You don't just build a billion-dollar empire without a high-performing team.
Facebook is famously known to connect people worldwide and fundamentally invented the "social network" as we know it today.
Along the way, it has acquired giants like Instagram and WhatsApp, upended traditional social media, and adapted to regional languages to expand its geographical footprint.
None of this growth would have been possible without a team of driven individuals. Nor without a carefully crafted performance review system that is:
Since a lot of Facebook's proprietary tech is based on a rating algorithm (likes and impressions decide who gets featured on top of your feed!), you would be right to expect Facebook to have a robust, data-backed, ratings-based Performance Review System.
"Our workforce is by far our greatest asset, and we have seen repeatedly that being committed to our people makes our people more committed to Facebook." Sheryl Sandberg, Ex-COO Facebook.
So, how is Facebook making this happen?
And how can you quickly implement the key learnings from Facebook?
"[Performance review] is a process that is designed to recognize, acknowledge, and show appreciation for people who have done really great work. And it's designed to ensure that you are getting feedback from all of the people that you work with most regularly." Lori Goler, VP of People at Facebook.
For Facebook, performance review cycles are the way to assess an employee's value to the organization and make decisions on promotions and salary raises.
Their performance reviews are highly structured and based on a rich input of quantitative data.
Unlike many Fortune 500 companies, Lori Goler, doesn't believe in getting rid of performance evaluations just yet.
In a Harvard Business Review discussion, Lori reveals that they even conducted focus group surveys to understand the employees' stance on formal performance reviews.
Around 87% of the employees wanted to retain the performance review system!
The Performance Summary Cycle is a two-weeks long process that kick-starts the review process for both managers and employees.
Employees are first encouraged to send in a thorough self-assessment. The following vital questions drive the underlying narrative of the review are:
All the subsequent questions lie under the purview of the above overarching themes.
After the self-assessment, all employees need to nominate up to five peers to send in a review. The peers should be people who have closely worked with them on projects in the last review cycle.
More on this is in the following section.
In addition to peer reviews, there is also upward feedback. Direct reports are also asked to give feedback on their boss's performance.
Once the self and peer reviews come in, managers and team leaders get together and determine the rating for each employee's performance over the last six months. The rating will be consequential for promotions as well as dismissals.
Interestingly, the bi-annual performance summary cycles are checkpoints rather than investigative, revealing evaluations.
So, the information communicated post the performance cycle should not surprise anyone.
If anything is surprising, "something has gone terribly wrong," stressed Lori Goler.
So managers would not tolerate poor performance until the formal kick-off of a performance review cycle.
More on the calibration step later.
"At Facebook, to mitigate bias and do things systematically, we start by having peers write evaluations.
They share them not just with managers but also, in most cases, with one another—which reflects the company's core values of openness and transparency." Lori Goler, Head of People at Facebook, Janelle Gale, Head of HR Business Partners at Facebook, and Adam Grant, organizational psychologist, in HBR.
To avoid redundancy, Facebook doesn't allow employees to have more than five peer reviews.
Peers at Facebook judge each other based on four factors:
This factor addresses your ability to make effective decisions that drive business impact. It can include both wins and losses.
Facebook truly believes that execution trumps "great ideas generated." This factor focuses on how employees execute their tasks:
Facebook employees with a knack for assessing risks involved, especially in multiple stakeholder projects or decisions dealing with massive trade-offs, are rated on this parameter.
Facebook employees are expected to display a degree of discernment and circumvent potential risks efficiently.
This factor rates employees on the speed with which they constantly upskill themselves and add value to their peers and the company.
The manager closely examines each review by peers and self-review.
Calibration is another two weeks process.
During calibration, managers of teams that work together meet and discuss the findings from peers and self-evaluations. They aim to validate the information collected during the cycle and establish where everyone stands.
"Managers sit together and discuss their reports face-to-face, defending and championing, debating and deliberating, and incorporating peer feedback.
