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Are the days of the annual performance review numbered?

Are the days of the annual performance review numbered?

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Salesforce Rypple cofounder Daniel Debow wants to turn employee performance management into an ongoing, collaborative social process.

Most managers would buy into the idea that performance feedback, mentorship and collaborative goal-setting are the essence of their role. Yet, the applications and platforms available to manage this process tend to be rigid and centered on annual performance reviews. The process can wind up being a huge time-suck, in effect shutting down a company while its managers scramble to fill out lots of paperwork.

Human resources software visionary and Workbrain cofounder Daniel Debow has spent more than a decade re-imagining that process. His latest venture, Rypple, cofounded with long-timer business partner David Stein, was created with the idea that performance management should be far more social and ongoing. Among the companies that have embraced its approach: Mozilla, Facebook, LinkedIn, Living Social, Spotify and GE Finance. Oh, and Salesforce.com, which acquired Rypple in December 2011 to become part of its social business software portfolio.

Why is performance management such a big issue right now?

Daniel Debow: Performance management is one of the oldest, most entrenched and, frankly, most hated processes in business. For 50 years, companies have been relying on it to assess and manage the performance of employees. And yet, over time, this process has become completely divorced from impacting the way that companies actually get performance. In particular, the annual performance review is a great example. Rather than being a tool that managers view as helpful and useful to give feedback as to how people can improve, the annual performance review has become one of the most painful things that managers and employees have to do. It sucks enormous productivity. It became this really compliance-, process-driven way for HR to justify and explain pay and promotion, and termination decisions.

What makes the social approach different?

I think it is more aligned with the reality of how people actually work. The way that we work has changed in the 50 years since we invented this performance management review process. People are much more social at work. They are collaborating more and they are much less hierarchical in terms of getting things done. They are real time in terms of having more information and more ability. This has changed people's expectations of what work should be. The problem we have is that the tools we have were designed for another age. They are basically paper forms automated by software.

How does social performance management work?

The behaviors that social performance management encourages are goal-setting and making sure those goals stay up to date; coaching face to face, making it really easy to schedule and keep track of face-to-face one-on-one meetings; recognition in real time, so that when people do good work, anyone can send them a Rypple, send them recognition; and feedback, making it easy for people to gather their own feedback, to send feedback about peers, to share feedback that they have gotten. And to the extent that companies want to run a formal performance review process, Rypple also enables that.

What benefit can companies expect from using Rypple?

Traditionally, HR performance has been sold on the benefits of compliance and legal and process acceleration. That's important, but our core vision and why we are part of Salesforce is we want to help people work better together so they can sell better together, increase revenue. We can market better together, more leads. They can build their products better together [be] more innovative. They can better support customers [for] higher customer satisfaction. Those are the results that we are trying to drive with this. … It takes less time to do a performance cycle and as I mentioned earlier, you want your people to be out there selling, marketing, building and supporting, you don't want them writing essays about each other. It also is directly linked to the behaviors we know increase retention and engagement of employees at work.

This really represents a totally new approach to performance management. How can companies ensure buy-in?

Change always requires some effort. Rypple and any software is not magic. There has to be buy-in, there has to be people believing in this. But I think there are things we designed from day one that dramatically change our chances of success. Let's start with the first thing which is that it is usable. It is simple and delightful and easy. If you know how to use Facebook and LinkedIn, within five minutes you know how to use Rypple.

Number two, it is directly hitting on pain points that engagement survey upon engagement survey are telling HR and senior executives are an issue. You can go to any company and [the refrains] are the same: 'I don't get enough feedback at work', 'I'm not being recognized for my job', 'I'm not feeling aligned with the main mission and goal', 'I don't know why what I'm doing matters'. When we implement Rypple, we can very clearly say to the people in the organization, 'We heard you'.

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Heather Clancy

Section Editor

Heather Clancy has written for United Press International, ZDNet, Entrepreneur, Fortune Small Business, the International Herald Tribune and the New York Times. She holds a degree from McGill University. She is based in New Jersey. Follow her on Twitter. Disclosure