Events

In September 2022, we convened a roundtable for leaders to discuss how organizations should rethink their performance management practices within a hybrid work environment. This session was part of our ongoing study on modern performance management.

Thank you to all who participated, shared your experiences, and learned from one another!

The state of work

We started the discussion by setting a context around

• Changing employee expectations
• The struggles faced by managers
• Falling employee engagement levels
• The continuing challenges around retention and turnover

We shared our latest research on the topic, using our framework to help organizations think about performance management for a hybrid work environment—the “3C” framework.

Organizations should focus on culture, capability of managers, and connection.

Figure 1: The “3C” model for performance management in a hybrid work environment | RedThread Research, 2022

The overall discussion resulted in rich insights. To help understand how organizations should rethink performance management as they build long-term hybrid work policies, we focused on 3 areas:

• Culture: What is the role of culture in enabling employee performance in a hybrid work environment? How should organizations rethink their culture?
• Connection: What’s the role of connection between managers and employees in driving performance in a hybrid workplace? How can organizations enable such connections?
• Capability of managers: How has the role of managers changed, now that they are enabling performance in a hybrid workplace? How can organizations support managers in this role?

Key Takeaways

The roundtable generated a number of insights we thought worth highlighting. Here are our top 4 takeaways.

Understand the “Why” behind your performance management

A major theme was that leaders need to understand the purpose behind their performance management practices. Participants agreed that it was important for organizations to go back to their value proposition and be clear about what kind of organization they want to be. As one participant explained,

“Culture is where you start—not something where you add. You have to start with what culture you are enabling and what process or system you use to enable that culture. So often we do it backwards.”

Participants also discussed the powerful role culture plays in reinforcing desired behaviors and mitigating those that are not. By designing performance management practices around the culture and values important to the organization, leaders can drive employee engagement, enable constructive feedback, and provide deeper meaning and understanding of what they do.

Individuals have just as much responsibility for managing performance as managers

The role of individuals in their own performance management was a topic that came up frequently. Participants shared that managers and individuals need to be on the same page about taking equal responsibility for driving performance. As one of the participants put it,

“The age-old notion that the ownership of performance lies solely with managers needs to change.”

Individuals should also be accountable for building their connections. Participants agreed that while an organization can help identify which critical connections need to be built, individuals are responsible for building them.

Connections need to be intentional

Participants shared how connections have become integral to performance management in a remote work environment. Several of them spoke about practices that they have adopted to make connection building a part of their performance management and, as a result, part of their overall culture.

One of the participants explained,

“When we’re remote we tend to go straight to work. We need to be more intentional about how we’re spending our time and how we’re connecting.”

One of the leaders shared that their organization has created accountability maps that identify and tag the people that an individual needs to know to be successful in their role.

Technology can help build connections, but cannot be a substitute for meaningful conversations

Participants shared how they are using technology to drive opportunities for connection. For example, one of the leaders is leveraging tools to nudge people to have regular 1:1s and remind leaders if too much time has passed since they last connected with employees. Organizational network analysis was shared as an example of technology that can help organizations drive connections and uses metrics that show their impact on the business. One of the leaders explained,

“Organizations need to embrace the power of technology in helping drive connections and opportunities. With high burnout, relying on individuals to make connections can easily fall by the wayside.”

Another participant shared an example of a framework their company introduced to help managers establish trust and transparency and remove barriers that prevent employees from achieving their goals. They embedded the framework as part of existing processes through their technology, so that people don’t see it as an extra thing they need to do.

We were grateful for the open and vulnerable discussion during this roundtable. We welcome your suggestions, thoughts, and feedback at [email protected].

 

In September 2022, we convened a roundtable for leaders to discuss how organizations can more effectively enable connection in the workplace. This session was part of our research into connection at work.

Thank you to all who participated, shared their experiences, and learned from one another.

Why is connection important?

To frame the conversation, we discussed why connection is important—both personally for roundtable participants and for their organizations. Participants commented that connection is:

• Personally fulfilling
• A deciding factor when joining an organization
• Essential for productivity, team effectiveness, innovation, and wellbeing
• Important for strengthening culture in a hybrid environment; at the core of creating a powerful culture
• Key to learning and trust

Participants noted that loss of connection isn’t purely a pandemic problem—loneliness, disconnection, and isolation were on the rise before 2020. Rather, the pandemic exacerbated an existing trend. And as one participant put it, leaders in this roundtable were “in violent agreement” that strengthening connection in the workplace is now one of the most important challenges facing many organizations today.

This roundtable aimed to help leaders answer the question: How can organizations most effectively enable connection?

To answer this question, we discussed the roles that systems, leaders, individuals, tech, and data might play in enabling connection:

• Systems. How can existing systems and processes be used to foster connection in an organization?
• Leaders. What’s the role of senior leaders and managers in building connection? How can organizations support them in this effort?
• Individuals. What’s the role of individuals in fostering connection in the workplace? How can organizations support individuals in this effort?
• Tech & data. How can technology and data be used to foster connection in the workplace?

Key takeaways

The roundtable generated a number of insights we thought worth highlighting. Here are our top 4 takeaways.

Individuals have a responsibility to build connection

Some participants latched onto the idea that individuals have a responsibility to connect. They emphasized that this responsibility is noteworthy because, in their experience, individuals sometimes rely on others to do the connecting. One participant noted:

“One of the things that’s striking to me is that we’re saying, individuals have a responsibility.”

Another agreed:

“Reminding individuals that they actually DO have a responsibility for building connections as well, not relying on others to only connect with you.”

Participants discussed how organizations can support and enable employees in fulfilling this responsibility. The conversation turned to tools and processes that might be used to help employees connect. For example, one participant described the Accountability Partnership Maps they use in their organization to help employees understand whom to connect with:

“You put yourself in the center, and then put different roles around you. Then you ask yourself: Who do I need to connect with to be successful in my job? Which are the most important connections? Then you color code those relationships, red / yellow / green, in terms of how strong the relationship is.”

Participants noted that tools like the Accountability Partnership Map help employees understand where to focus their limited time to build connections that will help them be successful in their roles and careers.

Connection must be embedded in what’s already happening

Participants emphasized the fact that although most people agree connection is important, they’re also overwhelmed by all that’s already on their plates. Making connection one more thing they have to do is unhelpful and, frankly, unlikely to get the results that leaders or employees might hope for.

So, instead of making connection an extra program or task that managers and employees are asked to complete, some participants are embedding connection opportunities into existing processes like onboarding, career planning, and manager support resources.

Other participants have seen success making networking more intentional by associating trainings with buddy programs, peer mentoring, or actual mentoring and coaching.

Participants also noted that organizations should implement processes that encourage connection, but at least some of these must make space for organic, informal connections. Connections can’t all be formal, and they certainly shouldn’t feel forced. As one participant wrote:

“The moment is forced, it drives disconnection.”

Finally, participants pointed out that connection opportunities should happen inside whatever technologies employees are already working in—not in separate systems.

Leaders set the tone

If individuals have a responsibility to connect, leaders have an outsized influence on whether and how connection happens in an organization. The ways that leaders connect with each other and with their reports will trickle down to the rest of the organization—behaviors cascade down.

Leaders, therefore, have a responsibility to role model connection. They set the stage and expectations for how others connect. One participant wrote that leaders can:

“Create space for connection, model connection, invest in experiences and opportunities,  encourage connection in creative ways, understand the importance of and build in every day micro-moments to create opportunities, understand that connection looks different for different people.”

Some participants noted that in order to role model and set the tone in the right way, leaders need to feel connected themselves.

Others pointed out that although these behaviors may come naturally to some leaders, others need practice and support—and might be embarrassed or afraid to ask for help. Organizations can support leaders in role modeling expected behaviors by providing tools, best practices, and guidance. Guidance might look like:

• Talk tracks for 1 to 1 conversations with reports
• Regular nudges on why it’s important for managers to connect
• Recognition of leaders who role model connection
• Senior leaders telling stories about how they build connection, when they’ve made mistakes around connection and what they learned
• Helping leaders understand the biases they may have about whom to connect with and how to connect with different types of people
• Providing tools and tech that make it easy to connect, especially remotely

Participants noted that in order for leaders to forge relationships, they need time:

“You can't microwave a relationship – it takes time.”

Participants noted that leaders must be given permission, support, and time to build meaningful connections.

Connection shouldn’t be left to chance

Participants discussed the fact that pre-pandemic, many connections were developed organically. Relationship-building chats could happen in the break room, at the water cooler, in the hallway, or just before or after meetings.

Now, participants claimed, organic opportunities for connection are much rarer. So they must be intentionally built into the ways people work these days. One participant wrote in the chat:

“In remote work, individuals need to be far more intentional about pursuing connection.  It used to occur more passively / organically, but I'm seeing less of that now.”

Some participants suggested that tech and data can be used to enable connection more intentionally. Perhaps most obviously, tech enables asynchronous communication and collaboration, which helps with some kinds of connection. One participant shared the example that in their organization, some employees are using virtual coworking spaces, where people are working together but aren’t located in the same place. This can create a sense of connection and community while enabling people to work remotely.

As another example, tech can match employees for any number of things—coffee chats, mentoring, projects / gigs, etc.—at a scale that would be difficult to manage manually.

Others in the discussion noted that having data about who’s engaged, who’s connected with whom, how healthy teams are, and so on can help leaders be targeted in their efforts to enable people to connect.

We were grateful for the open and vulnerable discussion during this roundtable. We welcome your suggestions, thoughts, and feedback at [email protected].

 

We reviewed more than 20 recent academic, business, and news articles and reports on performance management (PM) to understand the state of the current conversation. We limited our review to the past 12 months, as we conducted a literature review on this same topic last year.

This short article summarizes what we found:

• 4 major themes from the literature
• 5 critical articles we think you should explore
• A complete list of the articles we reviewed

Major Themes

From the literature we reviewed, we identified 4 major themes that reflect the current state of performance management, including how some organizations are changing it and where it is headed:

1. Performance management is starting to look more like performance development
2. Connections are becoming integral to performance management
3. Continuous performance management is here to stay
4. Organizations are unsure about how to move ahead

Performance management is starting to look more like performance development

Recent literature highlights the need for organizations to adjust their performance management (PM) practices to help individuals and teams perform effectively in a remote or hybrid environment. One approach suggested in the literature is to make career growth and development an integral part of PM. Recent findings reveal that growth and advancement opportunities are a leading cause of ongoing attrition. For example, McKinsey & Company found that employees leave when uncaring leaders don’t provide career development.

Another approach suggested in the literature is to provide clarity around organizational goals and ensure alignment through transparency and access to information. By being clear about desired outcomes, organizations can make sure employees are setting appropriate and achievable goals.

Connection is becoming integral to performance management

Recent literature, including our own, shows that the connection between the manager and employee has emerged as a critical factor for enabling performance in a hybrid work world. The role of manager-employee relationships in motivating and engaging employees has been highlighted by many in the past.

We also found articles that talk about the role of connections that employees have with their colleagues, leaders, and the organization in driving collaboration and, thus, enabling performance in a remote or hybrid work environment. The literature stresses the need for organizations to be intentional about fostering these connections, for example, by implementing performance management practices that encourage relationship-building.

Continuous performance management is here to stay

The pandemic accelerated the trend toward adopting a continuous approach to PM. We identified articles that shared examples of companies that eliminated or suspended the annual performance review and started conducting frequent check-ins and providing real-time feedback once they shifted to remote work.

The literature stresses the importance of communicating and providing development resources to employees in real time in a hybrid work environment, because of its positive impact on employee engagement. It also helps managers gain greater insight into their employees’ work and better meet their needs. Continuous feedback and employee check-ins are an integral part of this approach.

Organizations are unsure about how to move ahead

Quite a few articles covered companies returning to or updating practices around performance ratings and annual reviews to identify low-performers and areas of low productivity—practices that had been paused or replaced with frequent check-ins during the pandemic. In these cases, the practices are in addition to (rather than replace) the frequent check-ins and feedback practices adopted during the pandemic.

One explanation for the re-adoption of these practices is rising inflation and slow growth in some industries, resulting in the need to freeze hiring, cut the workforce, and reduce costs. As some companies double down on productivity and cost-cutting measures, it remains to be seen whether the frequent feedback and check-in process set during the pandemic will stay in the mix.

5 articles you should explore

From the literature we reviewed, 5 articles (listed below) in particular represent the 4 themes above and contain valuable and intriguing information.

Network effects: How to rebuild social capital and improve corporate performance

Taylor Lauricella, John Parsons, Bill Schaninger, and Brooke Weddle

“When teams feel connected, they tend to get more work done and do it faster… Social capital matters to an organization’s performance.”

This article highlights the vital role connections play in employee productivity and knowledge gain. Based on data collected in early 2022, the study shines light on the state of social capital, how it declined during the pandemic, and how companies can build it back.

Performance management shouldn’t kill collaboration

Heidi K. Gardner and Ivan Matviak

“Giving equal weight to financial outcomes and development underscores the importance of learning and growth.”

This article highlights the importance of cross-silo collaboration for employee performance and development, especially in sales organizations, and how current PM practices discourage it. The authors describe the common mistakes that undermine collaboration and provide steps companies can take to counter them.

How to conduct a great performance review

Frank V. Cespedes

“The biggest impact from performance conversations is often what happens after the review. Too often, nothing happens: The review is an isolated annual event and therefore has little real impact.”

This article is timely and informative, especially as some companies begin re-adopting annual and bi-annual performance reviews. It walks through the do’s and don’t’s of an effective review, highlighting the need to accompany it with ongoing feedback on progress towards goals and coaching for professional growth and development.

Why Organizations Are Adopting Continuous Performance Management

Lars Hyland

“The annual appraisal still plays an important role in the performance management process. It’s just not the only process anymore.”

This article explains continuous performance management and why it is important for organizations to adopt it. It then shows how companies can get it right and some the ways to incorporate it into the talent strategy.

Dump traditional reviews to better measure performance

Amy Leschke-Kahle

“It may be hard to imagine abandoning decades of tradition and big investments in old-fashioned performance reviews, but the world of work has changed. How we measure employee performance needs to keep up with the lightning-fast speed of change.”

This article examines how traditional ways of reviewing performance fail, as they often focus on whether an employee was able to meet their annual goals and are based on infrequent feedback and meetings. Instead, the author suggests organizations move towards measuring performance by collecting frequent quantitative performance data.

Wrap up

The current literature covers many emerging trends and provides information on how companies are adapting their PM practices. However, we found it lacks insights into the specific practices that impact employee performance in a hybrid work environment and how organizations can start to adopt them.

