In the past several months, companies have meaningfully changed how they approach performance management. Based on our 2020 Performance Management Benchmark Report, we identified interesting insights on how the tech industry has compared to financial services, health care, and other sectors.
Our responses from 445 HR professionals and business leaders uncovered some similarities between tech and other industries, such as adoption of reviews, ratings, and continuous feedback. Where tech leaders have responded differently is in their challenges with organizational alignment. Tech firms also take a different approach to performance management, and incorporate more data into their decision-making and planning.
Consistencies with Peers in Usage of Reviews, Ratings, and Continuous Feedback
First, let’s start with the similarities between performance management in the tech industry versus other sectors.
Performance ratings are also consistently communicated to employees: 96% of tech respondents communicate ratings, versus the 89% peer average. Regardless of whether your company uses ratings or not, communicating performance feedback regularly helps employees grow and develop.
Continuous feedback adoption is another similarity between tech and other industries. Sixty-three percent of tech respondents currently use continuous feedback, vs. the 60% peer average.
Per the 2020 Performance Management Benchmark Report, there is room for improvement here. Since 2018, there has been a 170% increase in the percentage of leaders & HR professionals who expect managers to offer feedback to direct reports daily. Similarly, there has been an 89% increase in the percentage of employees who want formal performance conversations monthly or more frequently. One thing is clear — leaders, HR teams, and employees alike see the value of continuous feedback, and desire more of it.
Tech Industry Struggles with Organizational Alignment, Partnership with Leaders
Another area of opportunity for the tech industry is improved alignment with leaders, peers, and teams. This was a surprising insight for us: as professionals comfortable with technology, we thought tech respondents would have less difficulty staying connected to their colleagues. The survey data indicated otherwise! Tech respondents are:
- 3X more likely to have more frequent disagreements with leadership
- 1.7X more likely to say it’s harder to stay aligned with their team
Similarly, tech respondents are less likely to partner with leadership on driving a culture of feedback:
- While 17% of all respondents said that they partner with leadership to run their continuous feedback program, 0% of tech respondents said that they do
- Tech respondents are 55% less likely to inform leadership about the change to a continuous feedback approach
- 38% of all respondents said that executive support was most helpful in shifting to a continuous feedback model — and only 23% of tech respondents felt the same (a delta of 65%)
How can tech companies improve organizational alignment? Consistent communication, as well as technology to support productive 1:1s and goal alignment, can help tech leaders stay connected while they’re remote. More best practices for goal-setting in times of change are available in this NextRoll blog post.
Fewer Workforce Changes in the Tech Industry
Another difference between the tech industry and other sectors is that the former was less impacted by the events of 2020. Per the survey data, tech respondents were:
- 2.1X less likely to have executed a Reduction in Force
- 73% less likely to have furloughed staff
- 76% more likely to report “no impact, business as usual” regarding the current climate
Tech respondents were also more likely to forecast smooth sailing ahead. Per the survey data, tech leaders are 1.4X less likely to anticipate changes in workforce planning later in 2020.
Tech Respondents More Likely to Use Data to Predict Employee Performance and Turnover
Rachel Ernst, CHRO at Reflektive, believes that there are a few reasons why tech companies have fared well versus other industries in 2020. “Not only is technology crucial to all of our day-to-day activities, but tech firms also had robust talent plans available at the start of the pandemic thanks to their strategic, ongoing usage of people data. This forward-looking approach allowed tech companies to make smaller changes early, rather than waiting several months to execute major organizational changes.”
Survey data also reveals the tech industry’s data-backed approach to performance programs:
- 78% of tech respondents use people analytics to predict employee performance, which is 56% higher than the peer average
- 77% of tech respondents use people analytics to predict employee turnover, which is 48% higher than the peer average
Additionally, tech firms expect to rely even more on technology in the future. In the next 6 months, 48% of tech respondents expect more investment in technology, which is 37% higher than the peer average.
Per Taylor Orr, Talent Management Program Manager at Dropbox, “We’re continuing to look at more sophisticated ways to tie individual performance to team and company performance. We’re analyzing what makes individual contributors successful and managers impactful at Dropbox, and this requires synthesizing and analyzing many sources of data, including employee survey scores and performance data. By figuring out what makes people successful, we can encourage these behaviors starting at the recruiting stage and continue to pepper our learnings throughout the programs and processes that touch the employee lifecycle.”
Having a data-backed approach to performance management – as well as products and services that can be used remotely – has helped tech companies weather the up’s and down’s of 2020. With the right programs in place, all tech companies can boost communication and alignment, and ultimately achieve key goals for their organization.
Interested in learning more performance best practices for tech companies? Schedule a consult with an expert.