This is the only article you need to read to manage employee performance effectively — from goal setting to performance monitoring to employee development.
Managing employee performance is a key priority for every organization. With the rise of the knowledge economy, it has become quite evident that an organization’s human capital is one of its biggest assets. Invariably, leaders globally are identifying and experimenting with new ways to manage and improve employee performance.
For a long time, performance management has been equated with reviews and feedback. However, most organizations are now adopting a more comprehensive approach for managing employee performance.
If you believe that performance management goes beyond reviews, you are in for a knowledgeable read.
Based on years of industry research and experience of working with fast growing organizations, we have been able to identify that there are three major components which collectively contribute to managing employee performance.
In this article, we will take you through a deep understanding of each of the three components and how you can facilitate effective performance management.
In the first element of managing employee performance, you need to be clear on what your team members are performing towards. This requires setting key goals on individual, team and organizational level. Setting goals effectively can enable you as well as your employees to gauge where the performance is expected to go, making performance management seamless.
However, performance goals must be set strategically and there must be an alignment between individual, team and organizational goals to ensure collective success. There are two facets to managing employee performance when it comes to performance goals, first is the types of goals and second how goal setting should take place.
We have a free guide on how to set and align goals effectively. Click here to download the PDF.
Based on the intent, scope and impact, you may find three types of performance goals for your fast growing organization:
Role specific goals for managing employee performance talk about major goals that align with the responsibilities mentioned in the job description. When you onboard any employee, you set a job description for the role you seek to get them for. The goals highlighted in this job description are primarily the role specific goals.
For instance, if you hire someone in the marketing team, the role would be to ensure better product reach and brand awareness. Essentially, this will become a goal, against which performance will be measured and improved, i.e. managed.
The second type of goals which can help manage and monitor performance revolve around project goals. These goals are more specific in nature and are generally time bound.
They are meant to be achieved in a particular time frame (the time of the project) and change once the project is over. Managing employee performance here depends on how well and to what level these goals have been achieved.
The final type of goals for managing employee performance talk about behavioral goals. If you take a close look, you will realize that the first two types essentially talk about what has to be achieved.
This third type talks more about the behaviors and patterns that must be achieved while achieving the above two types of goals. Behavioral goals mostly have a longer life than role based and project goals.
Once you understand the type of goals and have a broad agreement on different aspects of the same, you should focus your energy towards actually setting the goals. Goal setting should generally be a collaborative and collective process where managers, leaders and employees all should have a voice.
Collaborative goal setting ensures that there is greater buy-in, commitment and ownership towards the goals which makes managing employee performance more effective.
In this regard, you need to streamline your efforts across two major aspects:
OKRs or Objectives and Key Results is a goal setting approach that many fast growing organizations leverage to ensure that everyone in the team is on the same page and collectively works towards a collective vision. There are two facets at play here —
One, you need to set the objectives or the larger vision that you wish to achieve.
Two, you need to have a few key results that will help you measure and gauge whether or not you have been able to achieve your objectives or not.
Generally, you should have at least 2-3 key results associated with every objective to ensure holistic goal setting and performance management. Let’s take a quick example here:
Objective: Improve customer experience
Key result 1: Increase customer stickiness by 50%
Key result 2: Improve Net Promoter Score from 6 to 8
The example clearly illustrates that while the macro performance goal for employees is to improve customer experience, the milestones which will help determine the achievement of the goals, and are in turn sub goals include increasing customer stickiness and improving net promoter score.
We have a free 10 day Email course on OKRs to guide you through everything you need to know about setting, tracking and implementing OKRs in your organization. Click here to enroll now.
Most fast growing organizations today are adopting the SMART goals framework to ensure the performance goals they set are effective.
Specific: Ensure that the goals you set are clear and to the point to avoid any ambiguity
Measurable: All your goals must be measurable and result oriented to gauge the level of achievement and performance
Attainable: Keep your goals aspirational but not out of reach to ensure motivation
Relevant: Your goals must align with the organizational vision and employee objectives as well
Time Bound: The goals must have timelines to mark a start and end date to streamline efforts
Irrespective of the goals you set and the way you set them, it is very important to:
Setting of performance goals takes us to the next phase or component of managing employee performance which focuses on performance review.
Once the goals are set, it is important for you to constantly monitor the progress of your employee’s performance on the goals and determine their contribution to organizational success.
Here, it is very important to gauge employee pulse in real time. There are several reasons for this —
First, real time insights can help you track employee engagement and form a great base for performance review
Second, it will enable you to address any risks or challenges before they hinder performance levels massively
Based on the employee data collected through pulse survey and feedback received through regular team and 1:1 check-ins, you should focus on facilitating effective performance reviews. Performance reviews are a critical component of performance management.
There are several types of performance review systems that rapidly growing organizations today leverage. Based on your organizational priorities, you can either pick one of them or leverage a combination of a few to ensure maximum effectiveness. Some of the common types of performance reviews include —
Rating for managing employee performance generally focuses on adopting an objective approach towards performance reviews. It talks about grading employee performance on a scale, while taking different aspects into consideration.
The most commonly used one is the 5 point rating scale which starts from below average to excellent performance over 5 points. Depending on organizational comfort, either 1 or 5 are considered as excellent performance, while the other end of the spectrum denotes need for improvement.