Complete List of Reviewed Articles

1. “How to Conduct a Great Performance Review”, Frank V. Cespedes, Harvard Business Review, 2022.
2. “Performance management outlook 2023: The shift towards performance enablement”, Mohamed Ameen, Talent Management, 2022.
3. “6 ways to ensure your team achieves corporate goals”, Andrew Kenney, FM Magazine, 2022.
4. “Performance Management Shouldn’t Kill Collaboration”, Heidi K. Gardner and Ivan Matviak, Harvard Business Review, 2022.
5. “Mark Zuckerberg braces Meta employees for ‘intense period’”, Alex Heath and David Pierce, The Verge, 2022.
6. “Proof versus potential: Why women must work harder to move up”, Katie Bishop, BBC, 2022.
7. “Women Aren’t Promoted Because Managers Underestimate Their Potential”, Kelly Shue, Yale Insights, 2021.
8. “Why it may be time to ditch annual performance reviews”, Arden Madsen, Fast Company, 2022.
9. “The Importance Of Performance Management”, Arijana Koskarova, Forbes, 2022.
10. “Performance reviews aren't dead – they just need a shakeup”, Amanda Woodard, HRD, 2022.
11. “Dump Traditional Reviews to Better Measure Performance”, Amy Leschke-Kahle, MIT Sloan Management Review, 2022.
12. Gone for now, or gone for good? How to play the new talent game and win back workers, Aaron De Smet, Bonnie Dowling, Marino Mugayar-Baldocchi, and Bill Schaninger, McKinsey, 2022.
13. “Goldman Sachs is bringing back its infamous performance reviews, but experts say it’s a poor management strategy: ‘Exemplary leaders are not going to give up on low performers’”, Aman Kidwai, Fortune, 2022.
14. “Google CEO tells employees productivity and focus must improve, launches ‘Simplicity Sprint’ to gather employee feedback on efficiency”, Jennifer Elias, CNBC, 2022.
15. Network effects: How to rebuild social capital and improve corporate performance, Taylor Lauricella, John Parsons, Bill Schaninger, and Brooke Weddle, McKinsey, 2022.
16. “Performance Development in a Remote or Hybrid Workplace”, MIT Human Resource, 2022.
17. “Redesigning performance management for a hybrid workplace”, Kat Boogaard, Culture Amp, 2022.
18. “6 Ways to Make Performance Reviews More Fair”, Paola Cecchi-Dimeglio, Harvard Business Review, 2022.
19. The Great Attrition is making hiring harder. Are you searching the right talent pools?, Aaron De Smet, Bonnie Dowling, Bryan Hancock, and Bill Schaninger, McKinsey, 2022.
20. “The three C’s of effective performance management”, Ian White, People Matters, 2022.
21. “Top Three Trends In Performance Management In 2022”, Jessica Kriegel, Forbes, 2022.
22. “Five Lessons In Building A Hybrid Workplace For The Future Of Work”, Jeanne Meister, Forbes, 2022.
23. “Why Organizations Are Adopting Continuous Performance Management”, Lars Hyland, Training Industry, 2021.

Many organizations are experiencing a connection crisis spurred by the COVID-19 pandemic. As ways of working changed in the course of the pandemic, employees lost connection with one another and their organizations. Employees and organizations recognize that's not a good thing: Loss of connection has consequences for employee engagement and well-being as well as organizational performance.

That's why we're researching connection in the workplace. We want to know how organizations can foster connections that will help them thrive.

As part of this research, we reviewed over 50 academic and business articles, reports, and books. We wanted to understand the state of the current conversation so that our research can contribute as helpfully and thoughtfully as possible. This short article summarizes what we found, including

• 5 major themes from the literature
• 5 critical articles we think you should explore
• A complete list of the articles we reviewed

Major themes

5 themes emerged from the literature on connection at work. Each is discussed below, with links to articles that support the overarching theme.

Connection is a big deal

The literature we looked at generally agreed that connection is important for employees and organizations alike. A few striking data points to support this finding:

• Employee recognition firm O.C. Tanner reported that weekly one-to-one meetings with managers during uncertain times (like the COVID-19 pandemic) lead to a 54% increase in engagement, a 31% increase in productivity, a 15% decrease in burnout, and a 16% decrease in depression among employees.
• WorkHuman’s research associated connection with a greater sense of purpose, more collaboration, and decreased turnover intention.
• McKinsey & Company found that employees who feel more connected with colleagues are 1.5x more likely to report both engagement and a sense of belonging at work.
• According to BetterUp’s 2022 Insights Report, highly connected employees experience 34% higher goal attainment, a 36% boost in well-being, and 92% more professional growth.

These stats give color and detail to the overall sense we got from the literature, which was: connection is associated with things like more innovation and creativity, a culture of inclusion and belonging, higher employee engagement, less burnout, lower turnover intention, and higher productivity. The literature agrees that connection is good for employees, and it’s good for business.

Loss of connection isn’t just a pandemic problem—but the pandemic made it worse

Even before the pandemic started, there was a body of literature reporting an increase in disconnection and loneliness at work and assessing its consequences. Back in 2019, Karyn Twaronite and the EY Belonging Barometer team found that 40% of people felt isolated at work. In early 2020, Cigna reported that 62% of US workers could be considered lonely, at an estimated cost to the US economy of over $406 billion a year. And just before the pandemic began, researchers Hadley and Mortensen revealed that 76% of workers said they had difficulty connecting with their teammates, and 58% agreed with the statement “My social relationships are superficial at work.”

As with many other areas of work, the pandemic accelerated an existing trend: It made the connection crisis much worse. The literature points out 2 primary reasons for this accelerated loss of connection:

• As employees adjusted to the pandemic, they “turtled up,” as researchers King and Kovacs put it. That is, employees maintained and even strengthened ties with close colleagues, while letting their weaker connections to acquaintances wither.
• Lost connections weren’t replaced by new ones. It’s natural for some connections to fade over time. But the pandemic didn’t allow them to be replaced as they normally would be.

As a result of these lost connections, one study by Buffer found, 52% of people feel less connected to their coworkers since shifting to remote work.

Connection isn’t just one-to-one

Heading into this lit review, we expected the literature to cover interpersonal (one-to-one) relationships more heavily than other types of connection. That’s not what we found. The literature covered a wide range of types of connection, including:

• One-to-one: Relationships between 2 people
• One-to-many: Relationships between 1 person and a group of people
• One-to-organization: An employee’s sense that they belong in the organization and that they’re part of a community
• One-to-work: An employee’s sense of connection to, and meaning in, their own work
• Team-to-team: The relationships between teams in an organization

We were particularly intrigued by the explicit links made in the literature between connection, purpose, community, and belonging. For example, the Center for Equity, Gender & Leadership at Berkeley’s Haas School of Business emphasized that fostering different types of connection can strengthen employees’ sense of belonging and inclusion. McKinsey & Company’s Great Attrition research linked connection to employees’ sense that they’re part of a community. And researchers Blount and Leinwand noted that to accomplish their purpose, organizations must foster silo-breaking connections. Other articles also mentioned that alignment between individual and organizational purpose can strengthen employees’ sense of connection to the organization.

Strengthening connection is everyone’s responsibility

The literature contains a mix of advice for senior leaders, managers, HR leaders, and individual employees. Our interpretation of this mix is that the literature is telling us that everyone in an organization plays a part in, or has a responsibility for, building connection in different ways.

Many articles claimed that fostering connection is one of a manager’s or leader’s primary responsibilities, with motivational speaker John Hall emphasizing that building connections should be at the top of any leader’s priority list. Other articles proposed ways for HR leaders to implement systems and processes to enable connection. A blog by Lumapps, for example, advised HR leaders to create peer mentorship programs, set up communities of practice, and host regular social events.

A smaller, though still noticeable, number of articles were primarily directed at individuals. These articles dispensed advice on networking and forging one-to-one or one-to-many connections, since these connections are within an individual employee’s locus of control.

Connection must be strengthened intentionally

The literature emphasized that, particularly in a hybrid work setting, connections are not going to strengthen themselves. Several articles noted that leaders, managers, and employees must thoughtfully and intentionally put in place processes and systems to foster meaningful (not superficial) relationships.

For example, one article by writer Gwen Moran suggested that organizations start building connection at employee onboarding. A few mentioned the importance of documentation and communication—consistently taking and disseminating meeting notes, sharing detailed rationales for decisions, and setting explicit norms and expectations—to connect employees to what’s going on in the organization.

A final aspect of intentionality in the literature had to do with time. Some articles noted that building meaningful relationships takes time, and many of the interactions that employees have today are transactional or superficial. These articles advised leaders and employees to set aside time to nurture deep, human connections. For example, one article by organizational psychologist Juliette Holt-Lunstad argued that employers need to go beyond simply increasing opportunities for interaction and instead take steps to foster high-quality interactions that build high-quality relationships.

5 articles you should explore

Of the literature we reviewed, several pieces stood out. Each of the articles below contains information that we found useful or intriguing. We learned from their perspectives and encourage you to do the same.

“Network effects: How to rebuild social capital and improve corporate performance”

T. Lauricella, J. Parsons, B. Schaninger, and B. Weddle.

“It’s imperative… that business leaders manage social capital in the same way they manage financial, human, and other forms of corporate capital: systematically and intentionally.

This data-rich article advises leaders to interrogate the systems of social capital in their organization through 3 lenses: motivation, access, and ability. Are employees motivated to build and maintain relationships? Do they have access to the right relationships? And do they have the ability to build those relationships?

“What a year of WFH has done to our relationships at work”

N. Baym, J. Larson, and R. Martin.

"Those who said their interactions with colleagues have decreased this year were less likely to be thriving at things that lead to innovation, like thinking strategically, collaborating or brainstorming with others, and proposing innovative ideas.”

The authors describe how interpersonal connections, especially the types of relationships enabled through chance in-person encounters in the office, were lost in the first year of the pandemic. Managers are key to helping rebuild them.

"Hybrid work: Getting leaders to stay connected with teams"

M. Arena

“As the pandemic lingered, we noticed a decrease in both bonding connections and bridging connections.”

The author explains there are 2 types of connection: bonding connections, which typically occur within a team, and bridging connections, which connect individuals across different teams. Both types of connection were lost during the pandemic, but bridging connections were particularly hard-hit.

“Two years into COVID: The state of human connection at work”

WorkHuman

"The more recently someone has been thanked by a manager and / or peer, the greater their sense of connection to the company culture and their colleagues.”

This report offers tons of data and stats about how connection has been lost during the pandemic, and points to 4 ways to build connection: asking for feedback, communicating values, being human (demonstrating vulnerability), and saying "thank you."

“Are your team members lonely?”

N. Hadley and M. Mortensen

“Working remotely instead of face-to-face can by itself undermine social connections. But that is not the whole story, so resuming in-person work won’t fix the loneliness problem.”

This article reports results from 2 studies, one of which collected data before the pandemic began. The authors argue that face-to-face interactions (i.e., returning to pre-COVID ways of working) will not entirely solve the connection crisis. They make a case for fundamentally redesigning teams to foster meaningful connections.

Complete list of sources

Sources are listed in reverse chronological order.

1. “Network effects: How to rebuild social capital and improve corporate performance”, Lauricella, J. Parsons, B. Schaninger, and B. Weddle, McKinsey & Company, August 2022.
2. “22% of people don’t have any friends at work. Here’s how to change that”, Moran, Fastcompany.com, July 2022.
3. “The 5 things Gen Z is looking for in a job and career”, Fung and A. Yum, entrepreneur.com, July 2022.
4. “The magic of your first work friends”, Goldberg, The New York Times, July 2022.
5. Advancing belonging in organizations: An equity fluent leadership playbook, Smith, J. Sanders, and I. Rustagi, Berkeley Haas EGAL, June 2022.
6. “Employee engagement and resignation: You need a virtual watercooler”, G. Giacomelli, com, June 2022.
7. “How virtual work is accelerating innovation”, Berruti, G. Ho, P. Kirschner, A. Morris, S. Norman, and E. Roth, McKinsey & Company, June 2022.
8. “Hybrid work: Getting leaders to stay connected with teams”, M. Arena, com, June 2022.
9. “Don’t want to lose your Gen Z and millennial talent? Here’s what you can do”, Parmelee, Deloitte, May 2022.
10. “Maintaining network connections”, Gratton, Strategy & Business.com, May 2022.
11. “Purpose at work predicts if employees will stay or quit their jobs”, Amire, greatplacetowork.com, May 2022.
12. “6 tips for creating strong work connections in a hybrid office, according to an expert”, J. Liu, CNBC Make It, April 2022.
13. “Do we still need teams?”, Noonan Hadley and M. Mortensen, Harvard Business Review, April 2022.
14. “Managers can’t do it all”, Gherson and L. Gratton, Harvard Business Review, March-April 2022.
15. “Two years into COVID: The state of human connection at work”, workhuman IQ, March 2022.
16. “We need to talk about why so many people are lonely”, Moran, Fastcompany.com, February 2022.
17. “14 ways to foster connection between employees”, Forbes Council Members, com, January 2022.
18. “How leaders can build connection in a disconnected workplace”, Poswolsky, Harvard Business Review, January 2022.
19. “The neighborhood effect: Implications of hybrid work”, Arena, HRExchangeNetwork.com, January 2022.
20. Connectable: How leaders can move teams from isolated to all in, Jenkins and S. Van Cohen, McGraw Hill, 2022.
21. Rewired: Protecting your brain in the digital age, D. Marci, Harvard University Press, 2022.
22. “The connection crisis: Why community matters in the new world of work”, BetterUp Insights Report 2022.
23. “2022 state of Remote Work”, Buffer, 2022.
24. Rise of the relatable organization, Mercer Global Talent Trends 2022 Study, 2022.
25. “15 tips to create meaningful relationships at work”, Sestric, gobankingrates.com, November 2021.
26. “4 tips for being a ‘connected leader’”, Coultas, Trainingmag.com, October 2021.
27. “‘Great attrition’ or ‘great attraction’? The choice is yours”, A. De Smet, B. Dowling, M. Mugayar-Baldocchi, and B. Schaninger, McKinsey & Company, September 2021.
28. “Why workplace connection matters”, McClure, WorkHuman.com, Sept 2021.
29. “How to keep remote workers from feeling disconnected”, Somers, MIT Sloan, July 2021.
30. “The worker-employer relationship disrupted: If we’re not a family, what are we?”, Schwartz, K. Eaton, D. Mallon, Y. Van Durme, M. Mauptmann, S. Poynton, and N. Scoble-Williams, Deloitte, July 2021.
31. “How to be a leader who connects with others”, Hall, Forbes.com, June 2021.
32. “Help your employees find purpose—or watch them leave”, Dhingra, A. Samo, B. Schaninger, and M. Schrimper, McKinsey & Company, April 2021.
33. “What a year of WFH has done to our relationships at work”, Baym, J. Larson, and R. Martin, Harvard Business Review, March 2021.
34. "Research: We’re losing touch with our networks”, King and B. Kovacs, Harvard Business Review, February 2021.
35. Digital body language: How to build trust and connection, no matter the distance, Dhawan, St. Martin's Press, 2021.
36. “12 effective ways to create a more connected workplace”, Herman, Lumapps, December 2020.
37. “Are your team members lonely?”, N. Hadley and M. Mortensen, MIT Sloan Management Review, December 2020.
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39. “8 tips for leaders to increase connection in their teams (Part 3)”,-C. Ross, October 2020. “Employees need to feel connected: Leaders have to be human”, S. Taherian, Forbes.com, June 2020.
40. Loneliness and its impact on the American workplace, Cigna 2020 Loneliness Index Executive Summary, March 2020.
41. “Only 28% of employees say they feel connected to their company’s purpose”, Schroeder, hrmorning.com, February 2020.
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43. “Why are we here?”, Blount and P. Leinwand, Harvard Business Review, November-December 2019.
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46. “6 ways to increase social connection at work”, Sellwood, LinkedIn.com, July 2018.
47. “Fostering social connection in the workplace”, Holt-Lunstad, American Journal of Health Promotion, June 2018.
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51. “5 ways to form real human connection at work”, Career Contessa, undated.
52. “Traditional leadership is dying: Here’s what HR can do to help”,C. Tanner white paper, undated.

 

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Understanding the need for a DEIB–PA partnership

Why focus on the partnership between DEIB and people analytics (PA) leaders?

In the summer and fall of 2020, companies made big promises to improve diversity, equity, inclusion, and belonging (DEIB) in their organizations. At the time, one of our first questions was how organizations would show the progress made on those commitments. While DEIB metrics—measurements designed to understand DEIB—are the obvious answer, how to select, collect, use, and maintain those metrics isn’t so clear.

