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This Is How Google Redefines Performance Management

Matias Rodsevich

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.

Learnings

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.

The post This is How Google Redefines Performance Management appeared first on TalentCulture.

Photo Credit: marksdk via Compfight cc

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What Gen Z’s Arrival In The Workforce Means For Recruiters

Meghan M. Biro

Generation Z’s arrival in the workforce means some changes are on the horizon for recruiters. This cohort, born roughly from the mid-90s to approximately 2010, will be entering the workforce in four Hiring Generation Z words in 3d letters on an organization chart to illustrate finding young employees for your company or businessshort years, and you can bet recruiters and employers are already paying close attention to them.

This past fall, the first group of Gen Z youth began entering university. As Boomers continue to work well past traditional retirement age, four or five years from now, we’ll have an American workplace comprised of five generations.

Marketers and researchers have been obsessed with Millennials for over a decade; they are the most studied generation in history, and at 80 million strong they are an economic force to be reckoned with. HR pros have also been focused on all things related to attracting, motivating, mentoring, and retaining Millennials and now, once Gen Z is part of the workforce, recruiters will have to shift gears and also learn to work with this new, lesser-known generation. What are the important points they’ll need to know?

Northeastern University led the way with an extensive survey on Gen Z in late 2014 that included 16- through 19-year-olds and shed some light on key traits. Here are a few points from that study that recruiters should pay special attention to:

  • In general, the Generation Z cohort tends to be comprised of self-starters who have a strong desire to be autonomous. 63% of them report that they want colleges to teach them about being an entrepreneur.
  • 42% expect to be self-employed later in life, and this percentage was higher among minorities.
  • Despite the high cost of higher education, 81% of Generation Z members surveyed believe going to college is extremely important.
  • Generation Z has a lot of anxiety around debt, not only student loan debt, and they report they are very interested in being well-educated about finances.
  • Interpersonal interaction is highly important to Gen Z; just as Millennials before them, communicating via technology, including social media, is far less valuable to them than face-to-face communication.

Of course Gen Z is still very young, and their opinions as they relate to future employment may well change. For example, reality is that only 6.6% of the American workforce is self-employed, making it likely that only a small percentage of those expecting to be self-employed will be as well. The future in that respect is uncertain, and this group has a lot of learning to do and experiences yet ahead of them. However, when it comes to recruiting them, here are some things that might be helpful.

Generation Z is constantly connected

Like Millennials, Gen Z is a cohort of digital natives; they have had technology and the many forms of communication that affords since birth. They are used to instant access to information and, like their older Gen Y counterparts, they are continually processing information. Like Millennials, they prefer to solve their own problems, and will turn to YouTube or other video platforms for tutorials and to troubleshoot before asking for help. They also place great value on the reviews of their peers.

For recruiters, that means being ready to communicate on a wide variety of platforms on a continual basis. In order to recruit the top talent, you will have to be as connected as they are. You’ll need to keep up with their preferred networks, which will likely always be changing, and you’ll need to be transparent about what you want, as this generation is just as skeptical of marketing as the previous one.

Flexible schedules will continue to grow in importance

With the growth of part-time and contract workers, Gen Z will more than likely assume the same attitude their Millennial predecessors did when it comes to career expectations; they will not expect to remain with the same company for more than a few years. Flexible schedules will be a big part of their world as they move farther away from the traditional 9-to-5 job structure as work becomes more about life and less about work, and they’ll likely take on a variety of part time roles.

This preference for flexible work schedules means that business will happen outside of traditional work hours, and recruiters’ own work hours will, therefore, have to be just as flexible as their Gen Z targets’ schedule are. Companies will also have to examine what are in many cases decades old policies on acceptable work hours and business norms as they seek to not only attract, but to hire and retain this workforce with wholly different preferences than the ones that came before them. In many instances this is already happening, but I believe we will see this continue to evolve in the coming years.

Echoing the silent generation

Unlike Millennials, Gen Z came of age during difficult economic times; older Millennials were raised in the boom years. As Alex Williams points out in his recent New York Times piece, there’s an argument to be made that Generation Z is similar in attitude to the Silent Generation, growing up in a time of recession means they are more pragmatic and skeptical than their slightly older peers.

