Although other companies are eliminating annual performance evaluations, Facebook is not. Focus groups and a survey that Facebook conducted found that 87% of employees wanted to keep performance ratings. As a result, Facebook decided to keep its traditional performance management system involving ratings. Facebook conducts performance reviews every six months based on self-evaluations and insights provided by an employee's manager and peers. The reviews are conducted every six months to account for the quickly changing nature of the business.

Facebook takes several steps to ensure that its system is fair and transparent, and that it focuses on development. Evaluaters are asked to provide ratings on specific performance dimensions, such as technical contributions, before they make their overall performance rating. Peers' evaluations are shared with each other and their managers. Managers are trained to stay up to date on employees' projects and provide employees with feedback and help, if necessary. Managers attend meetings and discuss their direct reports, defending and advocating for them and considering their peer evaluations. The goal of these meetings is to reduce the effect of individual managers being hard or easy evaluaters. After the managers write their performance reviews, they examine them for bias (e.g., if words such asaggressiveorabrasiveare used more often to describe women and result in lower evaluations). The overall performance ratings are then converted directly into compensation decisions using a formula. This allows managers to focus on making accurate performance evaluations rather than on having to painstakingly deliberate about compensation.

Facebook has eliminated the problem of employees being categorized as excellent, good, or poor employees from one year to the next, whether they deserve it or not by using stretch goals (what they call 50-50 goals). These goals are challenging: There is an equal chance that employees will or will not reach these goals. As a result, employees have a chance of just one in three that they will receive the same overall performance rating each year.

QUESTION

1. Why do you think Facebook's employees wanted to keep rather than abandon performance ratings? Do you think performance ratings are necessary? Why or why not?