Peer Review to the Rescue?

Hearsay Social Inc. is all about communication.

The San Francisco-based computer software company uses social media platforms such as Facebook, LinkedIn and Twitter to help Fortune 100 companies including JPMorgan Chase & Co. and New York Life Insurance Co. connect with their customers.

It only makes sense that a company built around the concept of continual feedback would also implement the strategy internally. That is why Hearsay Social has taken steps to integrate peer feedback into its performance review process, said Zarah Gulamhusein, the company’s director of people.

“Teamwork and collaboration are a huge part of our culture at Hearsay Social and are two of the values that drive everything we do,” Gulamhusein said. “So for us, peer reviews are an important way to get a true, holistic picture of how an employee is performing across teams and to also create a supportive environment where people feel comfortable giving and receiving feedback throughout the year so that there’s continual improvement.”

Hearsay Social’s integration of peer reviews into its total performance review approach is a small part of a larger industry trend toward more frequent, qualitative performance conversations aimed at providing employees continuous feedback in real time.

Companies such as Adobe Systems Inc. and Microsoft Corp. made headlines last year for abandoning the stack-ranking approach in favor of a more qualitative framework.

Facilitating more conversations with a single manager is one thing. Facilitating those same conversations with multiple co-workers is another. This process, known formally as the 360-degree performance management model, pools feedback from an employee’s subordinates, peers and superiors for a more comprehensive representation of their performance.

Still, while good in theory, many companies get tripped up in trying to integrate the approach into their performance management system, according to Tracy Maylett, CEO of DecisionWise, a business management consulting firm headquartered in Springville, Utah.

“I’m a proponent of it so long as it’s done the right way, and most companies are not ready to do it in the right way,” Maylett said. 

The Good, the Bad and the Difficult

Like Hearsay Social, other companies have recognized the value in collecting performance feedback from peers. According to a recent study from human resources research firm Mercer on performance review practices, 35 percent of companies with more than 1,000 employees are currently collecting peer feedback in some capacity.

Human Capital Management technology provider Ceridian HCM Inc. is one of those firms. The Minneapolis-based company says it has found real value in peer-based performance management.

“I think having collaborative communications about a person’s contributions and influence has been really important,” said Lisa Sterling, vice president of Dayforce Talent Management at Ceridian. “You don’t work with your manager on a day-to-day basis. Your peers are the people that have the most visibility to the way you’re performing and what your contributions are.”

Though he is skittish on how companies implement them, Maylett agreed that there is real value to be found in peer reviews.

“The main reason why I would be a proponent is because peer reviews give you a nice, rich, rounded perspective,” Maylett said. “It’s not just operational performance, which is what you garner from a typical top-down performance review.”

Managers who don’t interact with subordinates on a daily basis tend to rely on harder metrics, such as number of sales or projects completed, to make their evaluations. In reality, such measures should only represent a small part of an employee’s contribution to the workplace, Maylett said. Interpersonal skills and the ability to successfully lead a team are valued in a corporate setting, and peers are better capable of gauging those abilities.

Facilitating peer feedback is also an exercise in driving collaboration in the workplace. Dave Rietsema, an Orlando, Florida-based human resources consultant and founder of HRpayrollsystems.net, said allowing colleagues to give one another feedback promotes a sense of camaraderie.

“It promotes the idea that it’s not just about looking good in front of your manager,” Rietsema said. “If you have a culture that relies heavily on teamwork and projects, it’s important to promote a collaborative environment among employees.”

Given its social media roots, Hearsay Social dipped its toe into the peer review pool by creating a private Facebook page where its employees are encouraged to share information and positive feedback. The theory is that initially positive feedback will create a level of comfort that will eventually lead employees to offer more constructive criticism. 

“From a human resources perspective, we’re able to obtain a broader perspective on how each employee is performing,” Gulamhusein said. “Culturally, it helps people feel that their colleagues care about them enough to provide input on their professional development. Over time, this creates a sense of trust that the feedback will be honest and constructive.”

Peer reviews also offer a certain measure of legal security, Maylett said. Collecting feedback from more than one person helps to defend against accusations of discrimination or bias that sometimes arise when an employee receives a poor review.

While there is great potential for peer feedback to improve upon the current performance review models, there are significant challenges to implementing the strategy within an organization, the greatest of which is execution.

Many companies introduce the concept of peer feedback without a clear understanding of the type of information they are hoping to gain from the exercise, Rietsema said.

Not having specific data goals in mind, such as soliciting information about interpersonal skills or leadership style, and simply allowing employees to provide uncurated commentary is a collection of basically useless information.

“You have to have a clear process in mind or you end up with inaccurate results,” Rietsema said.

Inaccuracy and the honesty of the feedback provided is Maylett’s main hesitation about including peer feedback in a performance review. Employees are often hesitant to negatively review both one another and their superiors for fear of how a colleague might respond.

Furthermore, there is also the potential for employees to manipulate the system in an effort to control the outcome of performance reviews, both for the positive and the negative.

“You tend to get one of these ‘You scratch my back, I’ll scratch yours,’ situations going on and the whole process starts to become a game,” Maylett said.

Laying the Groundwork 

While there are significant hurdles to implementing a performance review process that successfully integrates peer feedback, it’s not an impossible task to achieve. As with most changes in organizational structure, the first step is getting buy-in from the top.