So how will this impact their behavior and desires as job candidates? Most of them are the product of Gen X parents, and stability will likely be very important to them. They may be both hard-working and fiscally savvy.

Sparks & Honey, in their much quoted slideshare on Gen Z, puts the number of high-schooler students who felt pressured by their parents to get jobs at 55 percent. Income and earning your keep are likely to be a big motivation for GenZ. Due to the recession, they also share the experience of living in multi-generational households, which may help considerably as they navigate a workplace comprised of several generations.

We don’t have all the answers

With its youngest members not yet in double digits, Gen Z is still maturing. There is obviously still a lot that we don’t know. This generation may have the opposite experience from the Millennials before them, where the older members experienced the booming economy, with some even getting a career foothold, before the collapse in 2008. Gen Z’s younger members may get to see a resurgent economy as they make their way out of college. Those younger members are still forming their personalities and views of the world; we would be presumptuous to think we have all of the answers already.

Generational analysis is part research, but also part theory testing. What we do know is that this second generation of digital natives, with its adaption of technology and comfort with the fast-paced changing world, will leave its mark on the American workforce as it makes its way in. As a result, everything about HR will change, in a big way. I wrote a post for my Forbes column recently where I said, “To recruit in this environment is like being part wizard, part astronaut, part diplomat, part guidance counselor,” and that’s very true.

As someone who loves change, I believe there has never been a more exciting time to be immersed in both the HR and the technology space. How do you feel about what’s on the horizon as it relates to the future of work and the impending arrival of Generation Z? I’d love to hear your thoughts.

Social tools are playing an increasingly important role in the workplace, especially for younger workers. Learn more: Adopting Social Software For Workforce Collaboration [Video].

The post What Gen Z’s Arrival In The Workforce Means For Recruiters appeared first on TalentCulture.

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How The Digital Economy Is Defining An Entire Generation

Julia Caruso

millennial businesswomen using digital technology at work“Innovation distinguishes between a leader and a follower.” – Steve Jobs

As a part of the last wave of Millennials joining the workforce, I have been inspired by Jobs’ definition of innovation. For years, Millennials like me have been told that we need to be faster, better, and smarter than our peers. With this thought in mind and the endless possibilities of the Internet, it’s easy to see that the digital economy is here, and it is defining my generation.

Lately we’ve all read articles proclaiming that “the digital economy and the economy are becoming one in the same. The lines are being blurred.” While this may be true, Millennials do not see this distinction. To us, it’s just the economy. Everything we do happens in the abstract digital economy – we shop digitally, get our news digitally, communicate digitally, and we take pictures digitally. In fact, the things that we don’t do digitally are few and far between.

Millennial disruption: How to get our attention in the digital economy

In this fast-moving, highly technical era, innovation and technology are ubiquitous, forcing companies to deliver immediate value to consumers. This principle is ingrained in us – it’s stark reality. One day, a brand is a world leader, promising incredible change. Then just a few weeks later, it disappears. Millennials view leaders of the emerging (digital) economy as scrappy, agile, and comfortable making decisions that disrupt the norm, and that may or may not pan out.

What does it take to earn the attention of Millennials? Here are three things you should consider:

1. Millennials appreciate innovations that reinvent product delivery and service to make life better and simpler.

Uber, Vimeo, ASOS, and Apple are some of the most successful disruptors in the current digital economy. Why? They took an already mature market and used technology to make valuable connections with their Millennial customers. These companies did not invent a new product – they reinvented the way business is done within the economy. They knew what their consumers wanted before they realized it.

Millennials thrive on these companies. In fact, we seek them out and expect them to create rapid, digital changes to our daily lives. We want to use the products they developed. We adapt quickly to the changes powered by their new ideas or technologies. With that being said, it’s not astonishing that Millennials feel the need to connect regularly and digitally.

