How Covid-19 Inspired Changes to Pay and Performance Reviews

2020 brought with it a complete overhaul to many aspects of how businesses and organizations function, including how jobs, pay, and performances are reviewed. What matters after everything is that organizations focus on what matters now and not what mattered at the beginning of 2020 while keeping things fair and consistent.

But re-evaluating pay and performance management doesn’t need to be as stressful and intensive as it has in the past, and this can actually provide everyone with the opportunity to simplify performance reviews and find novel, unique ways for navigating today’s tumultuous waters.

 

 

A survey and report carried out by Mckinsey & Company in the last quarter of 2020 found that around 30% of US companies were adjusting their performance reviews in reaction to the environment created by the coronavirus pandemic. An additional 5% had either put reviews on hold or canceled them, and just 2% had decided to give employees the same ratings that they had received in the previous cycle.[1]

While a large number of organizations are going ahead with a business-as-usual approach, those that are making the right changes and leading the way can provide other organizations with a model for revamping pay and performance reviews as we continue into unchartered territory.

Facebook for example did not do their individual performance ratings for the first half of 2020, instead using a unique formula to calculate employee bonuses set at a rate above their usual standard and giving all full-time staffers an “exceeds expectations rating”, although they did return to their regular reviewing method for the second half of 2020. Google and Box have gone from their usual two review cycles to just one and are prioritising feedback between employees and managers over achievement quotas in reaction to the disruption of the pandemic.[2]

Simplified Reviews

Goldman Sachs on the other hand is introducing a rated performance review where a set 25% of staff will be graded as exceeding expectations, 65% graded as fully meeting expectations, and 10% graded as partially meeting expectations, with pay reviews being given out accordingly.[3] While this system is more simplified and attempts to overlook the interruptions the pandemic has caused to individual employee productivity and objectives by ranking all employees in comparison to each other, their designation of 10% of staff as not meeting expectations could potentially lead to more job cuts than in previous years.

Online Reviews

One of the upsides, however, to switching to using online platforms and Zoom conferences is that the traditional methods of observing employee performance have been revolutionised, in a manner of speaking.

The nature of remote work can in fact force more check-ins between employees and management on a weekly basis while also encouraging the use of shared platforms where work and progress can be directly monitored by all parties. This can in essence replace the need for annual performance reviews entirely.[4]

The major shift in priorities within organizations tends to be focused on job accountabilities due to restructuring and new operating demands, the location where work is carried out and what platforms are used (as is the case with remote working) and adjusting pay reviews for new revenue expectations, budgets, and organizational priorities.

Transparent Reviews

Hilton, for example, after having to cut around 22% of their global workforce, simplified their performance review template to a simple three-question checklist so that both employees and bosses were not focused on achieving old goals and could enjoy a more transparent review style. Hilton management was also encouraged to prioritize employee effort over outcome as a reaction to the fact that many staff were forced to take up unfamiliar roles, and valuing their willingness to work hard during a stressful time in the world needed to be added to their performance evaluation.[5]

NOTES

[1] Mckinsey & Company, “Women in the Workplace 2020 study, https://wiw-report.s3.amazonaws.com/Women_in_the_Workplace_2020.pdf

[2] The Washington Post, “One potential pandemic upside: Performance reviews are getting simpler”, https://www.washingtonpost.com/road-to-recovery/2020/10/19/performance-reviews-changes-pandemic/

[3] Reuters, “Exclusive: Goldman revamps employee reviews, opening door to greater job cuts”, https://www.reuters.com/article/us-world-work-goldman-sachs-exclusive/exclusive-goldman-revamps-employee-reviews-opening-door-to-greater-job-cuts-idUSKCN24S266

[4] The Washington Post, “One potential pandemic upside: Performance reviews are getting simpler”, https://www.washingtonpost.com/road-to-recovery/2020/10/19/performance-reviews-changes-pandemic/

[5] The Wall Street Journal, “Hilton Cutting About 22% of Global Corporate Workforce”, https://www.wsj.com/articles/hilton-cutting-about-22-of-global-corporate-workforce-11592320760?mod=article_inline