“It really starts with support from the leadership team and having a clear set of communications that allow employees to know that the company really wants performance development to be a key focus,” Ceridian’s Sterling said. “Employees need to understand the broader implications of the contributions that they are making to the organization. The whole transformation process really starts at the C-suite level and trickles down.”

When initially introducing the peer feedback to a workforce, providing for continuous communication is vital, Sterling said.

“We are starting to see more and more clients moving away from an annual performance-based review, but they are keeping a similar methodology,” Sterling said. “Scheduling a quarterly or monthly check-in at first to facilitate those conversations is a great first step. Managers will then have the opportunity to see the impact of a more holistic picture of how his or her employee is contributing to the success of the team, department and organization as a whole.”

After an employer creates a structure conducive to collecting peer feedback, it is vital that the information collected from peer reviews is not linked to administrative consequences.

According to Maylett, a clear distinction needs to be made between developmental reviews and appraisal reviews. An appraisal peer review should measure what has been accomplished. This includes operational components such as meeting sales metrics or customer satisfaction.

In comparison, developmental reviews focus on how those metrics were achieved. That’s the day-to-day grind that co-workers have the opportunity to witness and evaluate firsthand.

“When you try to combine the two you lose that developmental richness,” Maylett said.

Maylett and his firm have conducted research showing that when peers are solicited for feedback that is tied to a consequence, scores tend to center around 4.2 on a 5-point scale. Employees choose that number because they don’t want the responsibility of determining whether a colleague gets a raise or potentially fired. The solution is to make it clear from the outset that feedback will not be tied to consequences.

Furthermore, experts recommend eliminating a rating scale altogether. Employees should be asked yes or no questions about a peer’s performance and then allowed a space to provide comments, Rietsema said. This way they are prompted to focus on a behavior instead of a value.

Those employees tasked with evaluating peer reviews should receive specific training, particularly in the area of bias. Rietsema called attention to two specific forms: the halo effect and the horn effect.

Coined by psychologist Edward Thorndike, the halo effect is a cognitive bias in which an observer’s overall impression of a person, company, brand or product influences the observer’s feelings and thoughts about that entity’s character or properties.

In the workplace, this means that if an employee is seen doing something great one time, there is a strong possibility that all further assessments of that employee’s contributions will be seen in a positive light.

Conversely, the horn effect implies that if an employee is seen performing a task poorly or doing something wrong, all future performance tends to be judged negatively.

Accounting for these biases at the outset of a peer feedback program will help ensure that the data being collected is useful.

Finally, the entire process should be rolled out gradually. Hearsay Social is on a five-year plan to integrate peer feedback into its performance management process.

“You want to create a process that is very safe where employees know that there aren’t any administrative actions tied to their feedback,” DecisionWise’s Maylett said. “Then once you get two or three years into it, then you can start adding the administrative piece. You have to build that trust first.”

Technology Makes It Possible

Given the number of variables a company needs to control to make peer feedback a useful component of performance reviews, many have turned to technology.

Some like Maylett don’t believe complextechnology services such as Yammer are necessary. Instead, he suggests simply starting an email thread that solicits feedback from employees as a project is being completed.

“This is not about the tech,” Maylett said. “You can go out and invest lots of money in the best possible system to do this, but it’s not going to make a difference if the system is broken.”

Others like Ceridian’s Sterling, who have helped implement a technology system to aid in peer reviews, disagreed. She said she believes technology is necessary not only to motivate employees to participate in peer reviews, but also, more importantly, to make sense of the information they are providing.

Ceridian uses a system called Conversations to allow employees to provide feedback at any point in time. This differs from the traditional 360-degree feedback model, which puts in place set times for feedback to be collected.

“When feedback is solicited and gathered in real time, that’s really where we’ve seen the biggest advantage,” Sterling said. “At that point, it’s based on a current experience vs. a traditional methodology that uses a ‘look back’ approach, where a set of behaviors can be colored by experiences in between the completion of a project and the review. People are more honest in the moment.”

ViewsHub, a technology platform that allows colleagues to exchange feedback, helps facilitate this in-the-moment appraisal that companies are looking for. The technology works by allowing employees to create project groups where feedback can be exchanged both individually and among the group on an online messaging board.

Employees can also review each other based on a set of behavioral characteristics, including energy and interpersonal intelligence.

“We know that people want to give feedback in a structured way,” said Greg Harrison, founder and project manager of ViewsHub. “Companies can choose which skills are most important to success within their organization and then prompt employees to deliver feedback based on those categories.”

Furthermore, technology allows qualitative data to be collected in a manner that is quantitatively useful.

Ceridian’s approach pools feedback anonymously and creates a kind of word cloud based on commonalities among the reviews. That allows managers to focus on certain behaviors that are most noticed among colleagues. “Feedback needs to be filtered in an unbiased way, and technology makes that possible,” Sterling said.

Furthermore, for the technology to be useful, it needs to be seamlessly integrated into an employee’s day-to-day life. “It has to be a part of your overall employee system,” Sterling said. “You don’t want employees to have to go to various systems throughout the day.”

Products that are able to integrate peer feedback into the same system where employees request time off and manage their benefits are the most successful at the moment, Rietsema said.

Still, regardless of the technology a company chooses, the culture has to first bend to accept peer feedback as a viable means of reviewing employee performance.  

 “You can use technology to help make this happen, but tech won’t make or break the system,” Maylett said. “Above all, it’s really about doing the process the right way.”