- Many organizations are reinventing their performance-review process for the post-pandemic world.
- J&J's new approach involves giving employees more frequent feedback on their job performance.
- The company also changed the numerical grades that are part of an employee's review and tied to pay.
About 10 years ago, when Johnson & Johnson was in the middle of overhauling its performance-review systems, Michael Ehret, then a human-resources director at the company, received some pertinent advice.
"A colleague said to me, 'You know, the best performance review I ever got was on a napkin,'" said Ehret.
Today, Ehret is the global head of talent management at the healthcare company, and he finds himself reflecting on that napkin more and more. "At the end of the day, it's not about the tools or technologies or the processes — it's about meaningful conversations," he said. "We have to make those conversations between managers and employees as frequent and as easy as possible."
At a time when many organizations are reinventing their performance-review process for the post-pandemic world, simplicity and effectiveness are guiding principles for J&J. The company, which logged sales of $93.8 billion last year, has done away with tedious, document-heavy annual meetings and replaced them with periodic feedback sessions focused on employees' job performance and career growth.
It's a change that should benefit both workers and their bosses, according to Peter Cappelli, a professor of management at Wharton and the director of the school's Center for Human Resources.
"We have known for a long time that ticking boxes at the end of the year is not a good or functional way to evaluate performance," he said. "Too often the manager has forgotten what their employees did, and by the time the employees get the feedback, it's too late to do anything about it."
Helping workers figure out how to do their jobs better and develop their careers requires real-time conversations so that problems can be solved as soon as they arise, he said. Cappelli likened performance discussions to lifeguarding. "Checking the water once a day is probably better than not checking at all, but if you want to keep people from drowning, you need to do something about the splashing the moment it's happening."
'People want coaching on how they're doing and where they can get better'
In the aftermath of first COVID-19 lockdowns in 2020, J&J, which has more than 140,000 employees worldwide, made several refinements to its performance-review process, as Insider previously reported. According to Ehret, J&J made the changes based on employee sentiment from surveys and focus groups.
"We look at that data that we collect in lots of different ways — by levels, segments, generations, and so on," said Ehret. "And one thing we found is that what different people want is sort of the same: They want to work for a company that has a purpose, mission, and vision that's aligned to their own value system, and they want to know what their path is for how their career can grow."
In light of that feedback, J&J now requires managers to have many more frequent check-ins with their employees regarding performance and growth. Managers conduct beginning, middle, and year-end conversations around performance goals, in addition to four or five conversations per year focused on professional development, Ehret said.
"People want feedback and coaching on how they're doing, where they can get better, and where they can continue to grow."
'We believe in paying people in a differential way for differentiated performance'
In addition to changing the cadence of performance conversations, J&J made other modifications to its review process.
For example, in the company's previous performance-review process, J&J employees were asked to record their achievements from the past year. Many employees documented their every accomplishment. But this year, the company suggested 140-word limit on the question to simplify the process and create more focused conversations.
The company also made a slight — but critical — adjustment to how it scores employees.
Like many other companies, J&J has long given employees a numerical grade as part of their review. The scale runs from 1 to 4. In the past, 1 indicated the employee didn't meet expectations; 2 meant the employee partially met expectations; 3 signified the employee fully met expectations; and 4 indicated the employee exceeded expectations.
An internal study found that three-quarters of employees said they liked ratings but that they didn't understand how the numbers connected to their pay. What's more, the short descriptors didn't sit well. A rating of 3 was respectable in theory, but some employees said working hard all year only to learn they had met expectations was demotivating.
This year, J&J introduced new nomenclature: 1 is minimal, 2 is moderate, 3 is strong, and 4 is exceptional. It's a small shift, but one that aims to help employees reframe feelings about their job performance.
Ehret said these changes to the review process are intended to create a clearer link between people's pay and their performance.
"We believe in paying people in a differential way for differentiated performance," he said. "Whether it's bonus or stock payouts or other incentives that are reward-based, it doesn't get paid out the same to everyone. It is predicated on a number of factors led by performance."
But in the end, it all relates back to the napkin.
"We hear consistently from our employees that they want to know what their priorities are — what their managers need and expect from them, and they also want coaching and development," he said. "It's about having meaningful and powerful conversations."
This story was originally published on December 20, 2021.
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