Other rating scales include the 10 point scale, the Likert scale etc.
The importance of rating is that they form the basis for a fixed metric around which employee performance can be measured. It ensures that an objective and uniform approach is followed for all employees, which can be used as a basis for comparison of dedication, commitment and hard work.
On the simplest level, ratings can be on the achievement of a particular goal or objective, which makes the rating task specific. For instance, if an employee is able to achieve the task, with time in hand to go beyond the target, they surely deserve the highest rating.
However, there are a few other types of rating scales as well that will encourage you to look beyond target achievement into performance parameters that are critical for business success. The top two are mentioned below:
This particular rating scale has been used by many fast growing organizations to gauge the overall contribution of employees, and not just productivity. It seeks to rate employee performance on different characteristics which are instrumental for growth and success.
Under GRS, you may rate your employees on factors like punctuality, ownership, dependability, quality of work, collaborative potential, creativity, etc. These characteristics are essentially the guiding factors which enable employees to push their boundaries and achieve their goals.
The next rating scale focuses primarily on employee behaviors. This tool generally has two components to it.
The first is a performance dimension that organizations seek to review or measure. Attached to it are a few anchors which are graded on a 5 point scale, the cumulative result of which indicates the level of performance.
For instance, you might take the behavioral dimension as ‘accountability’. Here, the anchors would be, ‘takes responsibility for actions’, ‘does not indulge in blame games’, etc. The rating on these anchors can help create a final rating for accountability for an employee.
The next type of performance review that many organizations rely on is self-evaluation. This generally entails giving your team members an opportunity to reflect on their own performance and share key insights. It will help you get a chance to hear their side of the story about their performance, actions, impact, etc.
Self-evaluation will enable you to understand how the employees perceive their contribution to the organization and whether or not it aligns with your view. Furthermore, engaging in self-evaluation will give your employees to identify areas of improvement on their own which later you can collectively streamline and work towards.
Self-evaluation is critical for managing employee performance as it encourages employees to gauge a true picture of their performance.
Rankings primarily involve creating a stack of employees based on their performance in comparison to others. One of the top reasons organizations leverage rankings as a performance review tool is to get a comparative picture of everyone in the organization for decisions like appraisals, promotion, etc.
A 360 degree review is very important for managing employee performance, especially for fast growing organizations. Today, employees no longer only work with their managers. In the hyperconnected and collaborative workplace, employees work with almost everyone in the organization. Therefore, a review only from the manager will paint an incomplete picture.
Thus, you need to ensure that employees in your organization undergo a 360 degree review where feedback is collected from everyone they have worked with. This will help you manage their performance on different attributes and factors, and not simply on achievement of target.
You may want to collect feedback from peers to understand their teamwork and collaboration potential. Feedback from subordinates can help you gauge mentorship and leadership abilities, etc.
Finally, the last performance review type for the discussion here is Management by Objectives. This majorly revolves around the goals and objectives set in the beginning of the year, which become the base for review.
Here, performance is measured against the achievement of the set goals. Setting OKRs can really help in performance reviews with MBOs. It can help you gauge performance based on achievement of key results and collectively the objective.
Now that you have a clear understanding about the performance review components or ways you can follow, it is important to also be cognizant of the pitfalls you should avoid.
To begin with, performance reviews are vulnerable to human biases. There are several factors at play here.
First, if your line managers are not trained to evaluate performance and you are following a rating review format, there is likely to be similar ratings for all, high, low or average. This lack of differentiation will make managing employee performance difficult as you will have an incomplete understanding of true performance.
Second, reviews are vulnerable to the horns and halo effect. In the former, a particular negative aspect of the employee tends to cloud all other performance indicators and the employee gets an overall lower ranking than they deserve. In the latter, the opposite happens. A particular positive aspect of performance guides the entire review leading to a better rating than deserved.
Third, the notion of personal bias and favoritism comes in. As humans, we are all vulnerable to having favorites. However, when this manifests itself in performance evaluation, a few favorites of the manager might receive better reviews as personal feelings dominate this objective process.
This is where using an employee performance review software becomes crucial. Check out this quick 5 minute guide to understand what kind of performance review software your company needs.
The second major pitfall that fast growing organizations are vulnerable to is limited data for reviews. Due to limited bandwidth, you may be unable to gather all important information about employee performance from the employee themselves as well as all others who have worked with them.
This limited data might not contain components instrumental to gauging overall performance effectiveness. Invariably, when you don’t have a complete picture of the performance, managing the same will be difficult.
This is why most organizations use AI based tools to gather and analyze employee performance data. Here’s how you can choose one for yourself too.
Finally, the last performance review pitfall that you should avoid is the recency effect. In the absence of a continuous approach, organizations fall prey to evaluating only the latest performance and do not get a comprehensive picture of the entire year.
The major focus is on the latest events, which may not reflect the true performance caliber of the employee, hence compromising the effectiveness of your managing employee performance journey. Using employee performance snapshots throughout the year can be a great way to eliminate recency bias.
The third and the final component of managing employee performance revolves around performance improvement. Once you have reviewed the performance of your employees, your focus and energy should move towards improving the same to facilitate individual, team and organizational development.
