There’s been a significant shift in tone at many organizations over the past few months, amid heightened concerns about the economy. Executives have renewed their focus on individual worker performance, something that many had given lower priority amid concerns about retention, burnout, and adapting workplace practices over the first years of the pandemic.
Google recently instituted a “simplicity sprint” to improve efficiency, with Alphabet CEO Sundar Pichai telling employees to work with “more hunger.” At Meta, where CEO Mark Zuckerberg told employees on a call earlier this summer that he planned to “turn up the heat,” managers have been asked to identify and “move to exit” low performers. Goldman Sachs recently indicated that it plans to reinstate its infamous performance-review system, which historically has culled the bottom 5% of performers, after a pandemic pause. Swag is out. Layoffs are in.
And as short-term economic pressures rejigger company priorities, initiatives with longer-term payoff, like employee development, are taking a backseat. As one CEO recently told The Wall Street Journal: “In the good times, we want to focus people on the growth aspects… But when the economy appears to have the potential for that downturn, it’s fundamentals 101.”
To understand how companies can maintain a forward-thinking approach to worker performance, learning, and growth even in times of economic uncertainty, we reached out to Dr. Kenneth Matos, director of people science at the employee-feedback platform Culture Amp, which recently published a report on why human-resources leaders should prioritize development. Below are excerpts of our conversation, edited for space and clarity:
What advice do you have for companies that are newly or especially worried about productivity right now?
It really is, are you thinking long term or short term? A good example is manufacturing, which often obsesses about never stopping the assembly line. ‘Gotta punch out as many widgets as possible,’ versus ‘Let’s take the longer-term perspective. It’s better to stop the assembly line and fix something now for long-term productivity, than to make this one week’s numbers but have the machine slowly break down, and then we actually miss a month’s numbers.’ There has to be that open acknowledgement of, are we emphasizing this for just this quarter, or emphasizing this for the next year? What level of productivity are we investing in? That then leans you more towards one way or the other. If it’s, ‘We want productivity to last long-term,’ then you’re going to do the coaching work. ‘If you’re saying, I just need to make this quarter’s numbers,’ not so much.
Those aren’t necessarily mutually exclusive. I think one of the things that a lot of organizations get wrong is they moralize business strategy: ‘Coaching is good, orders are bad,’ or vice versa. In reality, it’s that you’re trying to achieve a goal in either a sustainable way or in a one-shot way. When you define what you’re trying to achieve, then it’s much easier to say, ‘All right, if you don’t hit this quarter’s numbers, we’re going bankrupt. Let’s just hit those numbers, and we’ll flow coaching in later.’ On the flip side, you may say, ‘We’re not in any danger of folding, so let’s do the coaching process.’
What does the coaching process look like? Why is that valuable?
Culture Amp believes very strongly in having a good coaching culture, but sometimes it’s coaching, sometimes it’s advising. Just ask: ‘Do you want me to advise you in this moment, so that you can just get through a thing? Or do you want me to coach you so that this is a development moment?’ And the employee then says, ‘I’m really under time pressure. Let me just get advice. And then we can talk about this in our next call and that can be coaching.’ Others say, ‘I feel like I have some space. Let’s coach.’
A lot of times, organizations get so focused on doing a thing that they lose track of the development and processes that enable people to do those things without being micromanaged. And so a good coaching culture shifts its focus away from just saying, ‘Do this. You don’t need to think, just obey me,’ and starts saying, ‘This is what we want to accomplish. How do you think we get there?’ It pushes the employee to engage in the actual thought process of how things get done, which I think is a challenge for a lot of managers when it’s all top-down, ‘Here’s the order, just do it.’
You get a lot of resistance with that: ‘This seems stupid. Why are we doing it?’ Whereas if you prompt the employee to think through the process, very often they come to the same conclusion, or they reveal to you what information they lack, or they come up with a better idea. I think a good coaching culture approaches giving direction in that manner. It’s curious. It enables people to understand why things are done, which ultimately allows you to spend less time managing them, because they’re like, ‘Well, I understand how this decision gets made. I have all the information. I’m just going to make a decision you would’ve made.’ That’s also how you get better leaders and managers.
There’s been some reporting in recent weeks that as companies brace for this downturn, they’re getting more harsh in their feedback. What do you make of this?
If you need to drop your performance review and put it back—if you’re saying ‘It needs to get harsh’ or ‘It needs to get soft’—then you’re not really doing good performance reviews to begin with. You haven’t communicated to your people what performance is for you. You haven’t communicated clear enough goals and guidelines. You haven’t invested in ensuring that you enable them and train them and develop them to be able to hit those goals that you’re putting forward. And so it ends up wobbling back and forth. You get too harsh, you break people, they leave. You get softer to get people in, you keep them, but then the performance standards decline. And then suddenly you’re like, ‘Oh, gotta get harsh again.’ If you have that well thought-out, consistent performance perspective, it doesn’t wobble nearly as much.
In an economic climate like this, when companies might be downsizing or pausing initiatives, how can they make sure employees still feel like they have room to grow and advance?
The organization that’s going to invest in development should also have some really clear thoughts about growth: Is there a place for me to go when I become really amazing? If you have a couple of leaders or managers thinking about organizational expansion, what are we going to do next? Because then the employee is like, ‘I’m super developed. Where’s my promotion?’ Let’s start talking about this new research area, this new market that we want to break into, that’s going to grow your company in tandem with the growth of your employees.
If organizations are doing a culture-first approach to layoffs, they are thinking about, ‘How do I make these moments meaningful for people?’ For example, when you’re thinking about who’s going to cover for a role that is now vacant, who does it actually benefit to cover this role?
What will usually happen is they’ll throw all their best people at everything, and those people will burn out and leave as soon as the market changes. All the knowledge walks, and they have to rebuild everything. But instead you’re focused on, ‘Okay, who here actually will be growing? If they’re doing this work, let’s get them to do some of that. Let’s have the other person mentor them.’ And then it’s a much more interesting experience for both of those employees, as opposed to saying, ‘You’re super skilled. You just go do it, because then nobody has to think about it.’
Read a full transcript of our conversation, including more about why employees value career security over job security, what to do when workers outgrow their roles, and how performance reviews can backfire.