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Are the days of the annual performance review numbered?

By | July 5, 2012, 3:00 AM PDT

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

About Heather Clancy

Heather Clancy is a contributing editor for SmartPlanet.

Heather Clancy

Heather Clancy

Contributing 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.

Heather Clancy

Heather Clancy

I am fascinated about how businesses of all sizes can transform their operations through technology -- not just to make themselves more efficient, but to rise above their competitors. That's the theme for my two ZDNet blogs, Small Business Matters and Next-Gen Partner. For SmartPlanet, I'm focused on profiling inspirational and controversial business leaders who have great leadership lessons to share. I also write regularly and passionately about corporate social responsibility and sustainability issues for GreenBiz.com.

Occasionally, I will pop up at an industry conference in some sort of speaking capacity. In cases where an engagement involves a sponsor that may be covered in this blog, that fact will be disclosed in coverage as appropriate.

My corporate writing work usually consists of crafting research white papers about some aspect of technology or moderating Webcasts. In the event that my commentary (in written, audio or video form) mentions a company for which I have provided consulting advice, I will disclose that fact. However, there is no connection between these projects and topics that I cover in my blogs.

She writes for SmartPlanet and is not an employee of CBS.

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+2 Votes
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This is close to how my employer works.
It is good to see the software catching up to companies needs.

This is also why 3 attempts to unionize our shop have failed. Good employees thrive while the bad do not last.

The reality is this flavor of a system is impossible to do in a union shop where bad workers are protected and mediocrity is rewarded with the same pay raises as hard work.

The adversarial nature of union contracts also prohibit this kind of one on one employee/boss communication.

Everything discussed between and employee and a boss must go through the union. The employees sign away their rights to self representation the moment they join a union.
Posted by Hates Idiots
5th Jul
0 Votes
+ -
I always hated those things
My supervisor would make us fill them out ourselves and send them to him. Then he would modify the numbers slightly (usually downward). It was an exercise in futility. I'm no longer in IT and I don't know how my current employer does such things yet (only been with them 3 months).
Posted by mudpuppy1
7th Jul
0 Votes
+ -
Always suspected that something was wrong about this practice
I worked for 8 years in a supposedly advanced and humane company. A company that most of you would say "wow! you worked there?". At first it was all honey. But when came the issue of performance evaluation they were more archaic than a 1950 business in terms of treating their employees. And the worst part of that they keep improving the methodology, adapting the technology and forced this nonsensitive way into us by way of seminars and meetings trying to convince us that it was the best thing for us all. It went on until one day i said to the head of HR "The day that you will switch from a way to managing human resources to a human way to manage resources you will enter in the 21st century. Your staff will be happy and the perception of performance will be altered for the good of all"
Of course they said.... wow what a bright idea! ... but hierarchy is immovable, i died as a worker preserving my human nature and retired.
Posted by Jsynette
13th Jul
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