Arguably nothing elicits more of a collective groan at work than performance review season. Managers hate giving them. Employees theoretically want them, but dread receiving them. It's as clear how much time and effort they take as it is unclear how useful formal performance reviews actually are in measuring and evaluating performance.
It's an arena ripe for disruption.
A flurry of startups are attempting just that and raising a lot of money in the process.
Global year-to-date VC investment into HR tech is approaching $12 billion, according to an August report from WorkTech. One leading HR software company, Lattice, just announced its expansion to Europe and an investment of $110 million in the UK. Other more nascent startups like ChartHop and OnLoop are attracting millions from top-tier investors.
So what's wrong with performance reviews?
Performance reviews are performed by people, and "people are biased," said Dr. Evelyn Carter, a managing director at Paradigm, a San-Francisco-based strategy firm that works with tech companies on their DEI goals.
One example is what Dr. Carter refers to as the "prove it again" trap: Research shows that marginalized groups like women and people of color tend to be evaluated on the results they deliver — can they "prove it again?" — while dominant groups are evaluated based on pure potential.
So how are these new HR tools attempting to make performance reviews suck less, and how can managers circumvent their own biases?
Establish a consistent set of metrics by which to evaluate people.
And make sure they're tailored to the job and level. You don't necessarily want to judge an engineer by the same standards as an operations person, said Carter.
Having clear metrics for evaluating success also helps people see what they need to do to get promoted, according to Lattice CEO and Co-Founder Jack Altman. Lattice, for example, has a section called "Competencies," which allows companies to articulate the expectations of each role, as well as the skills required for promotion. Those competencies are then pulled into the performance review form, and managers can rate how well the employee has fulfilled each one.
Up the cadence of reviews. Take notes all the time.
The biggest problem with traditional performance reviews is how infrequently they happen, which can introduce recency bias, according to Ian White, founder and CEO/CTO of ChartHop, an org chart startup that has a performance review component.
Most HR experts today recommend shifting from the annual review cycle to at least twice a year, or even quarterly. And they suggest supplementing those reviews with weekly one-on-one meetings to go over goals and feedback. That way, managers can keep regular tabs on how their reports are doing, rather than relying on memory to write a review once a year.
Taking the stress out of writing performance reviews is a major premise of OnLoop, a new mobile-first performance review app that aims to make the "data collection process more bite-sized and approachable," according to CEO and Co-Founder Projjal Ghatak.
OnLoop users are encouraged to evaluate team members once a week using "captures" in three potential categories: "celebrate," "improve" or "goal." One of the biggest issues with giving feedback, said Ghatak, is finding the language to describe a person or encounter, which OnLoop bypasses by prompting users to select relevant "tags" to input in each capture, like "growth mindset," "authentic self" or "subject matter expertise."
Collect feedback and data points from all directions, and automate it.
Remember the pain of writing extemporaneously about someone once a year with no other context? Another way to counter that, according to Altman, is through clever Slack integrations. Lattice can take compliments from a company's existing #praise channel, for example, and automatically feed them to its platform, adding another point of reference for managers while they're writing their reviews.
Lattice isn't the only company dabbling in off-platform integrations to streamline performance reviews. Betterworks, a performance-management system focused on OKRs and goals, has an even more literal feature that integrates project-management tools like Asana or Jira into an employee's "performance snapshot."
For example, a marketing manager might have an objective of revamping a website, which might be measured in a series of assigned Asana tickets or tasks. When that employee completes one ticket out of 10, that objective would display a 10% completion on Betterworks, explained Dennis Villahermosa, the company's senior director of product marketing.
Consider performance ratings. Or don't. They're controversial.
Having objective criteria by which to evaluate people as well as a rubric for what success looks like in each role is important from a company inclusion perspective, according to most DEI experts.
Having that numeric score also allows companies to compare performance ratings across the board and analyze them for potential areas of bias. For example, if more female employees received lower ratings across a department than male employees, perhaps there's an issue there, explained White.
Some companies, like Zenefits, are moving away from issuing ratings. "Where ratings get tricky is they end up being opinionated and subjective even in all of that effort to try to avoid being subjective," said Zenefits' VP of People Operations Danny Speros.
Most agree that the worst thing to do is to give stack rankings, pitting employees against each other as Microsoft notoriously used to do.
Actually use performance reviews to help make promotion and raise decisions fair.
Doing that is easier said than done, especially when your performance review platform isn't integrated into the rest of your HR management systems. Integrating these systems is ChartHop's whole selling point.
The platform allows executives to "slice and dice" their employee data and compare performance ratings against compensation and promotion data, which allows for more agility and continuous planning, according to White. If a person has three outstanding performance ratings in a row but hasn't received a raise in that same period, maybe they deserve a bigger equity refresh, he explained.
Do you want AI to get involved? Maybe.
At the end of the day, managers are still responsible for writing summaries of how their direct reports are doing and aligning with their goals. Or are they? OnLoop's loftiest goal is trying to simplify that process by integrating all the captures — the kudos, the constructive feedback, the self-reflections — into an AI-generated natural language summary that managers can then use to write their employee reviews.
They're not alone. Part of Betterworks' future plan also includes developing "intelligence engines" that would make suggestions to managers informed by performance data, said Villahermosa.
Time will tell how smart HR technology has the potential to be, or how smart users want it to be. What's clear is that, as with all AI systems, if the humans that create the tool are biased, the tool may very well end up biased too.
In other words: Managers, it's still on you.