Here the goal is to minimize the "idiosyncratic rater effect"—also known as personal opinion. People aren't unduly punished when individual managers are hard graders or unfairly rewarded when they're easy graders." Lori Goler, Head of People at Facebook, Janelle Gale, Head of HR Business Partners at Facebook, and Adam Grant, organizational psychologist, in HBR.
At the end of calibration, employees receive a grade from seven levels.
The levels help differentiate the star players from the ones with mediocre performances.
Here are the seven levels from highest to lowest.
As the name suggests, the employees falling under this category redefine expectations by not just exceeding them but also doing things way beyond the purview of their role.
Less than 5% of employees receive this grade.
About 10% of the employees with a stellar track record receive this rating.
These are employees that lie in the top 35 percentile.
These are employees that lie in the top 35 to 40 percentile.
This rating is considered a low one, making one's future with Facebook bleak.
Meeting most, but not all, expectations is a sign that employees must introspect and improve their performance over the coming months.
Such grades are scarce. They are a strong indication of employees on the verge of getting fired.
The last level is rare, as employees would be fired or asked to improve much before they would reach this point.
A rating curve plots all employees on a graph showcasing the maxima and minima and the entire spectrum of performance that lies in between.
This rating system effectively creates a high-performance culture. All the employees would want to be part of the top 5%.
The performance assessments and the resulting ratings directly impact base pay, bonuses, and promotions.
Employees' compensation is matched to their rating using a predetermined formula.
"Managers have no discretion in compensation decisions. It's fair: If you excel, your bonus multiplier rises according to a predetermined equation, not someone's opinion. This focuses managers on what they can accurately assess and allows the company to manage pay using compensation expertise.
It's also a huge time-saver. When other companies eliminate performance evaluations, they still spend many hours agonizing over compensation decisions.
For us, time invested in performance reviews is time saved on compensation." Lori Goler, Head of People at Facebook, Janelle Gale, Head of HR Business Partners at Facebook, and Adam Grant, organizational psychologist, in HBR.
Managers then discuss the assessment with employees in a 1:1 meeting.
Finally, employees receive a compensation letter with all the details, including revised salaries and bonuses.
This structured way of conducting reviews, calibrating them, and providing transparent ratings ensures clarity and transparency. Bonuses and raises result from careful deliberation, so there is no "grey area."
The assessment review takes about six weeks, a commendable feat for an employee headcount of 50,000+ across multiple geographies.
Facebook has been conducting the performance review bi-annually: one happens at the start of the year and another in the middle, i.e., in January and July.
Facebook has been holding on to the bi-annual cycle to ensure that employees receive constant updates about their contributions and transparency is maintained throughout.
"We do it twice a year because the business moves very quickly, and our product moves very quickly, and if you wait a whole year, a lot of things have changed." Lori Goler highlighted this in a 2016 interview with Business Insider.
However, Facebook is moving away from bi-annual cycles to a single review cycle per year.
"This change won't affect anyone until 2022, but we're sharing the news early to give everyone space to prepare. We are making this change to better reflect the direction of the company with remote work in mind and guided by our principles of fairness, simplicity, and building for the long term." Tracy Clayton, Facebook spokesperson, quoted by Business Insider.
The performance review process at Facebook has changed over the years and adapted to the evolving socio-economic challenges of the world.
Facebook adopted a hybrid model after the pandemic.
Despite the world coming to a standstill, they continued the 360-degree real-time feedback.
Since they retained their real estate, they had 50% of the workforce working from the office as the lockdown began slowly relaxing in some parts of the world.
However, for the most part, managers' assessment, and the 1:1 meetings for feedback in person, are continued but were now held virtually for most employees.
Also, from late 2022, Facebook is expected to drift from biannual performance reviews to annual performance reviews. However, the opportunity to get promoted twice a year for exceptional performance still exists.
Four reasons why Facebook's current employee performance management system works.
The consensus was that two reviews in a year were too stressful for employees.
Managers would try to push their employees as much as possible with two reviews in a year, resulting in burnout.
