“The reality is, even when companies get rid of performance evaluations, ratings still exist. Employees just can’t see them. Ratings are done subjectively, behind the scenes, and without input from the people being evaluated,” wrote Lori Goler, head of people, Janell Gale, head of HR business partners, and consultant Adam Grant, all from Facebook at Harvard Business Review.
At Facebook, they said, a survey conducted within the organisation showed that “87% of people wanted to keep performance ratings”.
They cited three reasons why they decided to hang onto the performance evaluation: “fairness, transparency, and development”.
Keeping it fair
“A fair process exists when evaluators are credible and motivated to get it right, and employees have a voice,” they said.
At Facebook, the system begins with peer evaluations that employees can show their colleagues and share with managers, who then sit down with the employee and discuss their report.
When managers write the performance review, a team of analysts evaluate the data to examine biases e.g. “are words like abrasive used more often to describe women – and how might that be affecting their assessments, their promotions, their pay?”
These ratings are then translated to compensation through a formula, they said, with managers not having any say in compensation decisions whatsoever.
“This focuses managers on what they can accurately assess and allows the company to manage pay using compensation expertise.”
Transparency is key
By being upfront and transparent about an employee’s performance, the authors said organisations are able to help them understand how their work and contributions affect the company.
They also advocated for the use of a ‘global rating’, an overall look at how well or not an employee is doing within the organisation and given after providing them with micro assessments.
One Facebook employee said that ratings serve as a punctuation mark, because they’re clear, the authors noted.
“Performance evaluations allow for an overall assessment that helps people prioritise,” they said.
Evaluations help employees identify their key strengths and allows them to develop their weak areas. It also serves as a “forcing function to make sure that tough feedback is delivered rather than swept under the rug,” they said.
Ultimately, they said that what they are trying to build at Facebook is a culture where employees and managers “approach ratings with curiosity and a learning orientation,” they concluded.
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Many organisations have done away with performance evaluations thinking it brings down staff morale but HR leaders at Facebook say evaluations are a necessary part of the business and even if companies abolish its formal practice, ratings still exist.