Performance improvement is not just about identifying weaknesses and areas of development, but involves actually creating an action plan at all levels to bridge performance gaps. That’s what performance management is all about. We have identified a few practices that businesses can leverage to facilitate performance improvement for their employees.
You should focus on creating a culture of recognition and appreciation. Here rewarding high and good performance will be instrumental. Even if you have limited budgets, a paid day off, a voucher or social recognition are ways to reward your employees. There are two ways rewarding performance begets performance improvement.
First, it will motivate top performers to keep up the good work when they believe their commitment is being valued and appreciated.
Second, it will incentivize others to also go the extra mile to be a recipient of the rewards and recognition.
Creating performance improvement plans is extremely important for managing employee performance. This generally involves identifying key development areas and aligning them with learning opportunities to ensure performance improvement. However, a crucial element here is conducting meaningful 1:1 conversations.
Check out this list of top 50 1:1 meeting questions to prepare for your next conversation.
Managers should ensure that they have a real time insight into every aspect of employee performance to preempt any risks or challenges. Based on this data, they must focus on having streamlined and impactful conversations with their employees to address any gaps that exist.
This will in a way be a parallel approach to coaching employees, without making any big investments. If you feel your managers need support for the same, you might want to explore platforms that can help you provide AI driven guided conversation template recommendations to help with the right statements and resources.
It would be useful to create performance improvement plans for each employee and document it effectively. In addition to basic details about the employee, capturing performance goals, reviews and feedback, resources, etc. can be instrumental in gauging trends and performance improvement data over time.
Based on the performance improvement plan, you need to ensure that your employees are able to access the required resources and get adequate support for improving performance. This is very important for managing employee performance.
It entails identifying the training required or investing in other resources that employees consider important for the learning curves. In addition to technical training, investing in mentoring and coaching programs, providing opportunities to innovate and grow are also important.
While providing resources and support for employee development is important, it is equally critical to ensure your managers are competent to manage employee performance. This involves equipping them with key leadership competencies and resources that can help them lead better.
You can rely on employee management tools to understand what key competencies are most sought after by the employees for performance improvement and encourage your managers to build the same. Leveraging heatmaps provided by third party platforms on the top competencies can be a good starting point.
Simultaneously, you need to ensure that your managers know how to handle 1:1 conversations and eliminate any biases mentioned above to ensure fair reviews and performance management.
Managing employee performance can be an overwhelming process especially for fast growing organizations that might have limited capital and human resources. Here, you can collaborate with a platform like SuperBeings to manage the performance of your growing team effectively. Following are some quick points you can benefit from:
Biases are common to all humans. If you look back at your day, you’ll realize that most of the decisions you made were based on some belief, prejudice or bias. While being biased is inherently human, its manifestation in some situations can lead to results which are far from ideal. And, that’s a topic we are discussing with this article, Performance Review Biases.
Essentially, performance review biases and preconceptions, notions or beliefs that you may hold, which may consciously or unconsciously impact your judgment when you are evaluating the performance of your team members. Performance review biases, even if unconscious, can lead to serious implications for your team member whose performance is being evaluated. For instance, if you have a certain bias against someone, you might give them a poor rating, unconsciously, which might impact their promotion, increment and career trajectory. Thus, as a leader, it is very important for you to check if you have any performance review biases and introduce preventive strategies, wherever needed.
Let’s quickly look at the top 12 most common performance review biases that are observed in growing organizations, how they look like and how you can prevent them for your company.
The Halo effect, like the term suggests, is when you put a halo over a person which is reflected in every perception you have about them. From a performance review bias perspective, it translates to a situation, where if a person has performed well in one aspect, you will have a bias that all other aspects of their performance are equally good which may not be the case. This suggests that their one good trait tends to overshadow all others.
If an employee has shown attention to detail to a particular project, which resulted in positive outcomes for the organization, a manager may consider attention to detail as their primary trait and all other parameters of performance review will be negated. Chances are that even if the person is not punctual, misses deadlines, etc., the manager will still give them a higher rating, because their one trait that impressed the manager will overshadow the other performance incompetencies.
To prevent the Halo effect, it is important for managers to evaluate the performance of their team members on multiple parameters and score them on each individually. In addition to the positive trait, you must objectively evaluate other factors which ultimately contribute to organizational success and assess the employee on a holistic level. This will ensure that one quality does not overshadow others, which equally determine the level of performance.
A counterpart of the Halo effect is the Horns effect. Here, one negative trait or performance parameter tends to bring down the overall performance review for an employee. If you have had a poor experience with an employee on a particular aspect, you may believe that they are overall a poor performer, which may reflect in your rating, despite them performing well on other aspects.
If an employee missed a particular deadline due to some personal reason, a manager might build a perception that they are not serious about their work. The delay in delivery of work then becomes the only important trait and other positives are ignored or overlooked.
Like the Halo effect, the best way to prevent the Horns effect is by taking into account multiple performance parameters and to get a clear understanding of the reason behind rating for each individual parameter. This will encourage you or any manager to rationally review a performance rather than being susceptible to performance review biases.