With the frequency reduced to once a year, entire teams would be much more relaxed, leading to a more enhanced work-life balance.
Your employees could set long-term goals with a 12-month performance review cycle.
A six-month cycle would only accommodate short-term growth goals.
With the 12-month performance review cycle, your underperforming employees would get more time to fix their performance and prove their caliber.
The systematic rating system would give each employee a holistic view of their strengths and weaknesses and an actionable improvement plan.
Two reviews would effectively consume more than four weeks. However, with one study, you can save time and rechannel your effort to help the organization in other areas.
Most tech companies today can boost their employees' extrinsic motivation with attractive perks, packages, performance bonuses, and compensation.
However, intrinsic motivation among employees is still not commonly discussed by performance managers.
At Facebook, there's both intrinsic and extrinsic motivation among all the employees.
Something that's rather hard to crack.
Some of the many ways Facebook succeeds in enhancing its employees' intrinsic motivation are:
A holistic feedback culture creates in-built loops that enable employees to get a realistic picture of their performance regularly and take adequate action to improve themselves.
While Facebook's performance measurement system is structured and data-backed, it still is rooted in solid principles that form the backbone of its company culture.
Four principles form the crux of Facebook's performance review system.
Transparency creates a healthy environment in the company and helps employees trust each other. You'll eradicate politics and toxicity and encourage a culture that celebrates constructive criticism.
The 360-degree performance review system lets you understand how your peers perceive each other.
Employees form the backbone of your company.
It's essential to keep your employees satisfied and motivated.
You invest in employees holistically by compensating your employees well and involving them in the company's long-term goals.
Companies must appreciate employees for their contribution.
Appreciating high flyers creates a ripple effect and an aspirational high-performance culture in the company.
The right behavior and skills need to be appreciated and rewarded, and a structured performance review process does that effectively.
Facebook conducts many focus groups and surveys among employees, similar to its DNA of being a social network.
Gaining employee insights helps the management get a pulse check of employees' needs and emotions, especially in the context of evolving times.
They consulted their workforce to understand their perceptions towards rating. Plus, most recently, they curtailed the bi-annual review as a result of employee feedback.
Here are a few best practices followed by Facebook that have led to its success:
Zavvy lets you run a performance review process like Facebook.
The process is simple. Here is a step-by-step breakdown.
Choose a clear name so all your stakeholders understand its purpose.
To replicate Facebook's example, you can name it "Annual Performance Summary Cycle."
You can choose:
When configuring the peer feedback collection, define how many peers can participate per employee and the rules for peer selection. Facebook does not allow more than 5 peers per employee.
Should the employee do it? Or should the manager?
You can create all questions yourself or choose some from the available templates.
Add instructions for your reviewers. You can add instructions on how to give feedback. For example, if using rating scales, you can explain the scale.
For the peer reviews, remember to add questions focused on judgement, execution, risk management and learning & development, just like Facebook does.
Who should see what feedback?
Facebook promotes transparency and encourages peers to share their reviews with each other, so you can disable the "Share anonymously" feature.
What would you like your reviewers to see while writing and submitting feedback?
Calibration is an essential part of Facebook’s review system. So, make sure that you enable the calibration step.
Once the writing phase is complete, the managers will receive a nomination for participating in a calibration meeting. They will be able to analyze the team dashboard and identify any odd reviews. They will also be able to correct any outliers before the sharing and discussion phase.
Who will be under review? You could select specific departments, teams, or specific employees.
You could also choose everyone in the company with a single click.
Set the deadlines for all the steps of the feedback cycle you configured.
Here are some examples of deadlines to consider for a 360 cycle:
Double-check all the details and activate the cycle.
Once you kick off the new Performance Review cycle, you simply wait for the feedback to roll in!
Some more features that make Zavvy stand out in conducting industry-standard performance reviews:
By combining technology with research rooted in the best people management practices, Zavvy can improve performance outcomes across leading organizations worldwide.
Book a free 30-minute demo to see how to craft the best performance review system that enhances your organization's productivity.