When it comes to unprecedented scale of success and growth, one company reigns supreme: Google. Started as a research project in 1996 by then-PhD students Larry Page and Sergey Brin at Stanford University, Google has become a multinational technology company with industry leadership in Internet-related services and products. Between its foundation as a company in 1998 and now, Google has gone through many transformations, the most recent being its reorganization as a holding company named Alphabet Inc. But one thing has remained a constant at the Internet giant: its commitment to employee satisfaction and engagement.
Google’s commitment to its employees can explain why the company has topped the Great Place to Work list in 2013 and 2014, and it has remained in the top five in the preceding years. A closer look reveals another important factor in this victory: Google’s carefully constructed and truly nurturing performance management system.
How Google works
In 2014, Google executive chairman and ex-CEO Eric Schmidt and former senior vice president of products Jonathan Rosenberg wrote a book about how Google operates. Titled How Google Works, the book provides great insights into corporate culture, strategy, talent, decision-making, communication, innovation, and dealing with disruption.
The authors admit that technology now defines and shapes almost every business sector. The influence of technology has caused massive changes across many businesses, to the degree that the term disruption has become commonplace. These conditions in the world of work have created a new segment of professionals the authors call smart creatives. Here is how they are defined:
- They are product professionals who bring together technical and business expertise with creativity.
- They are not easily fooled by traditional motivators such as compensation and bonuses.
- They feel the need to care about their workplace and what they are doing.
- They do not like formal business plans and strict schedules.
Attracting and hiring smart creatives is a skill in itself. The authors suggest that creating successful products and ideas based on unique technical insights is the first step. Having the focus on growth instead of revenue and keeping an eye on the competition are the other steps to maintaining a successful, original venture that will attract smart creatives.
However, the hardest part is retaining smart creatives once they are hired. Since they are not necessarily motivated by high salaries, smart creatives will not hesitate to quit a job that does not add value to their personal and professional growth. Google does this through its unique workplace culture and successful performance management system.
How does performance management work at Google?
Performance reviews are customized to provide great results for Google’s smart creatives. Senior vice president of people operations Laszlo Bock provides great insight about the company’s performance management in his book Work Rules. Googlers first identify a group of peer reviewers for each employee, which also includes co-workers who are junior to the employee. Google abolished numerical ratings in April 2014, so each Googler is now subjected to a five-point scale ranging from “needs improvement” to “superb.” Carried out semi-annually, peer reviewers are asked to state one thing the reviewee should do more of and one thing that they can do in a different way.
After the feedback cycle, managers come together to look at these peer reviews. The main goal is to prevent bias in feedback by asking each manager to justify their decisions. Managers are informed about potential obstacles to objective feedback, one of which is the tendency to overemphasize an employee’s most recent performance.
By keeping these obstacles in mind, managers decide on the final evaluation of an employee. Summaries of these assessments are shared semi-annually and compared to a set of examples to justify the evaluation. Employees are then informed of their compensation; however, compensation is decided separately from the evaluation that takes place during the reviews. Google keeps pay discussions separate from peer feedback to provide the right motivation to their employees, which is to grow and contribute to Google’s success.
Research done by Edward L. Deci, a professor of psychology at the University of Rochester, sheds light on the effects that two types of motivation have on achieving goals. Deci’s research indicate that when someone is motivated using an external reward such as money, their motivation tends to decrease. In contrast, when they are motivated by verbal reinforcement and positive feedback, their motivation increases.
This in line with what Google pursues with its performance management. Bock, et al. understand the importance of motivating their smart creatives with right initiatives and providing enough freedom for their ideas to flourish and become the next big thing at Google.
The ultimate goal of performance management systems should always be retaining talented employees by keeping them fulfilled and enabling their growth. Google seems to get it right with its carefully thought performance management. A vital part of why performance management works well at Google is its transparency. The company keeps performance data of everyone accessible—including CEOs Page and Brin. This way, Google manages to increase credibility and keep employee engagement on track.
Apart from quarterly, semi-annually, and annually conducted performance reviews, Google’s next step should be enabling continuous feedback between peers. This way, managers can overcome evaluation bias much more easily as there will be hard proof of employee’s performance over a given period.
It’s a fact that employee feedback apps are on the rise, and leading companies are increasingly adopting them, considering how cost-effective they are. By simply implementing a solution similar to Impraise, Google can engage its smart creatives much better by providing them with complete ownership of their own development.
Want more on performance management strategies? See 2016 HR Trends: Personalized Learning And Transparency.
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