Thus, our research initiative on DEIB metrics and analytics was born. The first article in this series, “DEIB Analytics: A Guide to Why & How to Get Started,” provides leaders with a plan for how to begin using DEIB metrics and analytics. The second article, “DEIB Metrics: An Essential Guide,” provides definitions of what DEIB metrics are and how they can be used.

This third article in the series focuses on how DEIB and people analytics leaders should partner to identify, measure, maintain, and distribute those DEIB metrics.

Why write an article on this DEIB–PA partnership? For several reasons. As shown in Figure 1, the way that DEIB and PA leaders partner (or not, as in the early days) has changed substantially. PA is increasingly at the center of DEIB metrics efforts as organizations ensure that they have consistent data sets, analysis approaches, and contexts across the board. However, PA leaders shouldn’t do this work without the support of DEIB leaders—since DEIB brings an essential level of theory, nuance, and context to the data. By DEIB and PA leaders partnering, you can clearly and consistently:

• Define terms
• Identify consistent data sources and analysis approaches
• Appropriately interpret data
• Develop targeted and appropriate action steps
• Create ongoing accountability

The combined expertise of DEIB and PA leaders enables you to make all these things happen.

“People Analytics leaders can help answer questions that DEIB leaders didn’t even know how to ask.”

—Hallie Bregman, Owner, The Bregman Group

PA is increasingly central to organizations' DEIB metrics efforts

Despite challenges, there is a known path to partnership

While you should (in theory) collaborate, it doesn’t always seem intuitive for PA and DEIB leaders to work together in practice. Why is this?

• First, many DEIB and PA leaders have historically come from different perspectives, such as social justice for the former, and math or statistics for the latter.
• Second, your individual responsibilities often have very different. Many DEIB leaders, for example, are charged with creating community and connection—and taking a data-driven approach may not be prominent on your radar. By contrast, PA leaders primarily focus on data and measurement; your only experience with DEIB may be through their participation in DEIB-related initiatives.
• Third, your reporting relationships are often very This can result in a poor alignment of priorities and little insight into each other’s work, especially if either DEIB or PA is outside the HR reporting structure.
• Finally, the data used by DEIB in the past hasn’t necessarily been the same as that used by PA—making it more difficult to create alignment on even simple reporting.

All of this culminates in the challenges outlined in Figure 2.

A look at the causes and effects of challenges to DEIB analytics work due to differences between PA and DEIB leaders

Yet, our interviews revealed that common approaches could enable a strong DEIB / PA relationship to develop and thrive.

This article is designed to help DEIB and PA leaders better understand each other—and create a partnership that will enable you to succeed. We identify 3 components of an effective partnership in this article, outline the responsibilities of DEIB and PA leaders and provide specific examples of how to make this relationship more effective. We also provide a series of exhaustive checklists in the appendix to help you get started.

As always, our research is designed to accelerate good ideas within the people management field. Some of the concepts in this article may fit your organization’s unique circumstances, while others may not. Even better, some of these ideas may inspire new insights and approaches.

Whatever your reaction to the work, we’d love to hear about it. Please feel free to reach out to us at [email protected] with any insights, questions, or feedback.

“One of the biggest challenges to a successful DEIB and people analytics partnership is that most DEIB leaders don’t have technical backgrounds. As a result, there is a disconnect between diversity leaders and people analytics leaders.”

—Sean Fay, Co-Founder, The Context Factory

What is DEIB?

Before we dive into the heart of this paper, let’s start by defining what we mean when we say diversity, equity, inclusion, and belonging (see Figure 3). Everyone in your organization should be on the same page when it comes to understanding DEIB—which starts with a single, common set of definitions.

What are DEIB metrics?

Building on the information on the previous page, defining what we mean when referring to DEIB metrics is essential. Figure 4 provides specific definitions for, as well as examples of, metrics for each DEIB area. Everyone in your organization should be on the same page when it comes to understanding DEIB. After introducing a single, common sets of definitions for DEIB, you then need to define and differentiate the metrics for each of the 4 aspects of DEIB.

Building a DEIB—PA partnership

3 practices for building a DEIB–PA partnership

Our interviews with DEIB and PA leaders revealed several things they’re doing to build a successful partnership. We grouped our findings under 3 broad practices, with specific areas that leaders should consider when developing the partnership (see Figure 5).

1. Understand your partner’s context. When starting a new relationship, you must understand how the other team operates. This involves becoming familiar with each other’s reporting and governance structures; specific concerns; priorities; and, responsibilities.\
2. Form a DEIB–analytics partnership by aligning your objectives, responsibilities, and expectations. A partnership built on clarity around who is responsible for what, along with the overall goals, allows you to achieve greater alignment. This becomes easier with both of you supporting each other in your work, as well as among your teams and throughout the organization as a whole.
3. Work together effectively within your organizational network. A successful DEIB–PA partnership is also a result of you both working together with other functions, teams, and leaders within the organization. Remember: You need to be strategic and tactical in building relationships with IT, business leaders, marketing, finance, and other functions to help ensure the success of your work and your partnership.

3 practices for DEIB and PA leaders to adopt to build a successful DEIB-PA partnership

Practice #1: Understanding your partner’s context

DEIB leader’s context: A primer

Before beginning any partnership, you must understand your partner’s circumstances. Let’s start with the DEIB leader’s context.

To start, you need to have a good understanding of the environments in which your DEIB leader works. For example, DEIB leaders typically have up to 5 different stakeholders: employees, customers, suppliers, communities, and shareholders.

Further, in many global organizations, DEIB leaders operate within a complex and demanding governance structure, an example of which is shown in Figure 6. All of these different groups require time with your DEIB leader and their teams. Note: HR—where PA teams often report—is just one of many constituents.

To help you understand your DEIB partner’s context, you should ask them the following:

• To what extent is working with DEIB your full-time or part-time responsibility?
• How big is the DEIB team?
• To whom do you report? How strong is that relationship? What other reporting relationships exist?
• What other resources (e.g., budget, indirect reports, external resources) do you have?
• What experience do you have in collaborating with PA teams on DEIB data?

DEIB leaders operate within a complex and demanding governance structure

PA leader’s context: A primer

Similar to DEIB, PA leaders also work in complicated situations.

As shown in Figure 7, PA leaders interface with various organizational stakeholders, while managing a team of technical experts. Their organizations also tend to have different governance structures (see Figure 8), impacting how they will work with DEIB.

To help you understand your PA partner’s context, you should ask them the following:

• To whom do you report? What other reporting relationships exist?
• What types of services and support does your team offer?
• How is your team structured? What are the types of expertise of the people within that team?
• How long has your team been doing their work?
• What other resources (e.g., budget, indirect reports, external resources) do you have?
• What experience do you have in collaborating with DEIB leaders on DEIB data?

“Our DEI group has great people, but I just don’t know if they are doing what we need right now and don’t know that they even have the skill set to do it. I don’t know how numbers-focused they are or how numbers-focused they should be. Right now, our DEI team is more like project management, focusing on things like benefits. They handle a lot of other stuff versus looking at data.”

—Global people analytics leader, international consumer packaged goods company

PA leaders interface with several organizational stakeholders while managing a team of external technical experts

Organizations often have one of these two types of governance structures for PA—impacting how PA and DEIB interact

“The combination of qualitative and quantitative data is ideal, but at the end of the day there is nothing that data will tell us that we don’t already know as Black people. I know what my experience was as an African-American man who worked for 16 years in roles that weren’t related to improving diversity. It’s as much heart as head in this work.”

—D&I Leader

Appreciate each other’s concerns

It’s one thing to understand each other’s contexts—but it’s another entirely to appreciate your partner’s concerns about working together.

Given the different silos DEIB and PA leaders often work within, it’s easy not to understand your partner and where they’re coming from. Based on our research, we’ve identified some common concerns each can have about the other (see Figure 9).

Be aware: This is a prime opportunity for you to lean in and address those concerns directly with your partner.

In some instances, it can require creating specific protocols or practices to address the concern, such as a standard expectation that new analysis will be reviewed by both partners. In other instances, it may need both groups to engage in certain situations together, such as when interpreting results with a senior HR business partner.

Some of these concerns will likely be addressed when you and your partner align on goals and objectives (we discuss this next). For other concerns, you both may need to acknowledge these exist, and then decide to address them on a case-by-case basis.

Some of the top concerns we heard from DEIB and PA leaders alike were regarding the work, as well as each other

Practice #2: Forming a DEIB–PA partnership by aligning on objectives, responsibilities & expectations

Identifying clear objectives

From the start, perhaps the most crucial item for DEIB and PA teams is to shift their mindsets from being 2 separate teams to being 1 integrated alliance—the DEIB–PA partnership.

While there doesn’t have to be any sort of official creation of a team (or even the naming of one!), these 2 groups must:

• Align around common objectives
• Share insights and learnings freely
• Think of themselves as each contributing equally to the DEIB metrics and analytics effort

To do this, start by ensuring everyone understands the organization’s people priorities for the year— and how those translate into DEIB and PA strategies and objectives.

From there, identify the common objectives and / or where enough overlap exists to articulate new common goals. Share this information broadly within and outside the partnership to enable a broader alignment of stakeholders.

While objectives aren’t always set or aligned at the beginning of the calendar year, it’s still essential for the PA and DEIB leaders to align—even if it means the 2 leaders discuss some hard questions about priorities.

Clarifying specific responsibilities

Another important part of the process of forming the DEIB–PA partnership is to clarify the specific responsibilities of the constituent teams. Figure 10 shows that some responsibilities belong to each group, while others are shared. Note: There may be more responsibilities than those outlined in Figure 11 and some of them could belong to different groups, depending on your organization’s structure.

After identifying the respective responsibilities, next you must put in place those practices or approaches that’ll codify how the shared responsibilities will be executed. For example, will the PA team first develop a list of data-related DEIB definitions and then run it by the DEIB team? And how will new data definitions be added?

Some of these process decisions may be determined by how the PA team supports the DEIB team (see the Uber Real-World Threads for an example). But many of these decisions won’t be, so you need a plan to make sure that all responsibilities are clearly delineated.

Breakdown of responsibilities for DEIB and PA teams individually, as well as those responsibilities shared by both teams

“But to discover the effects of bias in our organizations—and to identify complicating factors within groups, such as class and colorism among Latinos and others—we need to collect and analyze qualitative data, too. Intuition can help us find it. The diversity and HR folks described using their “spidey sense” or knowing there is “something in the water”—essentially, understanding that bias is probably a factor, even though PA doesn’t always prove causes and predict outcomes. Through conversations with employees—and sometimes through focus groups, if the resources are there and participants feel it’s safe to be honest—they reality-check what their instincts tell them, often drawing on their own experiences with bias.”

—Maxine Williams, Global Chief Diversity Officer, Meta

Creating a service-level agreement between partners

As part of identifying relevant responsibilities, the PA leader should put in place a formal service level agreement (SLA) for how PA will work with DEIB. It’s important to align expectations on what and when the PA team can deliver specific services.

Typically, SLAs should include:

• Services offerings. This describes the services provided, the conditions of the service availability (such as time window standards for different levels of service), responsibilities of each party, escalation procedures, and cost / service tradeoffs.
• Management approaches. This defines measurement standards and methods, reporting processes, and contents and frequency.

Some SLAs also include delivery metrics that are reported monthly or quarterly. While this is more common with external vendors, it can be useful for internal relationships—by creating a clear set of standards for the metrics that both parties can refer to if they’re dissatisfied with how things are going.

“When I took on the role of people analytics leader, the feedback we got from our D&I team was that the partnership was not working. The SLA was broken and there was difficulty understanding what the priorities were. The relationship was damaged on both sides, and we had to work on fixing that. Fast forward 3 years and it is one of our strongest and most collaborative relationships. Our D&I team is doing leading-edge work and has played a major role in our culture change at the company, and this has been driven by some really incredible analytics and tools from the PA team. Both our CDO and I would agree that we could not have done it without the other.”

—RJ Milnor, Global Head of People Analytics, Uber

Creating a system for ongoing alignment

DEIB and PA must have a system for ongoing alignment, particularly around requests made of the PA team.

In organizations with a centralized PA team, often a single location exists where requests are recorded before they are triaged to the relevant team or individual, according to the SLA.

“Alignment on the outcomes that you are trying to drive is one of the most critical components that make the partnership between people analytics and the Global Diversity & Inclusion team successful. Our CDO always appreciates insights the people analytics team provides.”

—Dawn Klinghoffer, Vice President of the HR Business Insights, Microsoft

In organizations for which a PA team member sits with the DEIB team, it’s still important to make requests transparent and formal. This enables broader insights into what analysis is being requested—and consistently requested analysis can be systematized. Additionally, the PA person can stay aligned to the broader goals, even if they don’t necessarily have complete visibility into them.

Whatever the exact scenario, PA and DEIB leaders should discuss requests and changes regularly. This communications flow between the partners supports the ongoing alignment of efforts to the highest priority work.

“You cannot get to decision-making without aligning on the basics first. It took 18 months to get us aligned on the definition of ‘headcount’. Unless there’s a single definition, we could not move to the next level of conversation.”

—Product Manager, a large technology company

Supporting each other publicly

Another critical component of the DEIB–PA partnership: The 2 groups publicly support each other.

DEIB metrics are sensitive and subject to scrutiny. So, if DEIB and PA teams don’t present a united front with the data and insights, then it’ll be even harder to get other leaders to act on those metrics.

Some of the ways in which the DEIB–PA partners can communicate their cohesiveness to the organization at-large include:

• Presenting together at large-scale events (e.g., town halls and / or business unit-specific meetings)
• Writing internal articles, blogs, and / or participating in videos on DEIB metrics and progress on them
• Writing external articles and / or presenting together at conferences
• Collaborating on discussions with senior HRBPs and business leaders

Remember: DEIB and PA leaders should defer to their partner when questions are outside their expertise and / or responsibilities. In other words, both partners must have a clear understanding of each other’s strengths in order to be (and appear) collaborative.

Practice #3: Working together effectively within your organizational network

A complicated web of relationships

While it’s incredibly important for DEIB and PA leaders to be aligned and work together effectively, they must also work well with the rest of the organization.

As shown in Figure 12 at least 8 different types of organizational stakeholders could be involved in the work of the DEIB and PA teams. Given this significant number of stakeholders, DEIB and PA leaders must be aligned to reduce confusion and conflict.

From our interviews, we have prioritized these relationships based on the impact and frequency with which DEIB and PA leaders need to work with these groups. Roughly speaking, we have put them into the following categories:

• Top priority. HR, and legal & privacy teams
• Critical priority. Business leaders, IT / centralized data teams, finance, and compensation
• Important priority. Corporate social responsibility, external communications and marketing, and external vendors and consultants

For the rest of this section, we discuss these different stakeholders and why they’re critical. We also outline how DEIB and PA teams can work with each group.

There are various stakeholders for DEIB and PA at differing levels of priority as represented by each stakeholder group

Top-priority relationship: HR

The most crucial relationship that PA and DEIB partners must navigate is with the broader HR function (see Figures 13 and 14).

When PA and DEIB both report to HR, the partnership is much easier—because both functions are aligned with HR’s overall goals.

Further, leaders of both functions have an opportunity to align themselves, so they can achieve those common objectives.

Conversely, it’s far more difficult when PA and DEIB report into different functions—because it becomes much easier to lack upward and horizontal alignment (between DEIB and PA).

In this situation, there’s a significant onus on the PA and DEIB leaders to understand the overall business and talent strategies—and then align their teams’ work to those broader strategies as well as to each other.

