How remote and hybrid work broke performance reviews.

BY DAVID MURRAY

The swing to remote and hybrid work demands a new approach to the employee-performance review, says this founder of an HR tech startup.

There is a theory called “Dunbar’s number” that the maximum number of people we can really know or relationships we can really manage is 150.

Executives know when it comes to running a high-functioning business, they need to foster keystone people and manage out anyone who isn’t working out. To do that, they need to really know the people who work at their company. In an office, proximity can give them a good sense of that—they see who’s going to meetings, who’s got people stopping by their desk, and who gets chatted up at the water cooler. So, according to Dunbar’s number, that means that up until a company reaches roughly 150 employees, in an in-person workplace, the executives probably have a decent grasp on who everyone is, roughly what they do, and how they’re performing.

But when a company moves to remote or hybrid work, CEOs and other executives lose that peripheral vision—they only see who they’re actively in meetings with. And that Dunbar’s number shrinks; some theorize it changes to about 50.

With remote and hybrid work, it becomes very difficult for executives to really know all of their employees well enough to become the sole source of information on their performance and contribution to the company. And, unfortunately, most traditional performance reviews take a top-down, hierarchical approach, where feedback on performance is based on a single manager’s opinion and, possibly, cherry-picked 360 peer reviews (input from colleagues, peers, underlings, etc).

Post pandemic, we work in an even more network-driven way. Most employees in remote and hybrid workplaces collaborate across teams, not just with a direct manager, and are going to their peers for help and advice. Remote and hybrid work also eliminated watercooler talk and “management by walking around.” Many conversations that used to happen in the open now happen in closed point-to-point channels like Slack and Zoom, making it more difficult for managers to be aware of every touchpoint and contribution their employee is making.

This new way of work robs managers of the clues they may have used to assess employee performance—like noticing how early an employee comes in or how late they stay, if they’re engaging in meetings or having watercooler conversations, or if they are socializing at their desks. This sort of peripheral vision that managers have had has been lost—and honestly, that’s a good thing. Because time in the office doesn’t equate to output, sometimes watercooler conversations are more productive than meetings, and sometimes that employee who always has people coming by their desk to chitchat is actually enabling their coworkers with important expertise and institutional knowledge.

Traditional performance reviews, even with a 360 peer assessment, don’t capture all of this critical information and insight into an individual employee’s performance and impact in the organization. In fact, 360s can just create more noise—reviewers are often cherry picked by employees to be coworkers who likely will give them favorable reviews, thereby diluting any critical feedback. With many more qualitative inputs (long text reviews from peers), it becomes even more laborious and time consuming to understand not only how the individual is performing, but also how they compare to others. Suddenly, instead of comparing apples to apples, you’re comparing orchards to orchards. All of this noise can create confusion about who is actually driving value for the organization and who is creating drag. The outcome: Nearly everyone can think of a colleague who managed their way up into an underserved promotion or a stellar colleague who was overlooked or even managed out.

ORGANIZATIONAL NETWORK ANALYSIS

What is needed is a completely new approach to employee reviews that accounts for this network model. Thankfully, one has existed for decades in academia. It’s called Organizational Network Analysis (ONA), in which every person at your company is asked questions like who they go to for help and advice, who they see as an outstanding contributor, and who they have concerns about, and why. In this way, any person at your company can review anyone else, briefly, and that review can be positive or negative.

ONA is a data-driven approach to reviews in which manager reviews are augmented by feedback from the network, ensuring that what wouldn’t have been revealed otherwise about each person is revealed to those who need to see it to make critical talent decisions.

We are working in a new world since COVID-19, and companies with remote and hybrid employees need to face the reality that traditional performance reviews don’t match how we currently work. This means removing the bias from performance reviews, making them more accurate, and taking into account that the new way of working now is often remote, or at least hybrid, for most employees.

With the current labor shortage since the pandemic, it’s also important that executives don’t fire or overlook someone who is really key to the organization—this insight can all be captured with better performance reviews. This important piece on letting go of the bell curve talks about the 80/20 rule and the idea that a small number of people at an organization typically account for the most impact, making it even more critical to retain those high performers and identify any that may be a flight risk.

There are a lot of opinions on how remote and hybrid work can affect productivity, culture, and engagement in the new workplace, but we think that it can at least be an impetus to change performance reviews for the better.

Source: Fast Company