The pandemic performance review

EMPLOYEE reviews, typically a delicate matter, have become even trickier to manage amid the ongoing coronavirus pandemic. With employees working from home on an unprecedented scale and the crisis rendering current business goals moot, companies are being forced to rethink how they assess performance. It's also likely that companies won't have the same capacity this year to reward performers, making it more crucial for them to identify those truly deserving or otherwise.

In July, Reuters reported that US investment bank Goldman Sachs would adopt a new performance review system that would grade up to 10 per cent of employees as under-performers this year, prompting speculation that this could allow for more job cuts. According to Reuters, before the introduction of the new grading system, Goldman Sachs' annual review typically resulted in about 5 per cent of staff being axed, often for missing performance targets.

In Singapore, firms have been urged to turn to job cuts only as a last resort, but that may become less tenable as the crisis wears them out.

Just this week, Singapore Press Holdings shed 140 jobs while Millennium Hotels and Resorts laid off 159 employees after exhausting other cost-cutting measures.

In the face of a worsening business outlook, some are casting a stricter eye on what constitutes good performance. Kartikey Singh, senior client partner at Korn Ferry Singapore, says clients that are still issuing bonuses want to give them only to the highest-performing employees and have made their expectations "more stringent", because the bonus pot is smaller this year.

"Employees have to do about 20 per cent to 30 per cent more work to get a bonus," he estimates.

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Andrew How, Singapore market leader at human resources advisory firm Kincentric, says managers will exercise greater discretion this year. Some organisations are looking at not just this one year, but also previous years' performance to make their judgment, he adds.

But writing in Fast Company, tech industry veteran Maelle Gavet, a self-confessed fan of performance reviews, says one key question that employers also need to ask themselves now is: "What is the role of performance reviews?"

More often than not, they are used strictly as a rating to determine an employee's pay rise, promotion, or exit, notes Ms Gavet. "Landing in the bottom 10 per cent to 20 per cent is a pretty direct path to being terminated," she adds.

She questions if performance reviews could instead serve as detection tools to identify employees who need help or are being poorly deployed: "Can they be used to redeploy talent, rather than simply weed it out?" Still, performance reviews may need to be updated to suit the "new normal" resulting from the pandemic.

New difficulties

With staff working from home for a good part of the year, companies are finding it difficult to assess employee performance due to a lack of face-to-face interaction, according to human resources consultants.

Says Mr Singh: "The absence of direct supervision, face-to-face interaction and the inability to confirm that the employees are spending sufficient time on the job rather than watching Netflix is starting to bother a lot of managers."

Linda Teo, country manager at ManpowerGroup Singapore, notes that it is even more challenging when it comes to employees who were brought on board just before the "circuit breaker" and who continued to work from home during this time.

This is because face time "is often mistakenly used as a productivity indicator", she says.

These difficulties also expose a lack of effort by managers to build relationships and establish trust with their subordinates in pre-Covid-19 times, Mr How points out.

But for some companies, in-person interactions have also been a way to observe employees' soft skills. "Assessing the development of soft skills and all-round personal development has become more challenging given the lack of face-to-face interaction and ability to observe the employees' interactions with different stakeholders," says Nicole Poon, senior vice-president of business operations, partnerships and strategic initiatives at MatchMove.

The financial tech firm has 150 employees across the region and conducts performance reviews every six months.

"We are also mindful of the employee's individual circumstances and potential challenges they could face working from home," Ms Poon explains.

In addition, companies are seeking advice on ways to assess employees when goals have been made irrelevant or impossible by the Covid-19 crisis.

"With the economic downturn, business is not as usual and many of the goals that were set previously are not attainable under the current circumstance, which is by no means the fault of employees," says Kincentric's Mr How.

Adjusting the scales

To better manage and assess performance from afar, the consultants suggest companies ditch the traditional annual or bi-annual review cycle for more frequent and regular conversations. This is to review employees' work progress, and to ensure that managers and staff remain clear on what is expected of each other, Ms Teo explains.

In addition, employers can get "a better grip" on their employees' performance by using project management tools and software to manage workloads and track deadlines.