Regardless of the reporting relationship, DEIB and PA leaders must understand:

• The overall business and talent strategies
• The CHRO’s responsibilities when it comes to DEIB
• The needs of business units and functions that result from working with individual HRBPs
• How to collaborate with COE leads to integrate DEIB metrics into their work on talent practices
• What support is needed from HRIT to access critical people data
• How DEIB metrics and analytics can help HR operations teams be more effective

When it comes to driving the relationship with HR, both PA and DEIB teams should take equal responsibility.

PA teams should be responsible for identifying the metrics and processing requests, while DEIB should take the lead in influencing talent strategy and practices.

More than 80% of chief diversity officers (CDOs) report either directly to the CEO or CHRO

More than 75% of PA leaders report one level below the organization’s CHRO

Top-priority relationship: Legal & privacy teams

Another critical relationship for the DEIB–PA partners is with the legal and privacy teams, a relationship for which they have equal responsibility in building and maintaining. It’s essential to collaborate early and often with these groups, especially given the sensitivity of DEIB data and variances of privacy laws among different countries.

Based on our interviews, we identified 3 different archetypes of legal and privacy teams (see Figure 15):

1. “The less said, the better.” These leaders see their job as eliminating—as much as possible—any potential risk to the business. An effective way to get them to move on DEIB metrics and analytics is to work with senior business leaders to help these leaders see why this analytical work must be done.
2. “I say no until you convince me to say yes.” These leaders see their job as shutting down any bad or poorly thought- through However, once DEIB and PA leaders develop a clear data collection, analysis, and distribution plan—with a clear business objective, these leaders can be swayed to support DEIB metrics and analytics plans.
3. “I want to help you do this work safely.” These leaders are the ones that all DEIB and PA leaders hope they have. They understand the need for this work, may already have some experience doing it, and collaborate and brainstorm on safe, legal, appropriate solutions.

For example, while PA takes the lead in ensuring appropriate data are collected and shared, DEIB might educate and provide broader context around why it’s important to share the information

We’ve discovered 3 common types of legal and privacy teams that DEIB and PA teams find themselves working with in their organization

Critical relationship: Business leaders

While the DEIB and PA team may be responsible for driving the quantification and interpretation of DEIB metrics and analysis—business leaders must be involved in this work since they (see Figure 16):

• Influence the practices that impact DEIB
• Need to understand the underlying logic of how DEIB is measured so they can encourage it
• May be held accountable for meeting DEIB metrics
• May be fearful of being held responsible for meeting DEIB metrics

Given this situation, DEIB and PA leaders must work with business leaders to understand their perspectives on the current state of DEIB in their part of the business.

Some business leaders are very interested in making progress on DEIB metrics, while it can be a bit of a “check-the-box” activity for others.

Understanding business leaders’ levels of interest in DEIB metrics is essential, so that the analysis and insights can be tailored to what they care about most. Some of our interviewees worked with those more passionate business leaders and developed truly insightful metrics that business leaders used to drive significant changes.

The point is: The person with the strongest relationship, who is most likely to get the business leader's attention, should lead the conversation.

When determining which team (DEIB or PA) will take the lead with business leaders, the decision will be very organization- and leader-specific. In some organizations, PA has the strong data-focused relationship with the business leaders, so bringing DEIB data into the conversation will be very natural. In others, the DEIB leader has a stronger relationship, so it might make sense for the DEIB leader to begin the conversation and then pull in the PA leader when necessary.

In other situations, it may be that the DEIB and PA leaders work with the senior HRBP, as that person has the relationship with the business leader regarding all “people topics.”

“It’s unlikely that a C-suite leader will come to people analytics with a tactical question. Most often, it’s a strategic question based on a business need. It is up to us to translate that into a research question, find out the answer through data, and translate it back into a data-driven story that provides clarity on the larger strategic issue.”

—Jeremy Shapiro, Executive Director, Workforce Analytics, Merck

Several reasons exist as to why business leaders are integral to DEIB analytics

“There is often a hesitation or reluctance on the leader’s part to open their doors to analytics due to fear that it might reveal some unpleasant findings about their business, which makes it hard to establish a good working relationship.”

—People analytics practitioner

Critical relationship: Compensation & finance

Let’s talk first about the compensation team, as this relationship especially matters when looking at pay equity issues.

Pay equity is one of the more approachable DEIB topics to address—meaning that it’s something the centralized organization can influence directly—and different geographies are enacting laws that require pay equity transparency.

Therefore, many organizations address it relatively early in their DEIB journey.

If DEIB or PA already has a working relationship with the compensation team, then it makes sense for that team to lead.

In terms of the DEIB and PA teams’ relationship with the compensation team, a few critical items of focus include:

• Ensuring the compensation data and other DEIB data are consistent
• Being able to put the results of the pay equity analysis into the context of other DEIB metrics and priorities provided to business leaders
• Collaborating with business leaders, compensation, and finance to determine the highest priority compensation adjustment actions
• Working with compensation and finance to identify and align any metrics that’ll be used in compensation decisions

Again, which group (DEIB or PA) leads the relationship with the compensation team will depend on the existing relationships in place.

Turning to the relationship with finance, it’s almost a certainty that the PA team will have experience working with that team due to their other responsibilities.

However, if neither has such a relationship in place, then it makes sense for PA to lead the discussions—as PA leaders are often already well-versed in compensation technicalities and will probably be able to get to the appropriate analysis faster.

“ We were reporting to the C-suite when the CFO made it clear that they did not see any value in our report. Once we walked them through it, the CFO was amazed at the insights and told us that it was a rich discussion. Once we were able to show the value, they became highly engaged in our work.”

—People analytics practitioner

In this vein, the PA team should (with input from the DEIB team) focus on actions, such as:

• Aligning on critical data sources and ensuring data / analysis consistency
• Showing the financial impact of DEIB when needed
• Putting a monetary value on DEIB events / initiatives

“For our CFO, is gold. He is using people analytics to understand what’s on the horizon and if they can forecast better, based on the human capital data. We actually built a CFO dashboard for him. It’s a great relationship to have because he does not see people analytics as a service function. It’s very much a partnership of equals.”

—Head of global people analytics, multinational consumer products company

Critical relationship: Centralized IT & data operations

Centralized IT and data operations teams are important to the DEIB–PA partnership because they can help:

• Access centrally managed technologies and data
• Identify and provide access to novel data sources
• Troubleshoot technical or data-related difficulties
• Share novel data collection, analysis, and distribution practices

From our interviewees, we heard 2 common challenges when it comes to working with centralized IT and data operations (see Figure 17):

• Trust. Many organizations haven’t historically had a data-led PA or DEIB function, so they’re not accustomed to accommodating requests for access to centralized systems or data. Therefore, requests for support are usually met with suspicion.
  Typically, organizations get around this by leveraging senior leaders who can provide a rationale, or by showing the type of work done in the past and how it was used. In addition, providing information on data privacy and security often help.

• Time. Many IT projects were put on hold during the pandemic, and centralized IT and data teams were overwhelmed. Teams have been managing this by reducing project scopes to the most necessary items, finding other resources who could do some of the work, and / or leveraging senior leaders to help with the reprioritization of work.

PA leaders should take the lead—with DEIB’s input—when it comes to driving the relationship with IT and data operations.

The PA team should:

• Share information on how data and technologies will be used to reduce hesitations and fear about data sharing
• Showcase the broader impact of the work on the business overall
• Find additional resources when IT lacks the bandwidth

Time and trust are 2 common challenges experienced by DEIB and PA teams when working with IT and data operations

Important relationship: Corporate social responsibility

The next set of relationships concerns how DEIB metrics and analytics are shared outside the organization. Many companies include DEIB efforts within their corporate social responsibility (CSR) efforts. As a result, communication with that team on appropriate DEIB metrics—some of which may end up in an annual CSR report—is essential.

But there’s more to it than that. As noted in this article by Dr. Rohini Anand, the well-known former Chief Diversity Officer of Sodexo, DEIB and CSR are often working toward similar goals but from different perspectives:

“… We sometimes approach the same goal from different starting points. Take gender equality. We both want it, but D&I might focus more on recruitment and leadership, whereas CSR might focus more on community empowerment. These can seem like different goals, but they are, in fact, merely different approaches to the same end: improving quality of life.”

To that end, it’s essential for DEIB to take the lead in driving this relationship to understand CSR’s goals, and to align the DEIB metrics and analytics approach to support those goals as much as possible. For many organizations, this relationship will likely build over time, with some initial, relatively “easy” shared metrics at the beginning and more complex metrics with time.

The point is to work across organizational silos and to align on a standard set of measurements and approaches. Without this, CSR and DEIB will look poorly in front of business leaders.

The PA team can serve as a subject matter expert (SME) on the appropriate metrics that’ll serve the purpose of both CSR and DEIB. Also, as the relationship between DEIB and CSR matures, PA can be brought in to identify the next-level or more complex metrics, and how they should be shared.

Important relationship: External communications & marketing

While your organization’s CSR team may share some DEIB metrics externally, it’s fairly certain that your external communications and marketing teams will be very involved in any external communication efforts (see Figure 18).

Some organizations release a dedicated DEIB report that needs to be developed in conjunction with the external communications and marketing teams. Others involve the external communications and / or marketing teams when communicating about DEIB metrics in financial reports or other situations.

While these are very pragmatic ways the DEIB–PA partnership may well engage with the external communications and marketing teams, much more possibility exists in this relationship. These teams:

• Are experts in understanding how to tell stories effectively—meaning they could be beneficial to the DEIB and PA teams as they work to creditably tell stories based on data
• Can share resources that might be useful in communicating about DEIB, such as this Diversity Style Guide
• Can also give some larger context to other critical messaging, both within and outside the organization

The relationships with external communications and marketing can provide DEIB and PA with opportunities to tie some of their own messaging to these more prominent topics. This insight can also serve as a starting point for identifying new data types and analyses that the DEIB and PA teams might want to use in the future.

DEIB should take the lead in working with external communications and marketing teams.

As the “natural” owner of DEIB work, DEIB leaders are responsible for crafting the story and messaging around the insights and how they tie to the broader business goals. On their end, PA leaders should help by:

• Providing DEIB leaders with the insights that shed light on the progress of the organizational goals
• Ensuring that the metrics are interpreted and reported accurately
• Answering questions that arise from the external communications and marketing teams

5 ways external communications and marketing teams can help DEIB and PA teams in their work

Important relationship: External vendors & consultants

Many organizations turn to external vendors and consultants when they need:

• An external review / perspective on DEIB metrics
• A separate party to do data collection and analysis so as to maintain privacy / independence
• More bandwidth to complete data collection / analysis / recommendations
• Specific expertise / insights

It’s essential to consider whether the external vendor / consultant relationship will be short- or long-term in nature. Due to the sensitivity of the data, this is especially important to consider with DEIB metrics and analytics.

• Shorter-term contracts may mean the DEIB and PA teams limit the data shared to reduce some of the risks to the
• Longer-term relationships may require some additional data privacy and security

In addition, it’s crucial to get the most relevant internal teams aligned on the reason for bringing in the external vendor / consultant and the scope of that party’s work. We’ve heard of way too many instances in which DEIB practitioners brought in external consultants to do DEIB metrics and analytics work without any consultation with the PA team. As a result, the work effort was wasted because the external team lacked adequate data or nuance to interpret the data in a meaningful way.

While DEIB leaders might often find themselves leading the work when it comes to working with external vendors and consultants, DEIB and PA leaders must work together and take equal responsibility.

Given the long-term nature of identifying, measuring, and distributing DEIB metrics, you must have everyone aligned on the work being done and who’s doing it. This is one of the areas in which it makes sense to go slow in moving forward.

“The DEI team hired a vendor for reporting. The team would send the vendor our SAP data and the vendor would send it back to us in some kind of a format that would be used for reporting. Looking back we can see that the numbers and reporting were very inconsistent.”

—Global People Analytics Director, a multinational consumer products company

You should partner closely to make sure:

• The services and technology offered are truly needed, and aren’t already being done in-house or by previously purchased tech
• A plan is in place as to how the data and findings from the consultant will be used
• Clarity exists around who is ultimately responsible for driving and implementing the recommendations and actions that come out of the review and analysis

“I see people analytics departments outsourcing DEIB analysis to external consultants, who will run multivariate regression models and provide independent assurance. The outcome often shows no significant bias. Well, of course, because there is no policy to pay people differently! I wish DEIB leaders would analyze potential bias in all the moments that matter. Then they will really see what’s happening.”

—Dirk Jonker, CEO and Founder, Crunchr

Next steps

Getting started

Now that you’re familiar with the practices required for a successful DEIB–PA partnership, what should you do next?

The 3 practices should be embedded as part of the broader strategy for both PA and DEIB teams. Here, we offer a few steps that you—as a DEIB or PA leader—can start taking immediately.

Step 1: Do a quick audit of where things currently stand between DEIB and PA with the organization. Some of the questions to help you do this include:

• Is there a formal partnership between DEIB and PA within the organization?
• Does leadership support the relationship if it exists?
• How often do DEIB and PA leaders interact or meet?
• Does senior leadership understand and value PA's role in DEIB?

Step 2: Identify the gaps and build on the practices. Determine the areas in the partnership that need attention and which of the 3 practices discussed earlier should be leveraged. Think through the following questions:

• Do DEIB and PA leaders have a clear line of sight into each other's work?
• Is there clarity between the 2 teams regarding responsibilities and expectations?
• Do you have in place an intake process for DEIB requests, data sharing, and communication of insights?
• What other relationships do DEIB and PA teams need to leverage within the organization?

Step 3: Communicate and share broadly the work you are doing together. Sharing your successes and lessons learned within the partnership is essential to supporting each other. Think through the following questions to understand how you can get started:

• How are we currently sharing our work with others in the organization?
• Is our senior leadership aware of our work's impact on the organization?
• Are there external opportunities we can leverage to showcase our work?
• Are we leveraging resources (e.g., community groups and other industry leaders) to get feedback and insights on what else we should be doing?

We also provide a series of exhaustive checklists for each of the 3 practices in the appendix. Use them as a "grab-and-go" list of actions to start building your own successful DEIB analytics partnership.

“There are people who partner with people analytics reluctantly because they need data, and then there are others who want to work with them and use their brain. Diversity leaders should strive to be in the latter group because only then will they gain the insights needed to be successful in their work.”
Chief Diversity Officer, a global retail company

Final thoughts

Over the last 2+ years, many events, trends, and changes have thrust DEIB and PA into the spotlight. While they may be on the stage together, these 2 teams have very different backgrounds and don’t always have the “chemistry” they need. Yet, they must play their respective parts to help organizations through these unprecedented times.

We discovered from our research 3 critical practices which DEIB and PA teams should do to build the kind of partnership that will allow them both to flourish:

• Understand each other’s contexts
• Build a plan for partnering
• Manage the complex organizational network together

By doing these things, PA and DEIB leaders can partner effectively to deliver high-quality DEIB metrics and analysis to their organizations. This partnership will enable organizations to make higher-quality, data-backed decisions that ultimately impact millions of lives.

We strongly encourage you to complement this study with our previous study on DEIB analytics: DEIB Analytics: A Guide to Why & How to Get Started and DEIB Metrics: An Essential Guide. If you still have questions, please reach out. We love to learn from you.

Note: for Appendices, including research methodology, and checklists for getting started please download the PDF report.

What does performance management in a hybrid work world look like?

Organizations have had to dramatically change their practices in recent times, especially when it comes to performance management (PM).

In this webinar, Stacia Garr and Priyanka Mehrotra answer questions such as how is PM evolving in current times, and specifically how is it different from 2019 in terms of philosophies, practices, and approaches?

Key takeaways from this webinar include knowledge of what PM looks like in an organization that has redesigned it, gain insights into how PM has changed since 2019 and PM practices that organizations should think about for the hybrid world of work.

