We all tend to trust what we can see. If someone is always in the office early and leaves late, you'd probably assume he is a dedicated, hard-working employee. But he might actually be the least productive of his co-workers.
And that's why numerous experts have advised that companies should avoid management by observation, and instead focus on the actual work itself. But many companies have clung to cultures of "face time," in which staffers who log the longest hours are assumed to be the best employees. I, myself, have been guilty of that bias. Though as telecommuting becomes more widespread and the workplace becomes increasingly virtual, management by observation simply doesn't work anymore. Supervisors can't concern themselves with the "where" and "when" of work. Instead, they now have to concentrate on the "what" and "how."
A number of researchers we talked to have observed that the virtual workplace is imposing a healthy rigor on companies. By focusing on what work is being done and how it's being done, businesses are better able to assess the performance of their employees. The result is that favoritism and office politics are less likely to corrupt the selection of who receives raises, bonuses, and promotions. And laggards can be identified more quickly to receive the additional training and attention they require. But that's the upside. The downside is the difficulty of evaluating the performance of employees who can't be seen.
While some companies like IBM and P&G have become adept at remote evaluations, many businesses are still struggling with the basics. From our numerous interviews and research investigating this topic, we have derived a list of the following best practices.
Don't focus solely on results. Performance should be based on a combination of two things: results and behavior. Both are necessary, says Dick Grote, a well-respected researcher in the field, because management shouldn't reward employees who achieve results but break company policies to do so. (And neither should it reward people who follow the rules but don't produce.) In a virtual environment, managers are often tempted to focus solely on results, because employee behavior can't be seen and is difficult to evaluate. But that's just asking for trouble. Telecommuters and other virtual employees who work in physical isolation could easily be tempted to cut corners. Thus managers must figure out ways to evaluate both the performance as well as behavior of their staffers.
Beware unintended consequences. The natural tendency in the virtual workplace is to rely on various metrics to assess employee performance. But those metrics often lead to counterproductive behaviors. The classic example, says Jim Ware, the founder of The Future of Work, are call-center workers who are being evaluated by how efficient they are in terms of the average length of their customer calls. That particular metric easily leads to workers prematurely transferring or terminating calls without really resolving customers' problems. My friend Tony Hsieh, the CEO of Zappos, has taken a very different approach. He encourages long service calls because he feels they are a sign that Zappos is building strong relationships with its customers. It's hard to argue with that philosophy, given Zappos' success and the company's strong culture of trust and collaboration.
Engage the disengaged. Performance reviews and evaluations often fail because people tend to avoid conflict. They merely go through the motions without candidly speaking their minds. In a virtual work environment, that danger is greater because many telecommuters and other virtual workers already feel disconnected from the rest of the organization. What they don't need is to feel even more disengaged by a review process that makes them passive participants. The solution, says Dick Grote, is to involve them from the start. A manager could ask each telecommuter to submit suggestions for performance metrics that could be used to assess both results as well as behavior. Beyond engaging employees and helping obtain their buy-in, creative ideas often emerge to assess worker performance in better ways. Moreover, the back-and-forth conversation between supervisor and employee about how to assess performance will also set the right tone that the relationship is a two-way street. This sets the stage for greater candor in future discussions so that disagreements can be resolved in productive ways.
Forget about employee self-evaluations. Although employee buy-in is crucial, companies shouldn't make the mistake of thinking they can obtain it simply by having employees do self-evaluations. Even in a traditional work environment, the effectiveness of self-appraisals is questionable. In a virtual workplace, self-evaluations are even more prone to failure because of two types of human bias. The first is that people usually think they are better at their jobs than they really are (called the "overconfidence effect"). The second is that people are likely to take too much credit for good results (called the "fundamental attribution error") and too little responsibility for things that go wrong. Those two types of biases are especially dangerous in a virtual environment, because employees are often working in isolation bubbles without regular feedback.
Level the playing field. As companies accommodate increasingly virtual workplaces, they can easily make the mistake of comparing apples with oranges. Here's how that typically happens. When a department begins to allow telecommuting, management develops a new system for evaluating those workers based on specific metrics. But then it continues to assess the traditional office workers using the old system. The result: people doing the same job are compared as apples and oranges. This can be especially problematic if a "forced ranking" type of approach is used, in which managers do side-by-side comparisons of workers. The danger is that telecommuters will be slighted for raises and promotions because they're "out of sight, out of mind." By using a single performance management system for all employees doing the same job, supervisors can help minimize any natural favoritism toward those who have greater face time in the office.
Performance management systems are one of the toughest things for companies to get right. Even HR folks will admit that the process often leaves much to be desired. In a recent survey [PDF], nearly 60% of HR execs rated their own performance management systems with a grade of just "C" or lower. That's appalling, given that salary raises, bonuses, and promotions are typically tied to those systems. Yet it's hardly surprising because managers are increasingly having to evaluate and assess what they can't see — namely, virtual workers. But, as I have learned over the years, such employees can be evaluated properly even if they can't be observed directly. The trick is to avoid the common traps — like focusing on results at the expense of behavior — that can distort how we evaluate the performance of those we can't see.
Keith Ferrazzi
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