Leniency bias in performance review biases refers to a situation where you are more lenient in your rating, giving employees a higher rating than what their performance truly would yield. Leniency bias generally leads to overestimating the performance of some, resulting in the inability to differentiate average performance from top performers. Invariably, you may end up promoting some who still have room for improvement, while leaving others dissatisfied who truly deserve recognition and incentives.
Mr X and Mr Y are at a similar level and perform the same role of running ads to drive online traffic. During the performance term, Mr X managed a traffic of 6000+ leads while Mr Y brought in only 1000+. Leniency effect kicks in when the manager rates both of them at a similar level, despite the difference in their outputs. Naturally, both of them will have similar increments and career paths, despite unequal efforts and results. This might lead to dissatisfaction, lower levels of engagement, and ultimately attrition.
To differentiate between above average and top performance and to prevent falling prey to leniency bias, it is ideal to have a rating scale which increases the number of rating options after average. Instead of simply saying if a performer was average or above average, add options like excellent, high potential, high performer etc, after above average.
Centrality bias occurs if you rate your employee’s performance just in the middle of the spectrum. This generally occurs when you find it difficult to make a decision and go with a safe option. However, like leniency bias, this is also one of the performance review biases which makes it difficult to differentiate between low and top performers.
Centrality bias is evident if for a particular manager most employees have received the middle rating or the average review. In the case of a 7 point rating scale 4 is the most common rating received by many.
One of the easiest ways to prevent this performance review bias is to eliminate the middle option from your rating scale. For instance, if you follow a 5 point rating scale, you should move to a 4 point scale and eliminate the middle option of average. This will push your managers to give a below or above average rating, and help differentiate between different performance levels.
Generally, performance reviews occur at the end of the year, and recency bias comes in if you take into account only the most recent performance of the employee as opposed to reviewing their performance through the year. Chances are if the performer delivered poorly in the end, their entire rating will be dependent on this performance if this bias is at play. This generally occurs because it is easiest to remember the things that happen most recently. However, they reduce the employees to a few weeks and overlook their contribution across the year.
If Ms Y brought in 3 new customers at the start of the year, resulting in 50 Lacs of business, however, she was unable to convert any clients in the last quarter. With recency bias, the manager will rate her performance below average or poorly, because of the most recent performance, despite having a worthwhile performance across the year. The manager will end up overlooking her performance in the initial months.
Preventing recency bias requires adopting a continuous performance review framework. Here, you can focus on capturing performance feedback at regular intervals, when an employee achieves a milestone, completes a project, etc. All the feedback can then be consolidated to create an annual performance report based on which the final rating should be allocated. This will help you get sufficient data points to get a holistic performance view.
First impressions last. That’s the best way to define the primacy bias. It stands on the flip side of recency bias. Here, the first or the first few instances of one’s performance tend to influence the final performance review. Whether the performance has been good or bad in the beginning is what defines the final appraisal call.
When Mr O joined work, he was a little under confident in a new territory and could only close 1 deal in the first two months. However, as he learnt more about the product, his performance improved and by the end of the year, he closed 5 deals in just 2 weeks. However, in the event of primacy bias, his performance review will evaluate his performance as poor because he was unable to make a lasting first impression.
Preventing primacy bias follows the same principles as recency effect. The idea is to make performance feedback a regular practice where it is taken at pre decided intervals and sometimes after completing some important milestones. This will help managers to get a snapshot of performance over the year with clear points to avoid being fixated on one or two incidents from the very beginning.
As the name suggests, this is one of those performance review biases in which you may unconsciously give a higher rating to an employee who shares similar beliefs, skills, perceptions, etc. The rationale is quite simple, we tend to like people who are like us and often believe that the skills we possess are most desirable. However, this often leads to the creation of a homogeneous culture where diversity and inclusion don’t exist, leading to poor innovation and creativity.
A manager Mr T has three employees reporting directly to him. Mr T is very process driven and appreciates the same quality to drive outcomes. While one of those employees, Ms S is also process driven, the others are not and all three have similar outcomes. With similar-to-me bias, Mr T is likely to give Ms S a higher rating because she works in the same way as him, despite equally good performance from the other two.
As a performance review bias, the similar-to-me bias can be prevented by making assessments more objective and evidence backed. Encourage your managers to bifurcate performance reviews based on different parameters along with a reasoning behind each parameter.
Contrast bias occurs when a manager is evaluating performance for more than one employee and the performance of one becomes the benchmark for evaluating the performance of others instead of the company standard. At times, despite performing extremely well, an employee might just get an average rating because of the goal or the standard being used, leading to low engagement and satisfaction.
If the sales target for a team is getting 5 new clients individually over a period of 6 months and one employee gets 10 new clients and others get 7, 8 and 9. Contrast bias occurs when the manager gives an average rating to the employee who brought in 7 clients because it is lower when compared to the performance of the employee who brought in 10. Despite performing better than the company standard and goal, the performance of this employee is not considered up to the mark, because of contrast bias.
To prevent this performance review bias, it is important that managers set clear performance expectations at the beginning of the performance period and evaluation is done strictly according to those parameters. It is even a good idea to define performance evaluation based on different levels of achievement and managers must be encouraged and trained to review each performance in silos, rather than comparing one with another.