 

 

 

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Listen as we discuss our latest findings from our study into the people analytics technology landscape.

The webinar provides insights around questions such as:

-What does the current people analytics tech market look like?
-How has it changed over the past year?
-What are the different capabilities offered by the vendors?
-Where is it headed?

 

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Organizations still have a long way to go when it comes to DEIB

It's been more than 2 years since the murder of George Floyd. Two years since business leaders published statements promising to address the systemic inequities within their organizations. Two years since organizations began hiring new diversity, equity, inclusion, and belonging (DEIB) leaders, reexamining practices, and investing in new programs and systems. So, what results have we seen?

To date, the results of these actions haven't been great. According to the Edelman Trust Index, most employees under age 54 don't believe that companies are living up to the promises made to address racism within their organization. Further, trust in employers to respond appropriately to systemic racism and racial injustice has declined. As shown in Figure 1, this is particularly the case in populations impacted by racially motivated events, such as the mass shootings of Asians in Atlanta, GA in March 2021, Taiwanese in Laguna Woods, CA in May of 2022, and of Blacks in Buffalo, NY also in May of 2022.

Though issues of race are the most prevalent at the moment, they're not the only areas for which employees are dissatisfied with their employers’ responses. For example, data from PwC shows that 80% of employees believe their organizations don’t gather and analyze data on compensation, performance, hiring, and promotions discrepancies. Further, nearly 40% of total respondents from a survey of 1,543 workers, the majority of whom identify as Black, Hispanic / Latinx, Asian, female, and LGBTQIA, believe their company’s commitment to DEI is likely to drift in the future.

Even CEOs recognize the problem: According to Deloitte, 41% believe there's a lack of trust around DEI in their organizations.

“The taken-for-granted assumption that one could just get a position of leadership and then behave however one chooses to and get away with it…is not really panning out. The context has changed.”

—Laura Morgan Roberts, Professor, University of Virginia, Darden School of Business

Employees still expect organizations to act

Despite employees’ dissatisfaction with their organizations’ progress over the last few years, they still expect companies to take action on issues of racial injustice. Americans still trust their employers more than any other type of institution to do what's “right” when it comes to racism. Similarly, 66% of Americans think businesses should act on racial injustice issues, while 68% believe people should be able to discuss the topic at work (see Figure 2).

Further, 58% of the U.S. general population indicate that an inclusive work culture with a strong and well-supported diversity program is critically important to attract and retain them. Further, in organizations that have made “a lot” of progress in addressing racism and racial inequities in the workforce, employees have higher levels of loyalty, employer advocacy, and commitment.

The questions this study answers

Given everything that's happened in the last few years, we took a step back and asked a few critical questions:

• What are some of the fundamental shifts we’ve seen related to talent—and how will this impact diversity, equity, inclusion, and belonging (DEIB)?
• What is a holistic way leaders can think about their DEIB efforts, thereby more effectively defining and integrating their DEIB strategy with other activities?
• What trends do we see moving forward that could influence organizations' 2022-2023 strategy?

This study is based on a review of more than 70 articles, and interviews with 10 DEIB leaders and 20 HR leaders.

RedThread's definitions of terms: DEIB

Fundamental shifts

The earthquake beneath the talent landscape is shaking up DEIB expectations

Over the last few years, we’ve seen some tectonic-level shifts in the talent landscape. These include:

• Change in power dynamics in favor of Over the last year, we’ve seen the Great Resignation as well as a massive rebellion when it comes to employees returning to the office (office occupancy rates have plateaued at 43%). Further, the gig marketplace and alternative work arrangements are increasingly attractive to employees, with many opting for those roles in lieu of a corporate job.
• Demand for skills that are in under-supply results in a greater focus on retention, promotion, and talent The last few years’ whiplash-like changes in the business environment have highlighted organizations’ talent deficiencies. Leaders realize they don’t have the skills they need in their existing workforce—and they can't fill their organizations’ demand for skills from the external talent market. Therefore, leaders are focusing on retaining employees and developing them with the skills the company needs.
• Rising importance of human capital For companies, more and more of their business is people-driven, resulting in investors taking a growing interest in human capital metrics. The SEC, for example, is now requiring public companies to report on those metrics—including diversity metrics—in their financial reports.

As a result of these major shifts, leaders could not simply make their 2020 DEIB promises and move on to the next thing (see Figure 3). Instead, they see a situation in which:

• Employees feel empowered to demand change with Nearly 60% of those aged 35-54 and 70% of those aged 18-34 have advocated or acted against racism—and they're carrying those expectations of action into their workplaces. Another 82% of employees expect CEOs to do something to address systemic racism and racial injustice.

• Leaders must respond to employees’ demands to make progress on It’s clear that leaders must address racism or risk losing employees. While 40% of employees would consider leaving their company if they don’t trust it to fulfill its DEI commitments, 56% would not recommend their company as a place to work.
• The public is monitoring progress on With the current SEC requirements to disclose diversity data—and more requirements coming soon—investors, employees, and the media are all holding leaders accountable for moving the needle on DEIB metrics. While some organizations have shared minimal diversity data, it’s unlikely that scenario will remain tenable.

“A role that was once focused on race and gender has grown in complexity and inclusion of individuals spanning military status, special needs, LGBTQ, generations, and more. What was once a focus on workforce (people) now includes workplace (culture) and marketplace (business).”

—Jackson Lee Davis IV, Head of Diversity, Equity, and Inclusion, MassMutual

A shift within a shift: The rising importance of purpose

An underlying theme of the shift in power dynamics toward employees is their greater desire to align their personal purpose with the purpose of their respective organizations. According to Gartner, as of January 2022, within the U.S. employee population:

• 52% question the purpose of their day-to-day job
• 56% want to contribute more to society
• 65% are rethinking the place work should have in their lives

Leaders increasingly understand the need to identify, articulate, and act on their organization’s purpose. As identified in Figure 4, an organization's purpose is a clear and concise statement that inspires people to deliver value to multiple stakeholders.

An organizational purpose that considers multiple stakeholders—also known as stakeholder capitalism—is not some new-fangled idea that some fringe companies are doing. In fact, the Business Roundtable, an organization comprised of the largest companies in the world, released an updated “Statement on the Purpose of a Corporation” in August 2019.

In this statement, “181 CEOs committed to pursue a more holistic approach to serving stakeholders more broadly renouncing the concept of shareholder primacy.”

Organizational purpose: A clear and concise statement that inspires people to deliver value to multiple stakeholders.

Purposeful organizations focus on the same stakeholder types as DEIB leaders

The focus on purpose has a direct consequence for DEIB efforts, as the multiple types of stakeholders identified by the Business Roundtable (see Figure 5) are the same ones on which DEIB leaders traditionally focus.

This means that DEIB leaders should have more support for their efforts, as organizations try to fulfill the idea of organizational purpose.

But with that broader support also, potentially, come more cooks in the DEIB kitchen—and more scrutiny of DEIB efforts. This makes it more important than ever to have a clear and holistic approach to DEIB.

Developing a holistic approach to DEIB

“This work is about culture and change management, and so we need to be looking for behaviors, practices, or norms that need to change.“

—Mary Ellen Connerty, Director, Diversity & Engagement, O’Melveny & Myers LLP

Creating a holistic DEIB approach

When you’re developing a new DEIB approach—really a DEIB system—you need to answer these 6 questions (see Figure 6):

1. Why is my organization focusing on DEIB?
2. What goals are we trying to achieve and for whom?
3. What is our strategy to achieve those goals?
4. What levers are we trying to pull to enable that strategy? What are the supporting activities that pull those levers?
5. How will we use technology to scale our operational activities?
6. How will we use data, analytics, and metrics to create transparency and enable accountability?

A holistic DEIB system is one in which every organizational process, action, policy, and decision is looked at through a DEIB lens.

Start with your organization’s “why”

There are typically 3 reasons why organizations focus on DEIB:

• Alignment to organizational purpose
• “Right thing to do” (RTTD)
• Business case for D&I

Right now, though, there’s another reason:

Other competing priorities. A recent Deloitte study revealed that majority of senior leaders believe their organizations' commitment to DEIB will take a back seat as other competitive threats surface.

This skepticism of organizations’ commitment to DEIB means it's even more important than ever for organizations to follow through on their commitments.

Making it happen: Understanding the why

When you open the discussion to “why” your organization is supporting DEIB, it's critical to be sensitive to the organization's specific context, environment, and leaders’ perspectives.

Different leaders are at various stages in their journey to understand and embrace DEIB. One of the benefits of the greater openness we’ve seen is that many leaders are now more open to further learning.

Regardless of specific leaders’ perspectives, the important thing is to align on the overall why for the company.

“Begin with why this is important to you. Align it to the long-term value of the firm, the purpose of the firm, and your value system.”

—Mary Slaughter, Former Managing Director, EY

What does your organization want to achieve?

The next big question to answer is what your goals are, both long term and short. Some examples of typical goals we heard are:

• Ensure talent pipeline diversity
• Move the dial on leadership diversity
• Identify barriers to belonging while putting inclusive practices in place
• Enhance representation among middle management

It’s important to be very clear on these goals, and (as we discuss later) to have clear metrics and accountability in place for these goals.

And, for whom?

While it’s important to have high-level goals, you should consider focusing on goals for specific subsets of stakeholders (see Figure 7).

For example, you may have specific goals for C-suite leaders and middle managers, as those groups are critical to making DEIB a reality.

In addition, you may have goals for specific demographic groups, such as gender, race / ethnicity, culture, sexual orientation, social / economic classification, age, disability, and religion.

For the last few years, there’s been a huge focus on both female and Black employees. We expect to see goals around representation and engagement of these populations to continue.

Making it happen: Listening for better goal-setting

When setting goals, it's essential for you to understand the range of perceptions and experiences of different stakeholders. This can mean leveraging a range of data sources (e.g., interviews, focus groups, surveys, demographic data, digital exhaust, etc.) to get a holistic picture of current state and gaps.

Recommendations and feedback from diversity councils, resource and affinity groups, people committees, and diversity advocates comprise an integral part of understanding where you stand and where you need to go.

“Every strategy must start with listening. We must veer away from making assumptions on what people need and how they need it, and listening forms a core part of that.” —Sheree Atcheson, former Global Director of Diversity, Equity and Inclusion, Peakon

“Understand the business you’re in and figure out how D&I can enhance the bottom line. Such efforts can’t be an HR initiative; they ca be separate from corporate strategy. This is about engaging the entire organization on issues related to diversity.”

—Rohini Anand, Global Chief Diversity Officer, Sodexo

What is a strategy anyway?

We have read about a lot of different DEIB “strategies”:

• The 3 Ps: People, partners, and places
• The 4 Pillars: Workforce, workplace, industry, and community
• The 3 Is: Individuals, infrastructure, and impact

While these are useful methods to keep track of all the ways you can operationalize a strategy, they are not a strategy.

Instead, a strategy helps you understand what you should be doing—and, as a result, what you should not be doing—to achieve the established goals.

A DEIB strategy supports the purpose and drives the organizational culture.

Think of it this way: Your strategy to win a marathon may be to go fast the first 13 miles and slow the last 13 miles (and just hope you make it!). Or it could be to go slow the first 20 miles and sprint the last 6.

But a strategy wouldn't be to put on your running shoes, clothes, and drink water! They may be necessary to running the race, but they're not your strategy.

A business strategy is “… a set of guiding principles that, when communicated and adopted in the organization, generates a desired pattern of decision making.” Source: Harvard Business Review, 2007.

So what’s a DEIB strategy then?

A DEIB strategy, similarly, is a set of guiding principles that helps your organization achieve its DEIB goals. The DEIB strategy should help you make decisions about the activities to engage in and those you should forego to achieve your goals.

What does this look like in real life? As an example, let's assume a company’s goal is:

“To be the most inclusive organization in tech.”

Sounds lofty, right? Well, then the strategy could be:

“To create inclusive experiences for employees from their first interaction to their exit interview.”

This strategy clarifies that the organization will focus on all of the talent lifecycle and specifically focus on inclusion (diversity, equity, or belonging may be a secondary focus).

It also gives the organization a set of guidelines for making decisions, for example:

• Is this talent selection process inclusive? Nope? Let’s change
• Is this leadership program inclusive? Kind of. Let’s evolve it.
• Is this event inclusive? Yes! Great, how can we do more of them?

How are DEIB strategies changing now?

We asked every interviewee if their DEIB strategy is changing and the results were mixed.

Organizations that already had a clear strategy indicated they plan to stay the course. These companies have amplified their efforts for Black employees and their communities, but haven't planned significant strategic changes.

"Having a collective strategy around what we’re doing not only to hire the best talent but also to retain talent and develop talent is important. One of the reasons we’re seeing strong results is because of how we’ve treated our people , and a lot of that has been led by HR."

—Cynthia Bowman, Chief Diversity and Inclusion and Talent Acquisition Officer, Bank of America

For those organizations that are relatively early in their DEIB journey, we find are much more likely to indicate they're planning to adjust their strategy. Generally speaking, this means developing a much more explicit focus on inclusion and belonging for Black employees, and a greater level of openness for difficult conversations about racial justice.

" to make sure we’re talking about inclusion and equality at every level, and that it is front and center in the board room and in the management room. We can set hard targets for ourselves and make those transparent to our board and measure them like we measure other outcomes like financial results.”

—David Kenny, CEO, Nielsen

Strategy vs. goals: What’s the difference?

Once you've set your goals, the next step is to figure out how to achieve them and lay out a strategy for it. You may fall short at this stage as setting goals and objectives is often confused with an actual strategy.

While DEIB goals are what you hope to achieve, a strategy is a specific action plan that will help you get there.

It's critical that you be extremely detailed and descriptive in laying out the specific targets and how you strategically work to achieve them. Unlike goals, which can be both short and long term (1-5 years), a strategy should cover a short-time period (e.g., 1 financial year) and needs to be revisited often.

" You can’t take exactly what someone else is doing, put it in your organization and think it will work. You’re not really focusing on your own culture and diagnosing your own issues. You can learn what others are doing, but you have to figure out what challenges you’re trying to solve for your own company.”

—Monica Jackson, Vice President of Inclusion and Diversity, Eaton

Making it happen: Refining the strategy

Similar to goal-setting, involve different stakeholders right from the start in refining the strategy.

Incorporate different groups with varied experiences to get their perspectives on how goals can be achieved. Strategy setting should be a highly iterative process.

Our interviews revealed 3 findings crucial to this step:

• Collaborate with business leaders on how the DEIB strategy will work for their business and enable them to achieve their objectives
• Work with HR and other teams, such as talent acquisition, learning and development, and leadership development, to revisit policies and practices to ensure that the strategy is baked into every process
• Using the strategy setting process—and the resulting communications—as a way to get everyone onboard with the actions to come

“Solving DEI&B starts with understanding the human brain and how we relate to one another. If we don't learn how to talk openly about this complex subject, if we don't learn how to spot bias in our own behaviors, and if we don't learn how to act inclusively and have empathy for others, all our procedures in the world won't change our individual experiences.”

—Mary Slaughter, Former Managing Director, EY

Moving on from strategy: Focus first on the levers, not activities

It’s super easy to rush from strategy to specific programs, initiatives, and events. Don’t make this mistake.

Instead, identify the levers your organization most needs to focus on to drive DEIB outcomes (see Figure 8). This allows you to be more purposeful about your organization's DEIB activities.

For some goals, it may be best to focus on some of the levers, while, for others, you might want to influence all of them.

