Performance Management System - Case Study Example

Performance Management System: A Case of Google Inc. Name Institution Course Date Table of Contents Table of Contents 2 Executive Summary 3 1.0 Introduction 4 2.0 Google Company Overview 4 3.0 Organizational Findings 5 3.1 Google’s Performance Management System 5 3.1.1 Self-Review 5 3.1.2 360-degree Feedback 6 3.1.3 Calibration 6 4.0 Evaluation of Outcome of Performance Management Process 7 5.0 Conclusion and Recommendations 9 References 11 Executive Summary Human resource management is important for the success of a company. To survive in today’s competitive, dynamic and complex business environment, companies need to build a strong workforce with employees with the right skills and competence. However, this is achievable through effective performance management. Google Inc is one of the companies with the most advanced human resources. This report has evaluated the performance management process of Google and analyzed the outcomes of the company’s performance management process. The analysis found that Google’s performance management process consist of self-review, 360-degree feedback, and calibration performance management systems. These systems are not only in line with the best practice, but also helped the company have a broader view of its employees strengths and weaknesses, thus helping develop the right development programs for each employee and aligning them to the company’s objectives. The report, however, recommends that Google should consider introducing management by objective (MBO) and psychological appraisal techniques alongside the performance management systems it already adopts for greater outcome. 1.0 Introduction Human resources are valuable asset for any company (Risher 2011, p. 274). In today’s dynamic business environment, companies need to have productive employees who know what is expected of them to ensure competitiveness and success. This requires building strong workforce consisting of highly skilled and competent staff with the ability to drive a firm into success. However, effective people management not only involve hiring skilled staff; rather a company must ensure that the performance of each member of the staff is periodically reviewed and evaluated to see if they are performing to the standards expected or not through performance management. Panda and Reddy (2016, p. 1) define performance management as the process involving the employer and the employees working together to plan, monitor and assess work goals and overall contribution of an employee to an organization. Google Inc. is an employee of a company whose success is partly link to effective management of the performance of its staff. This report begins by providing the background of Google Inc. It will proceed to analyze and evaluate the performance management processes used by Google and assess how it helps the company achieve its objectives. 2.0 Google Company Overview Google Inc popularly known simply as Google is an American multinational technology corporation founded in 1996 by Sergey Brin and Larry Page both of whom were Stanford University PhD students at the time. The company specializes in the provision of internet-related services and products, including search, online advertising, software, hardware and cloud computing among others (Google 2017). The Mountain View, California-based company has expanded over the last two decades to become a global brand. Today, Google ranks among the world’s most valuable brands. The Google Search engine is the world’s number one most used search engine (Schmidt et al., 2015, p. 4). Google search engine handle more than 150 million searches every day. The success of Google is linked mainly to its commitment to innovative culture that ensures that it keeps developing innovative products and services that meets the constantly changing needs of consumers in the market. In 2016, Google posted revenue totaling US$89.5 billion, the largest component of these revenue (67.39%) coming from advertising (Google 2017). Google also operates a number of subsidiaries that include YouTube, AdMob, Nik Software and ITA Software. According to the most recent annual report, Google has employees totaling 72,053 people, making it one of the largest employers in the technology industry. 3.0 Organizational Findings 3.1 Google’s Performance Management System Google is not just a Silicon Valley, but also has is thought to have the most advanced human resource, an invaluable asset that it uses to achieve a sustainable competitive advantage. Google believes that, to survive and compete effectively, it must hire only the best and select the best from a pool of candidates (Google 2017). Besides hiring and selecting only the best in the labor market, the company is committed to creating a meritocratic work environment, where top performance are singled out and rewarded employees are developed to achieve their full potential. All these are achieved through effective performance management system that the company has put in place that has seen Google become one of the world’s most valuable brands. 