You display attribution bias during a performance review when you attribute the reason behind a performance based on your beliefs and perceptions, rather than objective facts and logic. In attribution bias, we generally attribute our good performance to internal factors like hard work, dedication, etc. and poor performance to external factors like lack of support, collaboration. However, when it comes to evaluating the performance of others, we turn the tables.
A classic example of attribution bias as one of the performance review biases is if Mr L has not been able to perform up to the mark and his manager has to evaluate his performance. With attribution bias, the manager, who might think Mr L is not hardworking, might believe that the reason for poor performance has been the casual attitude of Mr L, even if clearly, he wasn’t provided with the right tools and software needed for the job.
To prevent attribution bias, it is important that managers clearly define the reasons they believe led to the good or bad performance and a similar exercise is undertaken by the employee as a part of self reflection. It is important to assess both internal and external factors and focus on continuous feedback from diverse sources to understand which factors have been behind the performance more than others.
This is one of those performance review biases which are clear by the name. It suggests that when it comes to performance reviews, women are often evaluated based on their personality and behavior, while the performance of men is evaluated on the basis of their work. This leads to a skewed understanding of the contribution made by both genders, resulting in unfair distribution of rewards and recognition.
Suppose there are two colleagues who are being evaluated, Mr G and Ms K and both of them have had similar achievements, milestones and areas of improvement. A performance review which says Mr G has great coding skills and is able to write perfect codes in a short time, while Ms K has a pleasant demeanor and is able to collaborate with everyone well. While both the reviews are positive, the former one for the male employee is based on functional competencies, which yields better rewards and promotions for him, leading to gender inequality at the workplace.
To prevent gender bias, it is important to make performance reviews structured and objective. You may want to steer away from open feedback and give your managers a pre populated template with a few blocks. Furthermore, encourage your managers to quantify how each performer’s contribution led to organizational impact, focusing on behavior and outcome rather than performance itself.
All of us have preconceived notions about others and their performance. Confirmation bias occurs when you pay more heed to actions and information that confirm your bias about a particular performance than others which challenge your beliefs. Put simply, you are more likely to agree with opinions and facts which align with your evaluation of an individual’s performance, while negating those that give an alternate view. This gives a partial picture of an employee.
If a manager believes that Ms B has performed well due to her high functional skills, punctuality and attention to details, you will give her a higher rating. If the manager received feedback from external resources reinforcing the same belief, they will add that to their narrative. However, if a contrary comment comes to the picture, a manager with confirmation bias might discount or completely ignore it.
To prevent confirmation bias, managers need to think of their perceptions as potential truths and not the ultimate truths. An initial perception should be made, which should be confirmed or negated based on proofs and behaviors that come along the way, rather than the other way round. It is important to pay attention to and accept feedback that goes against one’s belief to get a complete picture of the employee’s performance.
As a manager, you may have some functional competencies which you are great at. However, there might be others where you have limited experience and expertise. One of the performance review biases in this case is the idiosyncratic bias. Here, you may end up being more lenient towards those who possess skills that you may have limited expertise with, while being more strict with those who share common skills like you. Often the reason behind is that, when someone evaluates performance based on skills that one has limited knowledge of, even small achievements make an impression, however, when it comes to evaluating skills one possesses, the standard for evaluation goes up. In either case, the performance review is not holistic.
There is a manager Ms H who is great at sales, but has limited expertise in building proposals and attention to detail. She has two team members working with her Mr T & Ms L, where the former has sales experience and the latter has experience in creating proposals with utmost accuracy. Idiosyncratic bias creeps in when unconsciously, Ms H gives Ms L a higher rating than Mr T, because the standards set for what constitutes good performance are based on her level of expertise.
To confront and prevent this performance review bias, managers must be encouraged to go beyond rating them based on their performance and what they believe has been the impact they have created. It is best for managers to consider whether or not their performance left an impression where the manager would want to work with the employee again.
As humans, we are inherently biased and unconscious bias training can go a long way into helping us keep our biases in check. However, to ensure that biases don’t impact performance reviews for any employees, it is best to implement a performance management tool to reduce their incidence. A performance management tool, like SuperBeings, will help you:
Prevent performance review biases like primacy effect and recency effect, etc. which rely on one a year bias prone 9 box grid assessment, by replacing it with a system generated grid based on performance snapshots collected throughout the year. Not only will you get a holistic view of the performance, your managers will also get a clear understanding of which employees need help more than others.
Equip your managers with a pre-built customizable template to answer simple questions about employee performance and potential at regular intervals to get a true snapshot of the performance and improvement from time to time. This will help managers objectively review performance at the end of the year.
Get inputs from diverse team members with automation to get a holistic view of an employee’s performance. This will help reduce the rater biases towards or against any employee and ensure that the reviews are genuine and authentic.
While performance review biases are common, if you are able to prevent them, you will unlock a high performance culture which greatly recognizes and incentivizes good performance. Using a performance management tool can help you achieve the same.