For example, if your organization’s challenge is senior leaders' support, then you might want to focus on understanding those leaders’ individual beliefs / behaviors, and making low-risk policy or program changes. If, instead, your challenge is middle-manager support, then you might focus on understanding those leaders’ beliefs and behaviors, but also tackle driving changes in all other areas, too.

Select DEIB activities based on levers

Once you’re clear on the levers you're trying to influence, then identify the activities that could be appropriate. Figure 9 offers an example list of activities that impact DEIB levers. This list is not exhaustive. You should build out your own list—and adjust your assessment of the extent to which the activities influence the levers for your organization.

Generally speaking, it's better to have activities that influence multiple levers. That said, a specific talent activity may serve an important purpose for a single lever.

For example, a statement on the organization’s perspective regarding racial injustice during the summer of 2020 was incredibly important. However, since it only influences one of the levers, it needed to be backed up with other activities that can impact DEIB outcomes.

Making it happen: Enabling levers & activities

While strategy may be set by a subset of leaders, it comes to life through everyone. Therefore, it's essential for you to share details of the strategy throughout the organization and to distribute the authority to act on it broadly.

This means that once the influential levers and activities have been identified, you must provide tools, resources, and empowerment for everyone in the organization to take action.

Tech: The great scaler

For a long time, the combination of technology and DEIB—beyond training and ensuring accessibility—wasn't a thought that crossed most DEIB leaders’ minds.

That has changed. In our initial report from February 2019, Diversity & Inclusion Technology: The Rise of a Transformative Market, we identified 89 vendors in the space. In our most recent report on DEIB technology, we identified more than 100 vendors that offer solutions across all parts of the talent lifecycle.

As in so many other areas, DEIB tech can dramatically expand the scale and impact of your DEIB activities. However, just as with any technology implementation, it's essential that you have all other critical decisions—your “why,” goals, strategy, and levers / activities—made before you select any tech. Otherwise, you could be selecting technology that will scale your efforts … in the wrong way.

Before implementing any new technology, you should analyze your existing tech for biases that may exist either within the systems themselves or in how they're used. Then apply that same criteria to any new tech you may implement.

“DEIB technology is enterprise software that provides insights or alters processes or practices, at the individual or organizational level, in support of an organization's efforts to become more diverse, equitable, inclusive, and to enable belonging.”

Source: RedThread Research, 2021.

DEIB tech: You may already have it

When we think about DEIB tech, there are 3 types of vendors:

• “DEIB Focus” vendors: These vendors’ primary business is helping organizations address their D&I An example of this is a vendor whose product focuses only on reducing unconscious bias during hiring.

• “DEIB Feature” vendors: These vendors offer features or functionalities that cater specifically to D&I needs, but their primary business includes more than D&I. An example of this is a recruiting software vendor whose product can make all resume names / identifying information “blind” to minimize unconscious bias.

• “DEIB Friendly” vendors: These vendors do not address D&I as their primary focus, and they don't market themselves specifically as doing so—but their features or functionalities could positively impact diversity and inclusion in organizations. An example of this is a recruiting software vendor that uses artificial intelligence (AI) to recommend appropriate candidates to hiring managers.

It’s important to understand these differences because they can emphasize that your organization may already have technology—a “Feature” or “Friendly” tech—which can be leveraged for DEIB purposes.

Critically, many vendors have added DEIB features to their offerings (see Figure 10) in the last 2 years, making it more likely than ever that your existing tech already has some capabilities in this area.

After reviewing your existing technology, if you don't have a way to scale your strategy and activities, then consider some of the DEIB Focus technologies that may help you achieve your goals. Our DEIB tech research can help you find solutions.

Making it happen: Using tech to drive impact

One of the biggest benefits of technology is that it can help identify insights which either have been missed or considered too politically sensitive to surface. By tracking, measuring, and analyzing actions and behaviors, tech can highlight biases that otherwise wouldn't be discussed.

“It’s my responsibility as the CEO of this company to make sure it doesn’t fall off the agenda. I think by setting goals for ourselves in the short, medium, and long term, we can then hold ourselves accountable. And I expect the GM team to hold me accountable.”

—Mary Barra, CEO of GM, speaking about inclusion

Data: Creating transparency & enabling accountability

One of the biggest shifts we’ve seen is a higher level of focus on identifying, analyzing, and democratizing DEIB data.

• Identifying DEIB data: While organizations have tracked diversity data for compliance reasons for years, the focus has shifted more broadly. Organizations are now trying to understand the employee experience for diverse populations and how that differs from the majority We’re also hearing about organizations seeking more forward-looking metrics—not just pipeline or representation metrics, which are backward-looking.
• Analyzing DEIB data: Historically, given the perceived sensitivity of this data, the analysis and reporting of DEIB data have been done by a small group of The recent proliferation of data technologies has expanded the groups that can access and analyze these data, making it more likely to be done.
• Democratizing DEIB data: Given higher expectations from employees and other stakeholders, organizations are sharing more data on DEIB than The key will be in ensuring accountability for changes, which is a responsibility of both organizational leaders and stakeholders.

Making it happen: Data, analytics & metrics

Many companies can fall into the trap of “check the box,” for which DEIB efforts become something you have to do because it's required. By tying efforts to actual metrics that are reported and connected to potential rewards, you can embed accountability.

Additionally, establishing metrics that can be tracked consistently might be one of the most crucial steps you can take in the process.

“In every organization, there is a need for a set of standardized metrics that can be applied across the business, and customized metrics that are specific to each business, to ensure equitable measurement.

—Crysta Dungee, DEI leader

“If we want to make change, we have to have a target and accountability. If is important, we attach a number and a timeline to see if we’re making progress on that.”

—SVP, Head of People Sustainability and Chief D&I Officer, Technology company

Trends for 2022 & 2023

Trend #1—Ensuring return to office isn’t return to 2019

One of the most remarkable sets of data from the last few years compares the return-to-office preferences of different demographic groups. As shown in Figure 11, most underrepresented populations prefer to be in the office much less frequently than their white colleagues.

Qualitative research reveals that one of the primary reasons for this is the significant reduction in microaggressions and other types of harassment when employees worked remotely. As employees are in the office more regularly, leaders need to be aware of this issue, and implement workplace practices, behaviors, education, and resources to mitigate it.

There's also the topic of employees who return to the office much less often, as they require the flexibility they've found over the last several years. Research shows that, among knowledge workers, underrepresented populations desire flexibility much more than other populations.

This is also the case for working parents, for whom 57% of working mothers and 48% of working fathers want to work remotely 3-5 days per week (see Figure 12). However, the same research shows many working parents (46%) fear that working remotely will negatively affect their career trajectory (as compared with just 34% of nonparents).

As leaders look to adjust their return-to-office policies, they should consider (if they haven't already) how they'll design their talent practices to minimize the impact of proximity bias. This is especially important since it appears underrepresented populations may take more advantage of flexible work arrangements.

Approaches, such as the following, can go a long way in addressing this issue:

• Analysis of performance scores or promotions by in-office time
• Ensuring every employee has a career conversation
• Making access to information about development and promotions more transparent

Trend #2—Auditing existing talent practices and technologies through a DEIB lens

Due to the events of the last 2 years, organizations have a higher level of insight into the challenges of underrepresented populations. Many DEIB-specific resources have been launched to help address these challenges, such as employee resource groups (ERGs), hiring a DEIB leader, and providing DEIB training.

While helpful, these approaches don’t address systemic bias. To do this, leaders need to look at their talent systems—their practices and technologies. Figure 13 highlights DEIB-related practices that U.S. employees believe would help their companies’ long-term success while also benefiting DEIB.

One of the most important places to start looking is where critical talent decisions are made—hiring and advancement. Analyzing those talent processes for potential biases is a really good place to start. For example, one organization we’ve spoken with has put in place a “candidate advocate” on interview and promotion panels to listen specifically for potentially biased comments (e.g., “She’s got a young kid at home, so she probably doesn’t want this opportunity.”). Other standard practices include having diverse hiring / promotion panel slates.

Another area many companies are focused on today is pay equity. Many organizations can help companies analyze existing pay practices and plan for appropriate adjustments.

Trend #3—The increasing importance of DEIB metrics

We define DEIB metrics as:

Metrics that help leaders analyze and monitor the state of diversity, equity, inclusion, and belonging within the organization.

As alluded to earlier, DEIB metrics are increasingly required by investors, customers, and candidates. It's important to note that we'll soon see more required disclosures from the SEC, which will heighten the need to produce high-quality DEIB metrics.

However, external disclosures are not the only reason to focus on DEIB metrics. Instead, organizations should provide DEIB metrics, along with a straightforward narrative around them (especially around why they may not be able to change as fast as some desire), to dispel rumors and distrust within organizations. As shown in Figure 14, a substantial percentage of employees don't trust colleagues to tell them the truth about racism, diversity, equity, and inclusion in the organization.

Part of the reason for the lack of trust is this: Companies can appear to be “cherry-picking” the specific metrics they share. As shown in Figure 15, some metrics, such as board data disclosures and overall workforce diversity numbers, are commonly reported by companies. However, some of the metrics which could potentially cast companies in a more negative light, such as racial / ethnic pay ratio or diversity targets by race / ethnicity, are less reported upon.

As we all know, providing metrics around DEIB won’t necessarily change everyone’s mind. However, by being clear about where the organization is on DEIB and why specific metrics are being shared versus others, leaders can start to build trust with employees. Over time, regular disclosures of metrics—and improving those metrics—can strengthen employees’ trust in this topic.

Conclusion

The time is now for DEIB leadership

Here & now

The last few years created a unique set of conditions that made people, organizations, and society more open to making meaningful changes to diversity, equity, inclusion, and belonging than ever before.

Create a holistic DEIB system

While it remains crucial that you create DEIB strategies aligned to specific needs, you also need to create alignment across the entire DEIB system— from “why” the organization focuses on DEIB down to leaders’ data, analytics, and metrics. This will create a much more cohesive and stronger system to support DEIB.

Be prepared

Our research indicates that organizations need—and employees demand—to take action on DEIB. By creating an aligned DEIB system (see Figure 16), your organization will be better prepared to tackle whatever comes next.

On June 24, the U.S. Supreme Court overturned the Roe vs. Wade ruling, leaving many companies scrambling. In response, we convened a roundtable of leaders on June 30 to discuss these challenges and identify possible solutions.

Specifically, we discussed 3 questions:

• How organizations are communicating about Roe vs. Wade, both internally and externally
• How organizations can support those affected by this reversal
• What are some of the broader implications for talent attraction, retention, and employee experience

Key takeaways

There is a general sense of fear resulting in a slow or lack of response from organizations on the issue

Companies had been quick and vocal about expressing their support for social issues in the recent past, such as the Black Lives Matter (#BLM) movement. Yet, many have stayed silent on this issue both internally and externally due to a few reasons:

• While some groups and individuals expect their employers to take a stand on the issue, others prefer to avoid political discussions at work.
• Many companies have offices across the globe. Taking a stand on a U.S.-based issue that does not impact large parts of the organization has deterred many leaders from speaking out publicly.
• Many leaders are afraid of expressing a personal view or explicitly showing support or dissent for the ruling. Instead, they are limiting their response to acknowledging differing beliefs.

However, there is also a general fear of repercussions from staying silent on the issue. Employees have an increased level of expectations from their employers to take a stand, mainly because many organizations have been vocal about political issues in the recent past.

Many companies are focusing on the healthcare aspect of the issue

Many companies, unwilling to take a political stance on the topic, are using language that promotes healthcare access for employees to show their support. Because the overturn of the ruling changed laws overnight in some states, many HR leaders are not clear on the current benefits available to employees and how they will change in the future. Participants mentioned the lack of communication from their insurance companies, making it hard for organizations to share information with employees resulting in confusion and fear.

Some companies are finding other ways of helping their employees, such as:

• Expanding benefits to include travel expense coverage
• Communicating that the health and safety of their employees is their top priority
• Working with their benefits provider to ensure that all employees, regardless of location, have access to the healthcare they need

Some are also providing mental health and wellbeing support by:

• Encouraging conversations led by employee or business resource groups (E / BRGs) with guidelines on how to start a conversation on the topic, and set expectations around sharing, listening, and respecting each other
• Opening up forums and town halls for communications with leadership
• Promoting employee assistance programs (EAPs) for emotional support, including crisis lines offered to employees in need
• Bringing in external facilitators to guide discussion and hold courageous conversations without repercussions

Privacy is a concern, but many are not thinking about it

There are serious legal implications that could emerge from the data collected on employees, but few companies are thinking about it or addressing it right now. Data tracking on employees who request medical support could lead to privacy concerns around access and usage. Similarly, reimbursements for travel expenses that require disclosure of travel purposes could also result in privacy challenges.

One of the ways companies can prevent such challenges is by using a third-party administrator for travel reimbursements or stipends which would ensure privacy for employees. Additionally, companies can restrict access to sensitive data such as biometrics. Finally, some organizations are revisiting their paid time off (PTO) policies to remove the distinction between sick time and PTOs and help afford employees privacy when applying for a leave without disclosing the specific reasons.

It’s too soon to know the broader impact on organizations

Participants agreed that while there will certainly be some implications for organizations based on how they approach this issue, it is too early to tell whether they will be long-term and significant. Over time, companies could find themselves asking questions such as:

• Is this impacting the experience different populations have within the company?
• Is talent attraction impacted because of it?
• Has it impacted our attrition in the long term?
• Do we see this affecting our brand?

Organizations are aware that any communications regarding the overturn will affect their company culture over time.

Thank you to all who participated and shared their experiences. We welcome your suggestions, thoughts, and feedback at [email protected].

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Many of us are beginning to return to the office (RTO). Who could have imagined it would take more than 2 years? What an experience we've lived through. So, it's safe to say none of us are the same as when those first shelter-in-place orders were announced in early 2020.

For one thing, we've collectively lived through a grand experiment in remote working. And, as it should be with any experiment, we've learned a lot. For example, we've seen that:

• Certain work can get done better in distributed environments than in the office
• Not all work needs to be done synchronously
• Through improvements in technology and process, we can work in new and often more effective ways
• People can be much more self-directed and effective than many had imagined

We've also been reminded of just how much humans are social creatures. This has been reinforced by situations where in-person work interactions truly allow us to flourish. After 2-plus long years, there’s an incredible attraction to be together again with our teams—to create together, rejoice in being alive together—in a physical workplace.

Now’s the time for us to move to the next phase of the experiment—hybrid working. As we enter this period, the question becomes,

How can we keep the goodness of both situations—distributed (remote) and in-person work—while enabling our people and organizations to perform effectively?

While we have many components to do this, one area that many organizations are overlooking is performance management.

In this report, we focus on a few things:

• The critical levers for performance management (PM) and how they've evolved thus far since the start of the pandemic
• Why those specific levers are especially critical to hybrid work
• How to audit your organization's current practices and get started

This research is based on a number of different studies we've done over the years on PM, as well as the results of our 2021 survey of employees and HR leaders on performance management. See the appendices for the nitty-gritty methodology. This report gives you the data, insights, and practical suggestions you need to prepare your organization for this next grand experiment.

Performance management: Critical to the hybrid work experiment

PM is always important—it:

• Touches every employee in the organization
• Provides clarity on goals, objectives, and performance
• Influences incentives

While important, PM is far from perfect—its limitations and potential biases have been documented by many.

Unfortunately, many biases will likely be exacerbated in a hybrid work setting (see Figure 1). For example, managers may be susceptible to proximity bias when assessing performance if some employees are in the office more than others. To potentially overcome these biases, employees may begin to come into the office more often, even if it’s not where they get their best work done.

To ensure that employees can perform as effectively as possible—and managers can support them fairly—leaders need to make sure PM works for all in this new hybrid work world.

