March 3, 2017
Like many aspects of business today, performance evaluations seem ripe for the use of data. Human capital is a company’s greatest asset and likely its largest cost. Yet most companies still apply little rigor to measuring that capital—certainly compared to the way data is used in operational efficiency and customer-facing activities.
All of that is about to change. SSA and The Miles Group (TMG) are beginning to see real interest in applying analytics to people operations—opportunities to bring science and art together.
More data and a shift from formalized annual reviews to real-time models are revolutionizing performance evaluation. For example, GE has eliminated formal annual reviews for its 300,000 employees. A 2015 Harvard Business Review article reported that instead, managers and direct reports hold regular “touchpoints,” where they update priorities. Development is forward-looking and ongoing. Managers coach rather than critique, and suggestions can come from anyone.
TMG recently launched an app called lloop, which allows users to capture performance feedback “in the moment” when the employee behavior occurs. Once recorded, feedback can be organized into several categories, making it easy to analyze performance against specific development goals.
Organizations must also rethink the timing and frequency of performance evaluations. Companies like Adobe, which pioneered the “check-in” process, as well as Cigna, Gap, IBM, and SAP, have jettisoned annual performance reviews in favor of more fluid processes. Why would you look at your employees’ performance only once a year when you look at your company performance constantly?
Organizations must make better use of exhaust data in performance evaluations. Such data is collected for purposes other than the review but may have value in the review process. It could include:
In the emerging science of “people analytics,” companies are using time management and other data to measure and identify behaviors that correlate to success. Surveys, electronic calendars, and email behavior all can provide data that can be analyzed for trends over time to learn what actions have the most impact.
Examining a broad range of data can become particularly helpful in evaluating skills that might seem less measurable but prove essential to success. Horizontal leadership has become more important in modern, matrixed corporations; a 360-degree process would reveal progress against this opportunity, but so could the examination of calendar and email data to construct a relationship map. This data could be used to determine whether leaders change their behavior to address an opportunity and to help managers guide them toward the efforts that will have the greatest impact.
Google is one of the most public promoters of the use of employee data to drive better performance. In its quest to identify characteristics of the perfect team and best managers, its People Operations department scrutinized all kinds of employee data. Google found numerous insights, including that the most productive employees tend to build larger networks by rotating dining companions—data they wouldn’t have thought were a good indication of teamwork.
Changing the way an entire organization conducts performance evaluations is far from simple. Yet, performance reviews are no different from the many other business functions that are being disrupted by the use of data. Applying art and science to the performance evaluation process has the potential to make your talent development program more effective and your entire enterprise more successful.