For example, project management tool Monday allows users to see at a glance who is working on each part of a project and when each task is supposed to be completed. Managers can also view each individual's work capacity and track the time spent on each task.

Managers will also be able to provide "timely assistance to employees when issues crop up", Ms Teo adds.

Such feedback sessions can also be "more democratised" by taking in comments from the individual employee's peers, suggests Korn Ferry's Mr Singh.

At the same time, with the coronavirus crisis rendering existing performance targets less achievable, organisations now need to recognise effort and behaviour instead of just focusing on output.

Pre-Covid crisis, "number-driven key performance indicators (KPIs) were the norm, but this has to change now," says Mark Li, head of client solutions at Randstad Singapore. "We're advising clients to change and identify individual ability in other forms. For example, if an employee is able to work creatively or deliver through a new process, the person should be given brownie points for that."

Likewise, Kincentric's Mr How notes that employers have been traditionally biased towards outcomes. But with "more obstacles in place now than before", firms should focus on how employees get creative or adapt.

Multinational software corporation SAP is one employer that concurs with this view.

"When we look at career development, it's not just the immediate term... and it's important to take a holistic view of how the employee is contributing," its Singapore managing director Eileen Chua says, adding: "If they don't meet the targets, we can look at other measures, such as customer adoption. It's how our employee steps up, not just the hard targets."

Other employers - and their employees - may yet adapt to a new way of assessing performance too. But before that, employers first have to clearly define the milestones and factors that are being used for appraisal and communicate them clearly to their staff, advises ManpowerGroup's Ms Teo. "If not, managers will have difficulty evaluating employee performance and workers may feel that their evaluation was unfair."

And to be clear, these evaluations that HR consultants have spoken of so far only apply to those whose jobs are intact. Workers who have been furloughed for extended periods of the business year face a different situation.

As furloughed employees should not be doing any work for the company, they cannot be objectively assessed against any performance indicators during this period, says Ms Teo.

It also does not work to "simply pro-rate" prior targets according to the duration of furlough as companies that have to resort to this arrangement usually need to review their business models.

Instead, employers need to re-evaluate their business strategies and review goals and performance measures with employees when they are able to resume work, she advises.

In the meantime, being selected to be put on no-pay leave can affect workers' confidence. So, managers should still check in on those workers to ensure they do not feel "left out". After all, they are still a part of the company, Ms Teo points out.

Incentivising work

Even though most firms will not be in a good position to dish out rewards for performers this year, it's unlikely that this will discourage employees from working hard.

Instead, they may be driven by another kind of motivation: the fear of being sacked.

Says Ms Teo: "Some employees may feel less motivated by the possibility of lesser or no rewards.

"But most employees will continue to perform to their best ability as they are aware that should the situation worsen and a reduction of headcount is required, underperformers will most likely be first on the chopping block."

On a less-fearful note, employees should also recognise that it is the best time to step up during a crisis if they are keen to take on a bigger role with the firm, she points out.

In fact, the onus is on employees to showcase their efforts and capabilities.

Discerning supervisors usually know the extent of the work assigned to subordinates and are able to roughly gauge their progress and performance, Ms Teo says.

But employees can also "play a proactive role in seeking feedback from their supervisors on the quality of work, updating their supervisors on their progress and milestones achieved".

Mr Li thinks that overall, it's a matter of how the company frames and communicates the situation to employees. "For example, if they know that they will be rewarded in future for knuckling down now, they will do so."

Still, firms would do well to reward if they can help it, to retain talent.

"The need to pay bonus to high potential employees is even more so in the current climate," says Mr Singh. "Otherwise, organisations run the risk of losing them to other competitors when the market picks up again."

And companies that cannot afford to do so can still be creative about it.

In a survey of some 3,000 workers in Singapore by Randstad this year, respondents rated flexible work hours and vacation benefits among non-monetary benefits highly attractive to them.

In particular, flexible work hours, vacation benefits and healthcare were the three rated most highly by millennial employees.

For Generation Z workers, their top three were vacation benefits, subsidised meals and being able to work from home.

"These point to companies needing to be creative in terms of what's in their kitty that can be provided as incentives," Mr Li says. "Of course, money is great, but it may not be on the plate right now."