While this might feel a bit daunting (or not even be on your radar at all), let us assure you this is possible. After all, we've just been through a global pandemic and have learned some important lessons that we can apply to the future. Not only that, our RedThread data show that some organizations and managers have already adjusted their practices to better suit a hybrid work environment. So, your organization may already be further ahead than you know.

Introducing the new 3C model

While a wide range of practices can be considered essential when desiging performance management for hybrid work, the question, of course, becomes:

Which practices and behaviors matter most?

When we first conducted this study in 2019, we introduced a model that organizations needed to focus on most to drive PM. The model was comprised of 3 levers:

• Culture. Promotes the values and norms of the organization to drive organizational performance and engagement
• Capability of managers. Plays a role in creating the right environment to drive individual performance
• Clarity. Enables individuals to understand their contribution—in the present and the future—to drive engagement

Our latest research provides an updated model of 3 levers that organizations need to focus on when it comes to PM in current times. As readers can notice in Figure 2, some elements of the old model remain important, while others have evolved.

The 3 levers that organizations should focus on in a hybrid world are:

Culture. A culture that clearly promotes the organization's values and prioritizes people became an even bigger priority for leaders during the crises of the past 2 years. As companies look to implement new ways of working once again, they need to maintain their efforts to reinforce a high-performance culture. This lever has evolved in 2 important ways when compared with the 2019 version:

1. Culture now includes the new subfactor of “clarity” (that was its own separate lever in 2019). A high-performing culture must now provide employees with clarity around their goals and performance.
2. Another subfactor from our 2019 model, “future-focus,” is now renamed “fostering growth.” Organizations need to provide opportunities that help employees grow in their current roles and no longer view development as future-oriented.

Capability of managers. Few others have played a more impactful role in employee experience and performance during the pandemic than managers. Leaders will continue to rely on managers for their culture-building efforts and to empower employees to perform effectively in the future.

Connection. This is a new lever that organizations need to focus on. The pandemic and subsequent changes in work made the annual performance conversations obsolete for many. Several of these companies increased employee check-ins during the pandemic, which resulted in improved levels of engagement for many. Moving forward, enabling connections between employees, their managers, and the broader organization will be essential to employee performance.

Beyond our data, real-world stories also reflect the criticality of culture, capability of managers, and connections. Over the past few years, several companies have revisited their PM processes to understand what’s working and what needs changing—to ensure continued performance and career development.

A culture of continuous feedback and check-ins, along with clarity and alignment around expectations, are welcomed and encouraged widely. The latest example comes from Google, which recently did away with its biannual performance reviews. The new approach, Googler Reviews and Development (GRAD), involves feedback and check-ins throughout the year, twice-a-year promotions, investments in internal mobility, and once-a-year formal performance reviews.

Why should organizations use the 3C model?

Focusing on the 3Cs positively impacts several talent and business outcomes that leaders care about. Our findings revealed that companies—which focus on culture, capability of managers, and connection—are more likely to have:

• High engagement. Organizations that focus on the 3Cs are 1.6 times more likely to have high engagement. We know that employee engagement impacts retention, productivity, turnover, and employee health. It became a top priority for leaders during the pandemic—and continues to be critical as companies figure out their next chapter around planning work.
• Met business goals. Companies that focused on the 3 levers were 1.5 times more likely to have met their business goals in 2021. The pandemic has made it challenging for companies to set business objectives and even more difficult to achieve them as the instability continues. For companies looking not just to survive—but to be successful during such times—and instill confidence in their stakeholders, it’s critical to meet their business goals.
• High NPS scores. Organizations that focus on culture, connection, and capability of managers are 4 times more likely to receive a positive NPS from their employees. The rise of the “Great Resignation” has focused companies on improving employee loyalty. Similar to employee engagement, NPS data give organizations a general sense of how employees feel—meaning a low score, especially during a crisis, can be terrible news.
• High manager effectiveness. Companies that score high on culture, connection, and capability of managers are 3 times more likely to have employees who rate their managers as effective. Managers impact an employee’s engagement to a great extent. Managers also play a central role in their employees’ development and career journeys—making it imperative that managers possess the capabilities required to enable effective performance.

The 3 levers in our model (see Figure 3) can impact one, a few, or all of the critical outcomes mentioned above. For example, our data show that organizations should focus on building manager capabilities if they want to drive higher engagement, NPS, and manager effectiveness, in addition to meeting their current business goals. Organizations should consider connection-building if they only want to impact manager effectiveness.

Depending on which outcomes organizations want to drive, they should focus on 1, 2, or all 3 levers. In Figure 3, we look at each of these levers and the outcomes they influence.

In the following sections, we take a deeper dive into each of these 3 levers, discuss why they’re important, and look at how some PM practices should change to better fit the hybrid world of work.

Culture

Culture is the shared assumptions, values, and behaviors that determine how people do things within a company which helps them and organizations thrive. When redesigning PM, organizations should look at how each of these—assumptions, values, and behaviors—impact current practices.

In this section, we take a closer look at culture:

• What it is and why it matters
• Role of culture
• Highest priority practices to change

What it is & why it matters

When we looked at the importance of culture as a lever, we found that it significantly impacts all the talent and business outcomes that organizations care about. As we see in Figure 4, organizations that focus on culture experience significant positive results with NPS, manager effectiveness, past business performance, and employee engagement.

Additionally, in comparing 2021 data with 2019, we notice that culture's impact on employee engagement has grown significantly. In 2019, we found that organizations which did well in creating a high-performing culture were 32% more likely to experience high employee engagement. In 2021, this likelihood nearly doubled to 63% (see Figure 5).

 

Role of culture

While culture is extremely important, it can be hard to pinpoint exactly what aspects of culture matter most for PM. Our 2019 research revealed 3 cultural elements⎯feedback, fairness, and future-focus⎯that organizations needed to focus on to drive performance. However, organizations must now rethink culture for hybrid work—and our new model reflects this change. To build a high-performing culture for a hybrid world of work, organizations must continue to do what they’re already doing—and provide employees with focus and clarity around their goals. (See Figure 6)

A few things to note about the culture lever in 2021 when compared with 2019:

1. Clarity, an independent lever in 2019, is now a critical aspect of the culture lever. Culture took on new meaning during the pandemic. With remote work, companies have had to:

• Become explicit about the work that needs to be done
• Show how it ties to the company’s overall mission and goals
• Provide employees with the support and resources to do it

This means that organizations can’t rely on individual managers' varying capabilities and enthusiasm to provide clear goals and feedback. Instead, organizations must have a cultural competency around clear goals and feedback—so that, if employees don’t get what they need, then they’re empowered to ask for it. As such, our analysis revealed that “clarity” is now a part of organizational culture.

2. Growth continues to be an important part of culture, but is no longer solely future-oriented. As mentioned earlier, we renamed the subfactor “future-focus” from our 2019 model to “fostering growth.” In 2021, we saw a new urgency overtake upskilling and continuous L&D (as they apply to PM) as employees encountered both complex and mundane challenges that they hadn’t faced before the pandemic. For this reason, we no longer see growth and development in the performance context as being about preparing for the future, but rather as essential to executing the job today.

As organizations look to put in place practices and processes for hybrid work, they must consider these 4 areas under culture—feedback, fairness, fostering growth, and focus and clarity—as guiding lights for driving performance.

We know there’s a greater likelihood of new and existing biases creeping up in a work setting in which some portion of the workforce is remote. Organizations that are rethinking their culture should intentionally design and implement practices that address these biases. Specifically—by promoting a culture of fairness and trust—organizations can avoid halo / horn bias, whereby good or bad traits can dominate perceptions. Similarly—by encouraging feedback and emphasizing clarity—organizations can make sure that managers receive constant information and feedback on employee performance, thereby avoiding proximity, primacy, and centrality biases.

For example, Salesforce implemented “Flex Team Agreements” after receiving feedback from employees that they needed greater flexibility. These agreements are broken down into 3 levels—office-flexible, home-based, and office-based—and help provide clarity to employees on what's most important for them, including how many days a week they come into the office and what kind of work they’ll continue to do at home.

Teams can also decide how they communicate and what behaviors are most important to them. For instance, the Employee Success team agreed to “no meeting Fridays” and monthly wellbeing days. The team also prioritizes in-person meetings twice a year, volunteer days, and end-of-quarter celebrations to keep everyone feeling connected.

Similarly, IBM was able to build trust and psychological safety by replacing a system of once-a-year performance conversations with a culture of continuous feedback. Based on input from employees, the company put in place a new performance development process called “Checkpoint”—where feedback is self-driven and centered around providing a more holistic evaluation of employees.

To ensure strategy alignment across departments, offices, and countries, 5 key dimensions—or core values—were created:

• Business results
• Client success
• Innovation
• Skills
• Responsibility to others

In addition, IBM partnered with a PM technology solution to have one platform for check-ins, feedback requests, and goal-setting. The company has been able to move past traditional questions like, “Did you accomplish your yearly objectives?” to questions like, “How are we performing? What are the skills needed? How does this impact my career?”

Highest priority practices to change

So, what are the specific practices that lead to a high-performing culture? Depending on the outcomes that leaders want to influence, our data revealed specific practices which are important.

Figure 7 breaks down the specific culture practices used by high-performing organizations. While there are certainly more practices which organizations can adopt, we include only those that have a significant impact on outcomes.

Real-World Threads

Patagonia redesigns performance management with a focus on culture

When Patagonia decided to redesign its PM process, leaders wanted to make sure that the changes aligned with the company's strong culture of being a place at which people were proud to work. The existing PM approach was traditional top-down and rigid—whereas the company’s culture was more bottom-up, open, collaborative, and heavy on authenticity.

The company decided on 3 design principles to guide its reinvention of performance at Patagonia—more dynamic, more democratized, and more data. To make it dynamic, the company put in place 3 new performance tools:

• Quarterly stretch goals
• Quarterly check-in conversations
• Continuous crowdsourced feedback

Each tool (stretch goals, check-ins, and feedback) was built to allow employees to drive the process, while managers provide support and help them improve. Managers took on the roles of guide, coach, and advocate on behalf of their employees. To enable more data usage, the company integrated digital tools that collect data on the frequency of feedback, and networks of people giving and receiving feedback.

Employees still meet with their managers in the first month of the new fiscal year and set a few high-level, yearly targets—but they avoid getting too detailed about them (see Figure 8). After that, employees begin using the 3 optional (but highly recommended) performance tools.

In the first month of each new quarter, employees write 3–5 quarterly stretch goals. Then they ask for feedback from their peers and managers using digital tools. In the first month of a new quarter, they use the digital platform to fill out a check-in form that guides them through self-reflection questions. Finally, they schedule a 30- to 60-minute check-in meeting with their manager.

By applying this "regenerative performance" approach, the company has created an ongoing cycle that supports continuous growth and performance improvement year over year.

Capability of managers

Given the spotlight on managers during the pandemic, it comes as no surprise that capability of managers continues to be a crucial lever for driving performance management.

In this section, we take a closer look at this lever:

• What it is and why it matters
• Role of capability of managers
• Highest priority practices to change

What it is & why it matters

Organizations are increasingly relying on managers to:

• Support employee wellbeing and health
• Provide clarity to employees about the work that needs to be done
• Communicate company commitments and priorities
• Help employees effectively work virtually

Our data (see Figure 9) reveal that organizations, which focused on building manager capabilities, were highly rated by their employees on NPS, manager effectiveness, engagement, and the likelihood of meeting business goals in 2021.

Role of the capability of managers

Managers play a central role in making hybrid work successful. Similar to conditions during the pandemic—shifting priorities, work practices, and differing experiences of employees—require organizations to rely on managers to lead effectively. This is especially true as companies think about making sure the new working conditions are fair and equitable for everyone.

Findings from our data indicate the evolving nature of the manager’s role in today’s work environment. As we see in Figure 10, in addition to providing coaching, exhibiting candor, and clearing barriers for employees⎯as it was important for them to do in 2019⎯managers must also now exhibit confidence and care.

The addition of confidence and care for managers’ capabilities isn’t surprising for a few reasons:

• Having confidence in employees and trusting them are fundamental elements for a thriving work environment, especially in times of crisis and upheaval. Our Responsive Manager study revealed that—among the behaviors adopted by managers in organizations that are highly responsive to disruptions—trust and showing respect toward employees greatly impact enabling effectiveness. For example, the computing company NVIDIA exhibits confidence and trust in its employees with its “the project is the boss” philosophy. This approach leaves it up to the employees (and their schedules) to decide when work is completed, as long as the project is finished as expected.
• Care, a practice that has become extremely important over the past 2 years, is now seen as foundational to a manager’s role. Managers need to be supportive, flexible, and inclusive to help employees feel a sense of stability and empowerment, along with feeling valued, during a time of crisis. For example, one of Microsoft's steps to be successful at hybrid work is to encourage managers to care for employees’ unique needs in and outside of work, and their career aspirations and goals. “Care” is part of the company’s manager framework that was introduced a few years ago and on which the company continues to lean heavily.

Organizations must double-down and invest even more in manager capabilities as they move toward hybrid work environments for a few reasons:

• Preventing biases. Managers—who fail to recognize work that lacks a direct line of sight (between the manager and employee) and continue to promote those they physically see in the office—will inadvertently exacerbate the common PM biases in a hybrid work setting.
• Managing split teams. Hybrid work means teams with employees who might have different work schedules and days when they come into the office versus working from home. This means taking into account the different needs and challenges that can arise unexpectedly and on short notice. Companies need managers who are able to effectively solve these challenges while displaying consideration and care.
• Overseeing employee wellbeing. According to one study, 56% of employees report improvements to their mental health as a result of the hybrid work environment—and managers played an important role in that during the pandemic. As companies set long-term policies around hybrid work, they need managers to be responsible for leading this charge.

Highest priority practices to change

So, where should organizations focus? Our data revealed specific practices and behaviors that managers should look to adopt.

In Figure 11, we list them along with the specific talent and business outcomes they impact. While organizations can adopt several other practices, we include here only those that have a significant effect on the outcomes.

Real-World Threads

Zillow equips managers to better support their teams

In order to better assist their managers during the pandemic, Zillow, an online real-estate company, set up cohorts of managers across the organization. The purpose of the cohorts was to allow managers to engage in rotating 1:1 conversations with their peers to troubleshoot their current managerial challenges.

These conversations offered safe opportunities to engage in vulnerable conversations that focused on how managers can commit to specific actions to support the wellbeing of their team. Managers were able to practice empathy with their peers, ask specific questions to understand their challenges, and articulate their own circumstances in response to probes.

As a result, the conversations offered managers the opportunity to fail in a safe space and be better prepared to help their employees. This also promoted a coaching culture within the company, with managers offering each other ideas and advice outside of structured times.

Clarus Commerce consistently reinforces trust & confidence in its employees

The philosophy at Clarus Commerce, a small advertising and marketing company, resembles that of a winning sports team. The leadership works to:

• Hire good people
• Train them through practice and preparation
• Coach teammates to back up each other
• Learn from their mistakes
• Accept wins and losses together

Once the new hires are ready, leadership lets the players play.

Once play begins, or the new hires have proven they’re capable of tackling projects on their own, managers will only step in a limited number of times. The field of play at Clarus is set by goals and budgets. Within these boundaries, it’s up to the workers to execute. This empowerment enables the company to move quickly according to conditions on the ground and diligently to meet changing customer needs.

Connection

Much has been said about the importance of connection-building during the past 2 years. As such, we weren’t surprised (although excited!) to see it emerge as a lever in our new model.