2. It’s not technology that captures us – it’s the simplicity that technology enables.

Recently, McKinsey & Company revealed that “CEOs expect 15%–50% of their companies’ future earnings to come from disruptive technology.” Considering this statistic, it may come as a surprise to these executives that buzzwords – including cloud, diversity, innovation, the Internet of Things, and future of work – does not resonate with us. Sure, we were raised on these terms, but it’s such a part of our culture that we do not think about it. We expect companies to deeply embed this technology now.

What we really crave is technology-enabled simplicity in every aspect of our lives. If something is too complicated to navigate, most of us stop using the product. And why not? It does not add value if we cannot use it immediately.

Many experts claim that this is unique to Millennials, but it truly isn’t. It might just be more obvious and prevalent with us. Some might translate our never-ending desire for simplicity into laziness. Yet striving to make daily activities simpler with the use of technology has been seen throughout history. Millennials just happen to be the first generation to be completely reliant on technology, simplicity, and digitally powered “personal” connections.

3. Millennials keep an eye on where and how the next technology revolution will begin.

Within the next few years Millennials will be the largest generation in the workforce. As a result, the onslaught of coverage on the evolution of technology will most likely be phased out. While the history of technology is significant for our predecessors, this not an overly important story for Millennials because we have not seen the technology evolution ourselves. For us, the digital revolution is a fact of life.

Companies like SAP, Amazon, and Apple did not invent the wheel. Rather, they were able to create a new digital future. For a company to be successful, senior leaders must demonstrate a talent for R&D genius as well as fortune-telling. They need to develop easy-to-use, brilliantly designed products, market them effectively to the masses, and maintain their product elite. It’s not easy, but the companies that upend an entire industry are successfully balancing these tasks.

Disruption can happen anywhere and at any time. Get ready!

Across every industry, big players are threatened — not only by well-known competitors, but by small teams sitting in a garage drafting new ideas that could turn the market upside down. In reality, anyone, anywhere, at any time can cause disruption and bring an idea to life.

Take my employer SAP, for example. With the creation of SAP S/4HANA, we are disrupting the tech market as we help our customers engage in digital transformation. By removing data warehousing and enabling real-time operations, companies are reimagining their future. Organizations such as La Trobe University, the NFL, and Adidas have made it easy to understand and conceptualize the effects using data in real time. But only time will tell whether Millennials will ever realize how much disruption was needed to get where we are today.

Find out how SAP Services & Support you can minimize the impact of disruption and maximize the success of your business. Read SAP S/4HANA customer success stories, visit the SAP Services HUB, or visit the customer testimonial page on SAP.com.

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About Julia Caruso

Julia Caruso is a Global Audience Marketing Specialist at SAP. She is responsible for developing strategic digital media plans and working with senior executives to create high level content for SAP S/4HANA and SAP Activate.

Robots: Job Destroyers or Human Partners? [INFOGRAPHIC]

Christopher Koch

Robots: Job Destroyers or Human Partners? [INFOGRAPHIC]

To learn more about how humans and robots will co-evolve, read the in-depth report Bring Your Robot to Work.

Download the PDF (91KB)

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About Christopher Koch

Christopher Koch is the Editorial Director of the SAP Center for Business Insight. He is an experienced publishing professional, researcher, editor, and writer in business, technology, and B2B marketing. Share your thoughts with Chris on Twitter @Ckochster.

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Building A Business Case For Financial Transformation

Nilly Essaides

There’s constant pressure on the CFO from the CEO to do better—to innovate, and to transform the finance organization into both a leaner and a more forward-looking analytics hub that provides insight and foresight to the enterprise. CFOs today must:

  • Interpret numbers instead of reporting them
  • Deploy enabling technology to automate low-value work
  • Scout for business and growth opportunities
  • Work effectively with Big Data to turn their teams into the brains of the organization
  • Act as true partners to the CEO, business leaders, and board of directors

Defining the ROI for transformation

Transformation sounds great in theory, but to get finance to literally go beyond its form—not an easy feat—executives need to see a strong business case and a tangible payback. After all, finance is all about the ROI.