“Every employee can affect your company’s brand”- Tony Hseih, Former CEO, Zappos
Employee NPS is a key component for your organization if you wish to create a culture which engages, motivates and inspires employees and encourages them to recommend it to their friends. Here are a few quick points that you should not forget:
Now let’s get into the nitty-gritties of employee Net Promoter Score (eNPS) and how you can use them effectively.
eNPS is or employee NPS is a measure of employee loyalty and how they feel about your organization. It is a scoring mechanism that employees can use to share their satisfaction/ dissatisfaction with the company culture, which in turn helps leaders to gauge the impact it will have on the organization.
The advent of eNPS came as a result of realizing that employees have an equal impact on an organization as the customers
For instance, if any employee leaves a bad review or reports a bad experience about your organization, it might act as a deterrent for other high performing candidates from applying to your organization.
In a nutshell, eNPS is one of the top tools you can use to gauge how satisfied your employees are with your company culture and measure whether or not your employee engagement and other efforts are actually bearing fruits.
You can calculate the eNPS for your organization by subtracting the percentage of promoters from the percentage of detractors. Let’s quickly understand what this means.
You will start by asking your employees to rate their experience on a rating scale of 0-10. You can have questions like ‘How likely are you to recommend the organization to your peers or friends, on a scale of 0-10’. We will talk more about potential questions in subsequent sections. Depending on their experience, your employees will share their rating. Based on the rating, you can segment your employees into three categories:
eNPS= %of promoters - %of detractors
For instance, if your organization has a total of 100 employees and 61 are promoters, 18 are detractors and 21 are passives, then your eNPS= 61%-18% = 43
The higher the eNPS, the more advocates you have. This suggests you will have an ecosystem of high percentage of employees that are loyal, inspired, motivated and committed.
For growing organizations like yours there are several reasons why eNPS matters to create a sustainable workplace. Such as —
Research shows that the majority of candidates read six reviews before forming an opinion about a company and 70% of people look to reviews before they make career decisions
With employee NPS, you will know how likely your employees are to recommend your organization to others outside. This ensures employer branding which determines the quality of talent you will be able to attract.
By ensuring a good Net Promoter Score from employees, you will be able to manage the reviews effectively.
Employee NPS is very easy to execute, fast and cost-effective. At the same time, it gives you a clear picture of who are the advocates for your organization vs those who are disengaged and are unlikely to make recommendations. This information has two-fold benefits:
It is very rare that an employee will one day decide to leave your organization out of nowhere. Often, the decision to quit starts in advance and can be attributed to several factors including disengagement and dissatisfaction. eNPS, conducted regularly, can help you anticipate potential turnover in advance, when the employee rates low on the eNPS survey. You can use this data to fine tune your engagement plan and identify and address specific challenges.
🚀 Predict and prevent turnover with employee experience surveys by SuperBeings. Learn more
As stated above, eNPS directly impacts the quality of the talent you attract. Similarly, it also impacts how fast you are able to close an open position. If you have a high eNPS, you will receive a higher inflow of applications because your organization will be branded as a preferred place to work. This higher number of applications will translate to faster interviews and closures. Invariably, this will prevent the loss of work hours between transitions.
Finally, eNPS can help you track employee loyalty and engagement over time. If individual and overall employee NPS increases, it reflects that your interventions are moving the needle. However, if the score drops, you may need to relook at your practices and understand the root cause.
As mentioned before, employee NPS is generally measured with eNPS surveys. Therefore, like any other feedback cycle, your eNPS surveys should also follow a structured and cyclical approach. Here are to create an effective eNPS survey process —
Make your eNPS ratings confidential and anonymous. Do not force your employees to give names along with ratings or do not disclose ratings of one to another even if you know who it is from. One of the easiest ways is to use a platform that doesn’t capture respondent data, except the rating. Anonymity will help build employee trust and ensure honesty in the rating received
Refrain from adding too many questions in your eNPS rating. A maximum of 2-3 questions is more than enough. While most organizations use 1 central or core question, you can supplement it with another one to augment impact. For instance, one question can be about probability to recommend, while the other could be on motivation, inspiration.
Having an eNPS rating at regular intervals is important. Ideally, as a growing organization, you should have a monthly cadence. However, if that seems overwhelming, you can start with a quarterly rating, and gradually increase the frequency.
While a 2 or 5 point rating scale can also capture data, a 10 point scale and open ended questions enable employees to be more specific about their answer by giving them more options to choose from. The deeper your eNPS survey insights are, the more accurate actions you can take to improve your score.
Just because responding to an eNPS question requires one click, you cannot assume that you’ll receive 100% participation. You must follow up a couple of times. Using employee survey tools to increase survey participation rate can be useful here. For example, SuperBeings sends reminders and follow up nudges at preset intervals via existing chat tools (Slack, Teams, Gchat etc) directly in the flow of work to maximize response rate.
Finally, you must encourage your employees to be honest in their rating. Anonymity will help you achieve this. Additionally, explain to your employees that the answers will not have an impact on their appraisal and their negative rating will not land them in a backlash.
As a best practice, you can start your employee NPS survey with a core question and then you could follow it up with a few open ended questions. Your first question must follow a rating pattern to get your employee Net Promoter Score. Some of the questions can be:
Here are a few best practices you can use while preparing your follow up questions:
While it is difficult to pinpoint the exact score which can be considered good, there are a few ways to measure how well your performance has been on eNPS.
