity of the assessment compared to the approach when the employee is evaluated only by the immediate supervisor.

The well-known tool is Overview 360. According to Forbes, more than 85% of Fortune 500 companies use it.

Performance Review


The final step. Here, the data collected in the previous stages is analyzed, and based on them, an assessment is made. Further, the employee is given feedback and decisions are made on remuneration.

How does it work on Google?


Consider the Performance Review process with a case study from Google.

It consists of 4 stages:

  • self assessment
  • 360 degree rating (Overview 360 degrees);
  • calibration
  • presentation of results (Outputs).

Self evaluation


The employee evaluates himself according to six criteria (on a five-point scale from “I never show” to “I always show”, with a proposal to share examples that confirm these estimates). Further, according to the same criteria, colleagues will evaluate it.

  1. Googleyness  - Compliance with Google values. This is the main component along the How axis.
  2. Problem solving  - analytical skills used in work situations.
  3. Efficiency, autonomy  - the ability to perform quality work without the need for frequent monitoring by management and colleagues.
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Further, the evaluated employee briefly describes his projects and achievements over the past year (the essence, the size of the text field is limited to 512 characters). This description will be further transmitted to the reviewers in order to evaluate the contribution of the employee to each item.

360 degree rating (Overview 360)


At this stage, it is important to choose the right people to conduct the assessment. The employee himself offers a shortlist, which is discussed and validated with the leader. It takes into account how closely evaluated and potential reviewers interacted on projects and how well this or that reviewer will be able to give an objective assessment. The following is required from reviewers:

  • note the strengths of the assessed;
  • mark the parties that need to be worked on;
  • give an assessment for each of the 6 points from the self-evaluation stage;
  • assess the degree of contribution to those projects that the assessed employee himself indicated at the previous stage.

This approach replaced the multi-page form that was originally used, which led to a reduction in the average time for this stage by more than 25%. Plus, the share of participants increased (from 49% to 75%) who found this stage useful.

Calibration


After collecting the results of self-assessment, peer reviews and achievements on OKR, managers prepare a draft rating, having a scale:

  • needs to be improved;
  • meets expectations;
  • exceeds expectations;
  • far exceeds expectations;
  • excellent.

Then the calibration process begins. As Laszlo Bock describes this process:

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If in the process of calibration too “harsh” managers are identified, then a discount is made on their assessment (also relevant for too “soft” ones).

Presentation of results (Outputs)


After the assessment is finalized, the leaders hold two meetings with each employee: one to provide feedback, the second to discuss salary increases, bonuses and promotions. These two conversations are separated into different meetings with a break of at least a month.
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The Google approach has drawbacks: collecting, processing, announcing the results is a rather time-consuming process (in large companies it takes thousands of hours every year). Because of this, doing it more than once a year is quite problematic. At the same time, giving feedback to an employee once a year is too rare. Therefore, in many companies (for example, Amazon, Adobe, Deloitte) there is a tendency to reduce the number of questions, making this process as simple and flexible as possible so that you can collect feedback directly on the fly.

For example, in Deloitte, instead of conducting a review once a year, after each completed project, the manager answers 4 questions for each employee:

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At the exit, each employee has clear / measurable goals; the criteria are transparent to him by which he will be evaluated by his colleagues and manager. He knows about his weaknesses to work on. He is motivated by high productivity, as he understands that the results of his work are directly correlated with evaluation and reward. The team has a sense of fairness of financial rewards and career promotions. 

Of course, Performance Review has its drawbacks. Even in the best companies, a significant proportion of employees (more than 25%) are dissatisfied with the rating system. But it is better to have an imperfect system than not to have it at all. It is important to get strong support from senior management, analyze the results and constantly look for ways to improve this system.

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