3.1.1 Self-Review The first dominant performance management system used at Google is performance review/performance evaluation, which is conducted on an annual basis and which consists of two components namely “preview” that is conducted at the end of the first semester and “complete review” conducted somewhere in October and November every year. When rating employees at Google during performance appraisal, managers are expected to take two important things into consideration (Klau 2012). These are the results attained in terms of what individual employees have accomplished and behaviors and how the workers managed to achieve these results. At Google, performance evaluation begins with self-evaluation. Self-evaluation at Google involves each individual employees in the company required to self-evaluate their performance based on five cardinal criteria. First, each employee is expected to self-evaluate based on Googleyness. Googleyness is a criterion that requires individual employees to evaluate themselves to see if they adhere to Google values (Klau 2012). The second criterion for self-evaluation is problem solving, where employees self-evaluate their analytical skills to see if they have the desired problem-solving skills. The third criterion for self-evaluation is execution, where each employee is expected to self-evaluate their execution skills to see if they have the skills and competence to deliver great work autonomously without necessarily having to depend on managers or peers (Ledford et al. 2016, p. 13). The fourth base for self-evaluation at Google is thought leadership, in which employees evaluate their leadership skills to see if they have the right leadership skills that Google can rely on for its future success (Lebowitz, 2015). Lastly, members of staff are expected to self-evaluate in terms of presence. In this respect, employees are required to evaluate their performance to see their ability to be heard, which is related to emerging leadership. 3.1.2 360-degree Feedback Google also adopts the 360-degree feedback as part of its performance management system (Crace, 2015). The main aim of using 360-degree feedback at Google is to enable managers have a holistic picture of their report so as to minimize bias. The process starts with the managers and the employees picking a representative and peers who to participate in the review. Once the employees have selected their appropriate peers for performance review purposes, the peers are shortlisted, discussed and validated by the managers taking into consideration how well the peer is placed to assess the employee’s performance and how close the peer and the employee are to the contributions that the employee has made (Lebowitz, 2015). The peers are then given a chance to evaluate the performance of the employee key strengths of the employee that include the things that the employee should continue doing and the weaknesses which include the areas the employee needs to improve on or develop, as well as rating the employee on the five criteria for self-evaluation discussed earlier in this report. During the review, the peer reviewing a colleague is expected to comment on the contributions of the employee being reviewed to the organization or project (London & Beatty 1993, p. 78). 3.1.3 Calibration Calibration is a performance evaluation method that involves a group of managers at Google hold a formal meeting where they evaluate the employee’s provisional ratings together. The calibration ratings is done based on the review results obtained from self-reviews and peer-review (360-degree feedback) (Lebowitz, 2015). The employees are rated here based on a number of parameters, which include “needs improvement, consistently meets expectations, exceeds expectations, strongly exceeds expectations and superb.” During calibration meetings, the output of each worker’s performance is rated for the period under review. Once rating has been completed, the managers are expected to hold another meeting where they give the feedback to the employees factoring in the peer-reviews and the impression of the managers of the workers. A third meeting is held where the managers are expected to provide feedback on compensation and promotion is communicated. 4.0 Evaluation of Outcome of Performance Management Process Self-review has proved an invaluable performance management system at Google Panda and Reddy (2016, p. 2) argue that, by giving employees a chance to evaluate their own performance, this gives every employee the opportunity to understand their strengths that they need to maximize on and areas of weaknesses with regards to performance, which might require improvements to ensure better performance. At the same time, Google has benefited from this performance management system as it ensures that employees do not just become recipients of feedback; rather ensures that they are engaged as they become part of the performance review process. Self-review has also been helpful to Google in ensuring that the company achieves its performance target as self-reviews give the company a broader perspective into the performance of its staff and their views about their performance. Using the results from self-reviews, Google ensures that it maximizes the strengths pointed by individual employees to achieve greater results while weaknesses pointed out are addressed through training, counseling and mentoring programs among others to enable every employee achieve their full potential. Besides, self-review is in tandem with best practice as it is supported by Social Cognition (learned self-efficacy) Theory proposed by sociologist, Albert Bandura. The theory holds that human behavior and motivation is determined by the interaction of various factors that include cognitive, personal, behavioral and environmental factors (Redmond & Slaugenhoup 2016). Bandura defined the term self-efficacy as one’s belief in the ability of another person to succeed in a given situation. Social cognitive theory has four goal realization processes, namely self-observation, self-reaction, self-evaluation and self-efficacy. Self-observation holds that observing oneself can not only inform but also motivate. Self-evaluation holds that self-evaluation is beneficial to an employee because it informs the person of their current performance level to see if it can result in goal achievement or desired goal. Accordingly, this implies that the use of self-reviews is a best practice as it enables an employee to compare their levels of performance with the performance target, which is supported by Social Cognition Theory. Source: Redmond and Slaugenhoup (2016) The adoption of 360-degree feedback has benefited both the employees or Google and the company as a whole in its quest to achieve high performance targets. Google management reveals that the use of 360-degree feedback has helped it