The need for a new approach to performance management
By Vivian Guo and Claire Davis | June 1, 2022
The Future of Professional Development: Part 2
In our last post, we talked about how career goals and the meaning of professional development are changing across the workforce. As employees increasingly desire flexibility and work-life balance, the typical work arrangement will likely continue being hybrid or remote (rather than fully in-person). This means the skills that made someone a good manager when everyone was at the office together may not necessarily be the same in the distributed workplace.
Relatedly, the traditional performance management process may need to adapt to new ways of working. In this post we share how proximity bias impacts performance reviews between in-office and remote employees, differing perceptions of skill gaps and the skills needed for promotion, and what these trends mean for Managers and people leaders.
Proximity bias in performance reviews
In partnership with BetterUp¹, we examined 360-degree feedback assessments from 54,000 managers and peers at a variety of companies to understand what performance management looks like in the new future of work.
We were surprised that based on feedback data collected from managers in 2022, remote employees took a hit in performance reviews across most dimensions when compared to in-office peers. This included assessments of skills like authenticity, job performance, executive presence.
Rather than indicating any difference in aptitude or performance, this result was likely due to managers viewing in-person employees more favorably than hybrid/remote peers simply due to proximity or responsiveness bias.
In fact, peer assessments showed significantly less proximity bias than manager assessments: peer reviews showed a much smaller performance gap between in-office and remote employees. In peer reviews, remote and hybrid peers scored considerably higher than in-office employees on skills like relationship building, network leadership, resilience, and emotional regulation.
Perception of skill gaps between in-office and remote employees
Based on Manager assessments, the skillsets with the biggest gap between in-office and remote employees were relationship- and communication-based skills such as:
Network leadership: Employee has strong strategic relationships in place across the organization
Executive presence: Due to employee’s words and actions, other see him/her to have an extremely confident presence
Alignment: Employee aligns others’ efforts by clearly communicating goals
Perhaps the most successful employees in the “next normal” will be the ones who are able to flex the softer skills that are traditionally easier to showcase in-person than remote. These same skills will also enable employees to effectively bring alignment, presence, authenticity, and connection across the remote/office divide.
Perception of the skills you need to get promoted
A similar phenomenon was reflected when comparing results from our Head of People and tech employee surveys⁴. While both personas agreed that performance/results and work attitude were the main drivers of promotion, Heads of People and tech employees disagreed on the importance of skills like teamwork, demonstrating cultural values, and problem solving. In fact, only 1% of employees believed teamwork and problem solving were important to promotion likelihood.
It’s commonly known that communication and teamwork are critical skills for high-performing employees — especially those in management positions — yet companies either aren’t promoting based on those or aren’t perceived to be doing so by employees.
Implications for managers and people-leaders
1. Solving for proximity bias
Given the proximity bias displayed in Manager (top-down) performance reviews, Managers and people-leaders will need to proactively address and help teams understand potential blind spots through tactics like bias training and review standardization.
In terms of structural changes, it will also be important for leaders of distributed teams to work remotely themselves on occasion (vs. skewing to be in-office most of the time) and set clear and shared objectives as it relates to individual and team performance.
2. Redesigning your performance review process
We found that strong organizations are considering not only increasing the frequency of reviews but also review breadth in order to improve visibility into performance across a distributed workforce.
Rather than the traditional annual review process, 21% of companies with strong organizational health are conducting performance reviews more than three times per year.⁶ Most companies with strong organizational health also incorporate downwards and upwards feedback into formal performance reviews.⁶
Additionally, given peer-feedback displays far less proximity bias than manager-feedback, we believe that peer reviews will also become an increasingly crucial data point when measuring performance for distributed teams.
3. Use performance management as a tool for regular employee engagement
In the new future of work, we believe performance management should shift from being seen as a tool for evaluation to one of employee engagement. Rather than deliver a rigid view of performance at a single point in time, the aim should be ongoing conversations around goals, progress, and wellbeing. When managers of distributed teams lack clear and constant visibility into their employees’ work, a more frequent review process — either through regular coaching or more frequent formal reviews — will become critical.
For additional information on these trends and how companies are adapting to the changing environment, check out our full Future of Work Series. And stay tuned for future chapters addressing topics such as benefits and culture in the new Future of Work.
Notes & Disclosures:
1 Please refer to the Disclosures at the end of this article for more information on BetterUp.
2 Data from 360-feedback scores from managers and peers for employees enrolled in BetterUp coaching programs.
3 Data from 360-feedback scores from managers and peers for employees enrolled in BetterUp coaching programs.
4 Data from a survey of ~250 CHROs and 150 tech employees conducted in March 2022. For more details on data source and respondent make-up, reference our Future of Work Series: Professional Development report.
5 Data from 360-feedback scores from managers and peers for employees enrolled in BetterUp coaching programs.
6 Strong organizational health defined as companies with Data from a survey of ~250 CHROs and 150 tech employees conducted in March 2022. For more details on data source and respondent make-up, reference our Future of Work Series: Professional Development report.
7 Data from a survey of ~250 CHROs and 150 tech employees conducted in March 2022. For more details on data source and respondent make-up, reference our Future of Work Series: Professional Development report.