Here are some solutions CFOs can wrap their heads around to help drive change:

  • Manage competitive disruption. Today’s business environment is rife with competitive threats. My last post listed five ways financial planning and analysis (FP&A) in its future form can help companies battle these threats. The cost of not transforming the finance function into the fast-thinking, forward-looking brains of the enterprise is the opportunity cost of falling behind. It’s the risk of becoming irrelevant through the inability to foresee competitive threats, or of lacking an action plan for dealing with the potential impact of such pressures on the financial health of the corporation.
  • Streamline processes. Obviously, there’s the dollars-and-cents savings that come from streamlining processes, using new technologies, and breaking down internal silos. For example, in many organizations, forecasting processes occur in different departments. Merging these disparate processes into one and using a single technology platform can save enormous resources in terms of systems and time. It eliminates duplicate entries of data and the need to reconcile discordant information, or the need to later argue about which number is right. It creates a single version of the truth.

Even within finance, things can be improved. Often the processes of budgeting, forecasting, and planning happen in isolation in different time frames. And operational and financial planning occur in different cycles and levels. By syncing up these processes, companies can get rid of redundancies. What’s more important, they can discover efficiencies and improve the quality of the end product.

  • Eliminate waste and free up strategic time. New technologies are enabling the finance function to automate low-value work and free up executives’ time to focus on strategic thinking, developing partnerships with the business, and advising management on how to drive growth. The payback is smarter decisions (faster growth, higher investment returns) while lowering operating expenses.
  • Look forward. Finance and FP&A today are shifting their focus from yesterday to tomorrow, from what happened to what’s going to happen. Transforming their mindset is key to helping the business move forward. Using techniques and technologies like driver-based modeling and predictive analytics, finance is remaking itself and producing faster, more frequent and—most importantly—more accurate forecasts. It’s giving management the one thing that matters most: time to pull business levers to affect future financial results. The payback is higher sales, wider margins, and lower cost of operations.
  • Change the mindset. There’s no transformation of the financial organization without a transformation of the financial skill set of executives. The first-quarter Deloitte CFO Signal Survey indicated that CFOs expect to embark on a wide range of efforts to improve the performance of their teams before the end of 2016. While foundational finance skills remain a must, to transform finance into the “A-team” of the future, executives must possess business acumen, diplomacy skills, intellectual curiosity, technology savvy, and a degree of comfort with ambivalence. They have to be okay with making decisions without 100% of the information. One can argue that the return on soft skills is soft. But it also means being able to move fast and grab windows of opportunity. Not all business cases are based on cost savings.
  • Build an analytics hub. The biggest challenge for CFOs today is to transform finance into the analytical hub of the organization and leverage Big Data to drive smarter business decisions—both in terms of cost cutting and in giving the business units advice on how to market, sell, develop, and grow their operations. That’s how finance fits within the digital enterprise. Finance needs to funnel Big Data from all corners of the organization—and outside it—to leverage its unique central viewpoint. It must bring the information together and run it through advanced analytics models to come up with causal relationships that explain what business initiatives are really moving the needle, what steps the company can take to improve results, and what its customers are doing and are likely to do. Digitizing finance has a huge payback: It allows companies to stay competitive in a digital economy.

Is finance transformation worth the effort? That may be the wrong question. The question is, can companies afford not to transform their finance function and remain relevant now and going forward?

Learn how the FP&A team at CF Industries Holdings Inc. prioritized business partnering options and transformed the organization to optimally support strategic goals by establishing an integrated business planning process at the AFP Annual Conference session, Driving Finance Transformation Through Integrated Business Planning.

For more of my insights on FP&A, subscribe to the monthly FP&A e-newsletter from my company, the Association for Financial Professionals. You can also connect with me on LinkedIn or follow me on Twitter.

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Nilly Essaides

About Nilly Essaides

Nilly Essaides is the director of the FP&A Practice at the Association for Financial Professionals. She has over 25 years of experience in the finance field. Nilly has written multiple in-depth research reports on FP&A and Treasury topics, as well as countless articles. She also speaks at conferences and moderates financial executives' roundtables across the country. Nilly has published a book on best-practice transfer and process excellence with the APQC, "If We Only Knew What We Know."