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Boosting the performance of performance reviews

Daniel Debow and David Stein have accomplished something remarkable: Harnessing the power of social media, they have resuscitated the moribund chore of employee evaluation, turning the dreary corporate performance review into a dynamic, interactive experience.

They have been so successful, in fact, that when social networking giant Facebook Inc. recently decided to update its performance-review process, it turned to Messrs. Debow and Stein's Toronto-based startup, Rypple. The three-year-old company specializes in creating software tools for workplaces that use the principles of social media and online collaboration to provide real-time feedback.

The reasons for Facebook's choice were both straightforward and complex. As has happened at many other young companies, executives at Facebook decided that traditional styles of performance reviews were ill-suited to its employees. Workplace experts who study the annual ritual view it as a time-consuming relic of a bygone era, one that has been tweaked awkwardly with only slight technological modifications.

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Rypple's software uses a Facebook-style interface; managers can "like" tasks, reward employees with badges, ask for feedback (anonymously or not) and monitor goals and tasks set by employees and supervisors. Not surprisingly, this system appealed to Facebook's employees. (And perhaps also not surprisingly, one of Rypple's big investors is Peter Thiel, co-founder of PayPal and an early investor in Facebook.)

Managerial tools such as Rypple's – and there are several such products on the market – speak to the way online innovation has changed how people interact in a wide spectrum of activities. Yet simple but powerful high-tech features such as smart-phone applications that let you know where your friends are, and what they're doing in real time, are woefully absent from most workplaces. They could be a powerful antidote to the often mind-numbing drudgery of performance reviews.

"The performance review was invented … around the post-war era, and everything since then has just been an improvement, or a minor change, on it," Mr. Debow said. "We thought that's a problem. We wanted to ... build a business that created the next generation of performance [review] that said, 'How do we make something that actually feels like the way we work today?' Something that's collaborative, social."

Social collaboration can be particularly appealing to so-called Generation Y workers, who are used to real-time interaction through computers and smart phones and for whom an annual review might seem as anachronistic as casual workplace drinking.

Many older workers also find the traditional review process dull and pointless. Whether a person prefers an updated assessment system such as Rypple's is less a question of age than attitude, Mr. Debow said.

Get Satisfaction is a technology startup in San Francisco that is currently starting to use Rypple's software. Office manager Colleen McGarry said traditional performance reviews are less-than-popular with younger employees. "Nobody ever wants to do it. Nobody ever wants to talk about it," she said, adding: "The language is so sterile, so stuffy."

After surveying workers who were leaving Get Satisfaction, she realized the disconnect was serious: Young staff were leaving in part because they were enthusiastic but felt lost – they were willing to pitch in and be productive, but they were not being properly managed.

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"We have a lot of younger to mid-level employees who are really looking to grow and are motivated and intelligent and curious, and just need to figure out how," Ms. McGarry said. "We're hoping Rypple will help spell that out."

Her company's experience reflects many studies which show that younger workers prefer a process closer to ongoing coaching than traditional performance management.

"As a concept, the notion of an annual review is completely antiquated – that's the starting point," said Lauren Rikleen, a lawyer and executive in residence at the Boston College Center for Work & Family. "It's not only once a year, it's poorly done once a year … The [real issue]is, where do you go from there to provide effective, quicker feedback?"

On a laptop in a boardroom at Rypple's office, Mr. Debow demonstrates the software, showing how he and his co-managers can offer feedback on, or reward, any particular employee at any time and in various ways. The company's newest program, called Loops, can then aggregate the information, which can be accorded varying states of privacy (either public to all employees, like a Facebook wall, or private).

While the software application is impressive, it does raise questions about whether busy managers would be able to find the time to maintain the network, which requires a constant flow of information, goals, badges and praise. The tool could quickly fade into irrelevance if not used properly.

Mr. Debow acknowledges that Rypple's software isn't for all workplaces; its customers are mainly younger, tech-savvy companies such as Mozilla and Facebook. The system "isn't magic," he added, and it won't turn bad managers with little time for their staff into good managers.

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But it does provide a tool to help engaged bosses manage their staff, in real time, in a way that might be more familiar, and more productive, than a stilted annual review. "If I talk about your skills in six months," Mr. Debow said, "I have no ability to impact your performance today."

The annual review is ingrained and resistant to radical change, however, and for some that's a good thing. Experts say traditional performance reviews can still be helpful both for managers, who use them to assess and promote staff; and employees, who can use certain formal benchmarks as bargaining chips for pay raises and to improve their work.

Anil Verma, a professor of industrial relations and human resources at the University of Toronto, said formal evaluations are key for setting goals, assessing performance, and face-to-face mentoring. He said that generational differences are less important than one might think, and that the process should change gradually.

"Social media can help in engaging people more, and mobilizing resources," Prof. Verma said. But "performance is more of an individual thing," he added. "I see them more as complementary systems as opposed to one supplanting the other."


Getting engaged

Studies have found that employees who are engaged with their work:

– are more productive

– are less stressed

– take fewer sick days

– stay with their companies longer

– create better relationships with customers

Source: The Sloan Center on Aging & Work at Boston College

From emperors to software

Third century: Emperors in China use a system devised to rate their family members.

Mid-16th century: Ignatius of Loyola establishes a formal rating system for the Jesuit Society.

Late-18th century: During the Industrial Revolution, workers' pay is linked to their production.

1813: U.S. military begins a formal system of performance appraisal.

1904: Company records for India's industrial titan Tata Steel include blunt appraisals of workers, such as: "A failure." "Unfit for work." "Lazy and not honest." "Too weak." "Cheated and fled."

1918-1950s: Performance appraisals become common among blue-collar workers, though not for managers.

1960s-70s: In the U.S., new laws governing civil rights and equal employment opportunities lead companies to be more rigorous and formal with performance reviews.

1990: Software called Visual 360 is patented, allowing for a process for ongoing reviews that can be readily updated.

Early 2000s: The nature of reviews begins to shift, with many companies adopting the "360-degree review" in which workers and managers assess themselves. Many companies adopt a "balanced scorecard" approach, linking individual performance to broader corporate goals.

Ian Marlow

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