gain a broader perspective about its employees with regards to their behaviors and performance (Lebowitz, 2015). The company attributes this to the fact that 360-degree feedback involves an employee being reviewed by people who are closer to them and who understand how they perform better, such as colleagues or customers. Accordingly, this ensures that employees are rated accurately and this not only help the company plan how to improve employee weaknesses and maximize on the strengths identified, but also help in goal setting (Basu 2015, p. 56). According to goal-setting theory, a good goal needs to be SMART. Edwin Locke in his study observed that goals have a direct impact on employee performance. The researcher observed that persons who set difficult, but specific goals perform better than their counterparts who set general and simple goals (Kumari & Malhotra 2012, p. 1). The theory implies that companies need to set goals that are specific, clear, realistic and challenging. However, this is can only be possible if a company understands how every individual in a company performs in terms of their strengths and weaknesses. Therefore, by gaining feedback from peer-review, Google managers are able to set SMART goals for its employees and this produces motivational effect on staff. Calibration performance management system has proved invaluable to Google it enables Google to identify employee skill gap and performance area that needs improvement so as to maximize the employees potentials. Calibration has also proved beneficial to Google by enabling it sees if its workers are meeting or exceeding expectations. As for Google employees, calibration has motivational effect because it not only provides them with feedback regarding their performance level and pointing their areas of weaknesses that requires improvements, but because this performance management system ensures fairness of performance rating (Risher 2011, p. 276). The fact that calibration has a motivational effect on the employees implies that this system is in line with performance management best practice. The impact of feedback on motivational level of an employee is exemplified by intrinsic motivational theories that maintain that behavior is driven by innate reward (Ledford et al. 2016, p. 11). Therefore, providing positive feedback increases intrinsic motivation of an employee through competency. 5.0 Conclusion and Recommendations Performance management is a key human resource function that seeks to ensure that employees have the skills and competence to achieve the company goals. Google adopts a variety of performance management systems that are integrated into one that include performance evaluation based on self-reviews, 360-degree feedback, and calibration methods. The adoption of these performance management systems have enabled the technology gain a broader perspective of its employees’ level of performance in terms of strengths and weaknesses, thus enabling it adopt the right cause of action based on the feedbacks. Nonetheless, going forward, Google should consider implementing the following recommendations as part of its performance management. In addition to the above discussed PMSs, Google should consider introducing Management by Objective (MBO) for use in reviewing the performance of its staff. Proposed by Peter Drucker, MBO is appropriate for Google as it would enable the tech-giant identify and effectively plan how the goals are to be achieved. MBO will also enable Google to properly prepare for uncertainties and hurdles that might hinder its plan. Besides, MBO will enable Google to achieve greater efficiency, save resources and enhance employee morale by ensuring that goals (SMART) are properly set, managed and achieved, in tandem with goal theory. It will also be appropriate for Google to consider adopting psychological appraisal technique that would involve assessing the workers’ intellects, analytical skills, emotional stability and psychological traits as this would make it easy for Google managers to assign employees in appropriate teams. References Basu, T 2015, ‘Integrating 360 degree feedback in to performance appraisal tool and development process,’ IOSR Journal of Business and Management, Vol. 17, No.1, pp. 50-61. DOI: 10.9790/487X-17135061. Crace, J 2015, Work rules: Insights from inside Google by Laszlo Bock – digested read. The Guardian 19 April, viewed 22 May 2017 https://www.theguardian.com/books/2015/apr/19/work-rules-insights-from-inside-google-laszlo-bock-digested-read Google 2017. About Google, viewed 22 May 2017 https://www.google.com/intl/en/about/ Klau, R 2012, How Google sets goals: OKRs, viewed May 22, 2017 https://library.gv.com/how-google-sets-goals-okrs-a1f69b0b72c7 Kumari, N., & Malhotra, R 2012, ‘Effective Performance Management System For Enhancing Growth, ‘Global Management Journal, vol. 1, pp. 1 http://globalmj.eu/?p=557 Lebowitz, S 2015, Here's how performance reviews work at Google, viewed May 22, 2017 http://www.businessinsider.com/how-google-performance-reviews-work-2015-6?IR=T Ledford, G. E., Benson, G. S., & Lawler, E. E 2016, ‘A study of cutting-edge performance management practices: Ongoing feedback, ratingless reviews and crowd-sourced feedback,’ World at Work Journal, pp. 8-24. London, M., & Beatty, R. W 1993, ‘360 degree feedback as competitive advantage,’ Human Resource Management, vol. 23, no. 4, pp. 77-82. Panda, S., & Reddy, K. J 2016, ‘A study on impact of performance management system on organization,’ International Journal of Industrial Management (IJIM), vol. 2, pp. 1-6. Redmond, B. F., & Slaugenhoup, E. L 2016, Self-efficacy and social cognitive theories, viewed May 22, 2017 https://wikispaces.psu.edu/display/PSYCH484/7.+Self-Efficacy+and+Social+Cognitive+Theories Risher, H 2011, ‘Getting performance management on track,’ Compensation & Benefits Review, vol. 43, 273-281 Schmidt, E., Rosenberg, J., & Eagle, A 2015, How Google works: hacked. Books Content Development, New York. Read More