If you look closely, by formula, your score can range from -100 to +100, depending on the ratio of your promoters and detractors. Generally, any positive score, that is, a score above 0 is considered to be a good starting point. This indicates that there are more promoters in your organization than detractors. This translates to the fact that more employees are likely to recommend your organization than those who will not.
However, only a positive score is not the end of the story. While a positive score represents retention and recommendation, the higher the score, the greater will be propensity and impact.
Furthermore, you must also align your eNPS with other organizations in your industry. For instance, while 60 might be a great score, if all organizations in your industry have an eNPS of 70+, then you may need to relook at your numbers.
Here, studying industry benchmarks can help. However, eNPS is not a data point that is publicly available that you can consume.
At the same time, your own eNPS can also be a benchmark for you over time with an aim to increase every time. The idea is to track your own company’s fluctuation, positive or negative, to identify the reasons or interventions behind the same.
eNPS surveys can disillusion even the most people friendly organizations. It is not rare to have a survey score below expectations. But improving eNPS is easier than you think:
You must have heard that what gets measured, gets improved. The same is true for eNPS. When you capture employee NPS on a regular basis, you can track fluctuations and gauge whether or not the needle is moving. You can get a real time picture of whether the promoters or the detractors are increasing. Furthermore, the fluctuations can help you identify how specific interventions or regular organizational activities impact eNPS.
No matter what the results say, share it with your team members. Even if you have a negative score, share it with the team to facilitate collaborative thinking on what is going wrong. This will help you create an image that you are truly listening to your employees and are taking action. After sharing results, follow up and communicate the next action steps so your employees know that their voices are being heard and impact is being created.
To improve eNPS, you need to understand the rationale or the reason behind each rating. Here, you should ask follow up questions to your employees on what contributed to this particular rating. On one hand, it will help you understand the motivation or the inspiration for promoters as well as you will be able to identify what is stopping detractors from recommending the organization to others.
Put simply, the factors mentioned by promoters can be augmented and focused on, while those from detractors must be addressed or resolved
Once you share the results and engage in collective brainstorming, you must take action.
If you think that you only need to focus on detractors to improve your eNPS, you are mistaken. While you definitely need to pay attention to them, the other two segments, i.e. promoters and passives must not be left attended.
When it comes to improving your eNPS, there is no stopping point. Just because you improve your eNPS by 20 points, doesn’t mean you have reached the pinnacle, even if you are above the industry average.
Employee Net Promoter Score must be a part of a more comprehensive employee feedback framework. The idea is to get more qualitative feedback and insights to compliment the score. You can use open-ended survey comments for this purpose. Such feedback will help you understand where the score came from and how you can take steps to move in the right direction.
Finally, to improve your eNPS, you need to focus on the passives. Based on the formula, you might think that passives have no role to play in eNPS. However, you must understand that they are just one point away from falling in the detractor or the promoter category. Here, your focus should be on moving them up the spectrum. Getting qualitative inputs from them is very important as they have some level of commitment and positive regard towards the organization already.
With eNPS, you can turn employee feedback into a growth strategy both as a business and as an employer. Here’s how:
First, employee NPS boosts the morale of employees who believe that their voice has value and is being heard. It makes employees feel included in the process of building the right culture. Employees who participate in eNPS come with a sense of pride as being a contributor to building the overall experience in the organization. It also comes with a sense of respect when an organization asks the employees for their perception.
Low or negative eNPS is a clear indicator of the level of disengagement. It shares an inverse relationship.
Lower the eNPS, higher will be the disengagement
Obviously, only when employees feel disengaged at work, will they not recommend it to others in their network. This can act as initial information for your organization to create strategic plans to reverse the trend. Furthermore, fluctuations in eNPS can be useful when it comes to sudden disengagement which may not be very apparent, but can lead to mass turnover.
A deep dive into the qualitative aspects of eNPS can help you understand the factors contributing to engagement or disengagement. For instance, if a promoter claims that they gave a high score because of the focus on wellness, it becomes clear that wellness programs can augment engagement. Similarly, if the reason for a detractor is high workload, effective distribution can help improve engagement levels.
Creating, communicating and analyzing employee surveys can be intimidating and time taking. To conduct eNPS in a comprehensive and hassle free manner, you can partner with SuperBeings. Here’s what you get with our employee engagement survey feature —
This is just the tip of the iceberg of what you can do with our engagement survey tool. At SuperBeings, we are constantly trying to improve the engagement processes and make it easier for the people leaders.
Need a helping hand? Talk to our product expert. 💡
“Most organizations fail to manage performance effectively because they fail to look into the system holistically.” - Pearl Zhu, Author of Performance Master
The impact of having an effective performance management system goes way beyond hitting quarterly targets, it also facilitates employee development, high levels of retention and a high performance culture.
Yet sadly, most organizations do not spend nearly as much time and resources into planning and developing a wholesome performance management process as they do chasing goals.
In this article, we break down the components of an efficient performance management system and how you can achieve them in 7 easy steps.
We spoke with several HR practitioners and below are the 7 steps they recommend to build a super effective performance management system.
But before that, it’s important to understand that —
Improving performance is a collective responsibility. And it starts with shifting the mindset around performance — from appraisal to improvement, from annual to continuous.
As HR leader and author of Nothing About Business says —
“Performance management is so tightly integrated with the business that Business has no option but to do it on its own.”
First, you need to start with a continuous approach to make your performance management effective. Simply relying on traditional approaches of annual check-ins, feedbacks and reviews will have limited impact considering the dynamic and volatile market ecosystem. To adopt a continuous approach for effective performance management, you should:
Read our detailed article on Continuous Performance Management to learn more.
Next, a major component of strategic performance management is capturing and analyzing performance feedback. You need to ensure that your employees are offered adequate and comprehensive feedback on their performance and areas of development are worked on.
You can use our Performance Review Phrases template for such performance feedback recommendations.
At the same time, there should be focus on seeking feedback from your employees for self evaluation and to understand what they feel about their work and the organizational culture as a whole.
Here adopting an employee feedback tool can enable you to find success easily. It can help you to not only capture feedback, but also generate insights and share heatmaps on how certain areas of performance can be improved, which is essential for finding success with your performance management initiatives.
A good performance management goes way beyond just reviews and evaluations on how the performance of an employee has been. You need to equip all your line managers and leaders within the organization to conduct powerful and meaningful 1:1 conversations with their team members.
The right conversations have the potential to preempt any potential risk of turnover, drop in productivity, low levels of motivation etc.
Once you have been able to identify any potential challenge, you need to ensure that the conversations take a new avatar. The idea is to have conversations that can address the surfacing risks.
However, conducting directed conversations on different challenges can be overwhelming at times. Therefore, you may want to leverage a guided 1:1/ Meetings tool to train and equip your managers.
Based on the feedback, conversations, reviews, surveys that you conduct, you will have a clear picture of what factors are promoting high performance and which ones are deterrents. The latter ones form the areas of development and learning opportunities. You need to identify these areas of intervention and provide your employees with adequate resources and support to hone the skills and competencies that are needed for effective performance.
Pulse surveys can be an effective way to gauge employee sentiment on a regular basis.
Frequent pulse surveys are excellent for understanding how employees feel about their current capabilities vis-a-vis their role and the external support they need.
Ideally, you can also look at industry benchmarks to understand the types of learning opportunities available for different roles and provide them to your employees.
Thus, to make the most of your performance management, you need to identify and acknowledge the strengths and weaknesses of your organization as a collective measure of your employees and work towards them.
While effective performance management requires learning and development interventions, it is equally important to focus on guidance via mentoring and coaching. Your employees need the right mentorship to help them navigate through professional challenges that may not require upskilling but a change in mindset. Here setting up a formal mentorship program can contribute to effective performance management.
You can also enable your managers to provide the right mentorship and coaching support. You can count on SuperBeings to help you ensure the same.
Undoubtedly, a key step for effective performance management is to navigate collaborations for different aspects of the employee lifecycle. You need to adopt the right tool to capture employee pulse, feedback, review, facilitate continuous performance improvement and much more. Fortunately, today you can find all these features in a unified solution to relieve yourself from the costs of different tools and the added administrative hassles.
The last and the final step for effective performance management is to ensure that you recognize and reward a job well done. This will catalyze a high performance culture by positively reinforcing those who performed well and encouraging others to improve their performance in a bid to achieve rewards and incentives. A few things to keep in mind:
Before we finish, let’s quickly discuss the tangible benefits you will get if you have a solid performance management system. This will help you build a stronger case for performance management and secure leadership buy-in.
Efficient performance management can help you in facilitating the right development opportunities for your employees. Based on a combination of expectations, feedback and conversations, you can enable your team members to grow in their professional journey. This will also facilitate higher retention.
94% of employees say they would stay at a company longer if it invested in their learning and development.
Effective performance management has the potential to create an equal impact on organizational success. When the performance of the teams and individuals increases, it will invariably positively impact the organization as a whole. As employee performance becomes better, productivity, quality of work and other related parameters also improve and impact the bottom line. Furthermore, it leads to creation of a high performance culture. Research shows, that good company culture could help you increase revenue by more than four times
If your organization is growing fast, you may have financial and budget constraints to spend towards employee development and training.
47% of HR leaders are not aware of employee skill gaps, and 60% of HR leaders say that building new skills and competencies will be their top performance management priority.
An efficient performance management process can help ensure that you are able to allocate your resources to interventions that actually make an impact and eventually monitor, track and measure the return on investment.
Performance management goes beyond feedback and performance evaluation. In fact, it actually starts with creating a clarity of expectations.
Most fast growing organizations are chasing multiple priorities and this leads to a confusion among employees on what is expected out of them. In fact, only 50% of employees would “strongly agree” they know what’s expected of them at work. A practical performance management process can help you and your managers create a clear path for employees with a focus on OKRs to ensure everyone is on the same page.
Finally, performance management sets the stage for greater levels of engagement and a better employee experience. When employees feel valued and believe that you are taking genuine interest in helping them grow, the motivation, morale and commitment is bound to rise. As a result, they will be more engaged at work which will eventually show in their performance, productivity and quality of work. The impact on the bottom line is also phenomenal.
Companies with a highly engaged workforce are 21% more profitable
Use the following resources to get started on everything you have learned so far —
And finally, to see how SuperBeings can help, talk to one of our experts today.