In this section, we take a closer look at the connection lever:

• What it is and why it matters
• Role of connection
• Highest priority practices to change

What it is & why it matters

Connection surfaced as a modern PM lever for a few reasons:

• Genuine relationships within a company can help to create a workforce that’s generally more satisfied and less stressed
• Research shows that a top challenge among remote workers is loneliness—add to that ambiguity over expectations and goals due to a lack of frequent conversations—and it’s a sure-shot recipe for a disengaged and unproductive workforce
• Bonding connections (within-group interactions) and bridging connections (across-group interactions) that are important for collaboration and innovation deteriorated from the virtual work environment during the pandemic—organizations need to be intentional about rebuilding these connections to drive growth

One of the primary ways that leaders build a connection with their employees is through check-ins. Our research shows that the frequency of daily check-ins increased by 8% from 2019 to 2021, while that of monthly structured conversations increased by 10% from 2019 to 2021 (Figure 12).

These increases in conversations (connections) occurred for the following reasons:

• Organizations shifted to more continuous goal-setting approaches that required frequent conversations between managers and employees
• Leaders feared that employees might feel cut off from company culture—resulting in a greater effort to engage employees through frequent check-ins
• Managers lacked previous levels of visibility into an employee’s work—resulting in managers speaking with their team on a more regular basis
• The informal means used before the pandemic to provide “in-the-moment" feedback to employees disappeared—leading managers to set more frequent conversations

As many organizations implement policies that require the workforce to return to the office for some portion of the week, it’ll be tempting for managers to let go of these habits—this would be unwise.

Our findings reveal that 70% of employees want more daily or weekly check-ins than they’re having with their managers. Although low as compared with other levers, connection has a significant positive impact on manager effectiveness (see Figure 13).

Organizations with ineffective managers could end up losing critical talent. While the impact isn’t necessarily high, we believe it’s just as important because of how it impacts other PM levers for a few reasons:

1. Companies need to foster connections through regular and frequent conversations. This is especially critical to empowering managers to build trust and show candor with their employees. This can have a positive impact on the capability of manager lever, too.
2. A culture of feedback and clarity requires frequent conversations. Quick check-ins are a great way for managers to give “in-the-moment feedback,” and clarify employee goals and expectations. This can have a significant impact on the culture lever as well.

Role of connection

We believe that building and managing connections will continue to be important—if not more so—as hybrid work becomes a reality for many. A few reasons for this include:

• Addressing the “fear of missing out” (FOMO). Employees who continue to work entirely from home or for some portion of the week might experience anxiety due to the fear of missing critical information or being left out of important decisions. Frequent check-ins with their managers can provide opportunities for employees to discuss and address such concerns, as well as alleviate their sense of FOMO.
• Staying connected. Employees need to feel connected with their workplace and a part of the company culture—which can be challenging to maintain in a hybrid work environment. Connections built through informal check-ins can assuage some of the fears and feelings of being disconnected.
• Avoiding bias and discrimination. Because remote work offers a better experience for women and people of color, they’re more likely to prefer working from home than others. Organizations must provide and promote opportunities for frequent conversations between employees and managers in a hybrid workplace setting to avoid proximity bias from creeping in. Regular conversations can help address concerns, provide the necessary support, and ensure they’re not forgotten or passed over for development opportunities.

Figure 14 provides an overview of this third lever in our PM model.

Highest priority practices to change

As we mentioned earlier, connection's impact on organizational outcomes is low as compared with other PM levers. However, organizations mustn’t ignore this lever for a few reasons:

• Employees want more conversations. Our survey findings show that about 70% of employees want more daily or weekly check-ins than they currently have
• Companies need connections to drive the other levers. Those wanting to implement a culture of clarity, feedback, and coaching will find it hard to succeed without implementing processes that encourage frequent conversations and communications between managers and employees

So, what are the specific practices on which organizations focus? Our data reveal one practice that organizations should look to adopt¾quick check-ins. In Figure 15, we outline the practice and the outcome it impacts.

Real-World Threads

Spotlight adopts more frequent conversations between employees & managers

Before COVID-19, Spotlight, an analyst relations firm, had a PM process in place that consisted of employees and managers having development conversations on an annual or biannual basis. Once the pandemic hit and employees shifted to a remote work environment, a clear need surfaced for more frequent development conversations. Company leaders received feedback from employees asking for more frequent conversations and 1:1s with their managers.

As a result of this feedback, the company:

• Executed focus groups to understand the specific pain points around its current performance management process as experienced by managers and direct reports
• Researched practices instituted by other companies to address similar pain points
• Leveraged technology to make the process easier and execute the changes

Because of these steps, Spotlight was able to redesign its PM process—so it’s now comprised of practices, such as providing continuous feedback, weekly check-ins, and monthly 1:1s with managers.

Early results from these efforts show that employees generally report a more positive experience with their managers. The company has seen an increase in employee scores on questions around employee relationships with their managers, their levels of trust toward them, and development investment from them.

UCHealth makes conversations an integral part of its PM process

UCHealth’s mission is to improve lives through learning, healing, discovery, and human connection. The healthcare system of hospitals and facilities wants everyone who connects with the organization to have a positive experience, thus making UCHealth an attractive employer in a tight marketplace. The company believes that relationships are the most potent and essential lever which leaders can pull to influence behaviors, align employees’ work, and inspire the workforce.

Over 2 years, the company collected data to understand its Employee Value Proposition (EVP) and found 2 things that mattered most to employees and for retention:

• Personal, instead of transactional, relationships
• Opportunity for growth

Unfortunately, the existing PM process eroded the company’s EVP as it didn’t help employees focus on growth, improve performance, or build connections with leaders. Instead, it focused on:

• Evaluating performance to provide ratings for merit-based pay increases and bonuses
• Giving feedback on past performance
• Satisfying regulatory and legal requirements and internal processes

After collecting feedback and data through conversations and forums, the organization decided to revamp its PM process. The overall objective was to design a process that:

• Supports retention
• Encourages relationships rather than being transactional
• Helps grow and move talent
• Provides a forum for comparative rating for merit-based raises
• Aligns with UCHealth’s overall objectives and mission

In 2019, the Organizational Development and Learning Services team revamped the process to reduce the administrative burden. The following year, it decided to formally shift the focus of performance reviews from evaluation to “Career Conversations” around professional development. “Career Conversations” drive inspiring discussions between employees and their managers about the employee’s performance, growth, and opportunities at UCHealth. They’re mandated for everyone and framed around 3 core sections for all leaders and employees.

Managers begin by asking employees if they’re willing to take on extra and challenging work. Starting with this section allows the organization to focus the bulk of the conversation on discussing growth and career development. Questions in this section are not rated, and encourage useful dialogue between employees and managers. The following 2 sections cover discussions around whether the employee is getting their current job right and if they are a good teammate. The organization evaluates these sections on a 5-point rating scale.

Overall, the new process provides equal opportunity to all employees to manage their development, while simultaneously fulfilling the need for comparative ratings to inform the annual merit pay increase and bonuses.

UCHealth emphasizes that leaders go beyond transactional relationships, and build deep and meaningful connections with employees. It also invests in helping leaders build interpersonal skills—and holds them accountable for meaningful conversations with employees throughout the year through “Career Conversations”, stay interviews, and other informal check-ins.

Because of the critical role that managers play in the new process, the organization:

• Helps managers improve their interpersonal skills by building deep connections and relationships
• Provides resources, such as formalized learning opportunities and courses, to help leaders hold conversations
• Provides opportunities to role-play different scenarios to help leaders prepare for difficult conversations

“The challenge of the next decade for organizations will be to figure out how to create a space where individuals can feel heard, aligned, and part of something bigger while still getting the work done.”

—Matthew Gosney, Vice President of Organizational Development and Learning Services

By designing a PM process that puts an onus on building connections and holding meaningful conversations around growth and development, UCHealth is actively working on addressing this challenge and fulfilling its overall mission.

And the results are proof that these efforts are working. The organization improved its internal promotion rate significantly from 37% to 67% over the last 5 years, with considerable improvement over the previous 2 years. The organization is on track to achieve what it sees as the ideal mix of internal versus external hiring.

A secondary benefit of these efforts is improved representation in the company’s talent pipeline. The organization improved its Black, Indigenous, and people of color (BIPOC) representation in its talent pipeline by 40% in the last 2 years. It also tracks performance metrics around ratings and promotions on the backend, and analyzes them by demographic data to identify biases and discrimination.

What now? Getting started

Now that we know which practices and areas impact performance management, how can organizations get started on applying these across the organization? Different companies have different needs, which means they might focus more on some areas and practices versus others.

One thing is certain—performance management as we know it no longer works.

Companies that redesigned their PM processes in the recent past already see the benefits of doing so. According to our data, in organizations with redesigned PM processes (within the last 2 years), 56% of employees believe their evaluation process is fair and consistent, as compared with only 36% of employees in organizations that haven’t redesigned their PM processes (see Figure 16).

So, what should organizations do? In Figure 17, we outline the 5 steps organizations can take to kick-start their modern PM journey.

Step 1: Identify what matters most

While most organizations will agree that engagement, NPS, meeting business goals, and manager effectiveness are all important outcomes they want to drive—each company will differ in which of these outcomes matters the most, given where their individual business is today. This is why the first step to redesigning your PM process should be identifying the outcome you want to impact most.

Our research shows that engagement is one of the primary reasons organizations conduct performance management—and this has changed significantly over the past 2 years. As shown in Figure 18, almost 45% of organizations reportedly managed performance to engage employees in 2021, as compared with only 26% in 2019.

You can better identify your priority areas by:

• Clarifying your organization’s philosophy for PM—specifically answering the following questions:
  • What are we hoping to achieve by managing performance?
  • How does that tie to our organization’s overall values and purpose?
• Pinpointing the desired state or the specific outcomes your organization needs to achieve

• Specifying what the success of PM practices should look like and how it can be measured

For example, a U.K.-based IT consulting company with a history of acquiring many companies follows a very clear philosophy when it comes to performance management. The company conducts PM to help employees understand:

• Where they currently stand
• Where the company needs them to be
• How they can get there

Even though the company made changes to its practices around manager check-ins and goals over the past 2 years due to the pandemic, the overall purpose of managing performance didn’t change.

Step 2: Determine gaps in the current approach & with the 3C model

The next step is to take inventory of the existing practices within the organization, identify the ones that map to the areas you want to impact, and identify the gaps.

“Voice gap” is the difference between how much voice and input workers feel they ought to have versus how much they actually have¾that exists between workers and leadership when it comes to topics that impact them in the workplace. Employees want to participate in decision-making around policies and practices that affect them, such as performance management. Therefore 2 of the most important things for organizations to do in this step are to collect feedback and be open to discussions.

Organizations can execute this in several ways. Figure 19 offers a few steps that we’ve outlined.

For example, Old Mutual Wealth decided to set a customer-centric strategy to ensure the company meets its business goals and recovers from the financial crisis. The company realized that it needed to leverage performance management to bring the new strategy to life. Leadership identified organization-wide, customer-first behaviors that were incorporated into employee performance reviews, manager feedback systems, and an all-employee survey.

The changes spawned a new culture throughout the organization in which everyone took responsibility for their decisions—starting with the CEO, who clearly said that nobody would be blamed for giving him bad news. Within 12 months, 90% of the firm’s U.K. and European insurance books were replaced by new products aligned with the board’s vision. And Old Mutual’s share price more than doubled in 5 years.

Step 3: Ideate & brainstorm solutions

Once the gaps are identified, you may find it tempting to start work on adding in the missing practices needed to drive performance and to weed out the ones that go against the desired state.

We recommend against doing this—in favor of taking some time to be sure you understand the root cause and gain others’ input before moving forward. Specifically, organizations can take these actions at this stage:

• Identify root causes of the reasons for the gaps in performance practices
• Brainstorm potential approaches to address the root causes
• Test out assumptions on what the implications of those potential approaches would be
• Consider different variations of practices that could potentially work
• Conduct research to understand practices adopted by others with similar challenges
• Do a technology audit to understand how it’s currently used and identify any opportunities for leveraging it more effectively

When it comes to technology, many organizations look to fix a process with technology—but remember: If you simply automate a bad process, then you’re enabling the organization to do bad things faster. Technology should help managers and leaders have better conversations, and provide timely feedback—instead of turning these into tasks for managers to check off their lists. As pointed out by a leader during our research, if managers don’t understand their role in enabling performance and conversations, and giving feedback, then no amount or kind of technology will matter.

Once covered, these steps should make it easy for your organization to narrow down the areas to focus on, allowing it to quickly identify the specific practices needed. Practices for different outcomes should be coordinated and should reinforce each other.

For example, Behavioral Learning Center Inc., a healthcare organization, improved employee engagement and enabled manager effectiveness by adopting a culture of feedback and clarity. New practices adopted by the organization allowed managers to assess and provide continuous feedback to their employees flexibly and frictionlessly.

Managers can also complete evaluations and on-field assessments using smartphone apps, along with initiating feedback as soon as a project is complete. After implementing the tool for real-time feedback, the company witnessed a marked increase in employee engagement, with a decrease of 30% in voluntary turnover.

Step 4: Socialize & refine focus areas

Once the practices and outcomes are identified, the next step is to get feedback. Organizations must continue to refine the focus areas by soliciting feedback on what is and isn’t working. Again, organizations should seek input from employees and managers about their pain points with the new process and the challenges they face.

For example, when an IT consulting company decided in early 2022 to change its performance appraisal process and the role managers play, the company made sure it had support and buy-in from executive leadership. The affirmation from the top helped socialize and communicate the importance of the changes to the other leaders.

The company also refined its focus areas by coaching less tenured managers to ensure they have the necessary skills to lead their teams. In addition to providing training and courses for them, the company looked toward the more experienced and senior managers to support these efforts.

Another essential element to sharing information and continued refinement is using data and insights to track and identify areas of improvement. In 2019, Infosys began using analytics to drive manager enablement in the company.

The company designed “MaQ” (Manager Quotient), a tool to empower the manager community to meet their current and future challenges in a personalized way. The end objective was to make MaQ the one-stop shop for all managers—to find out how they’re doing as managers, as well as chart and track their L&D paths to improve their managerial styles.

Within 12 months, more than 51% of its people managers were using MaQ to either view their assessments or learn small nuggets on managerial effectiveness.

Step 5: Communicate & manage change

Communication must start at the top and be reinforced at every level. Organizations should use different channels on hand to socialize the message around those practices and behaviors that need to be changed. These messages must clearly explain why this is important, and how they align with the business objectives and priorities. The communications should cover 3 core areas (see Figure 20).

Many organizations see the PM designing process as once and done. If the past 2 years have taught us anything, it’s that you can never be entirely prepared for what comes next. With hybrid work as the preferred option for many, organizations will constantly have to be vigilant and monitor those areas that will define their next steps.

To that end, we encourage organizations to focus on how they can continue to make PM relevant for the future—and enable employees to perform to the best of their abilities in a constantly changing environment. This means organizations need to put in place a plan to ensure which practices and processes are revisited and reviewed regularly. Decisions to revisit or reform PM practices can be driven by several factors, such as response to a crisis, declining employee productivity and engagement levels, or a change in leadership.

At a minimum, organizations must always keep a check on the “employee pulse” to understand the value they’re getting from the existing processes. By making sure they’re checking with employees and regularly collecting their feedback, organizations can determine which areas they’ll potentially need to focus on and the steps that can help them get there.

Conclusion

With rising consumer prices, talks of an impending recession, a national baby formula shortage in the U.S., and mass shootings, the first half of 2022 has been rocky for many of us, to say the least. The pandemic has blurred the lines between personal and professional, and there’s little evidence of things returning to how they were 2 years ago. Companies looking to retain and develop their talent will likely find themselves pressed to do more to help employees address challenges. One such thing that companies can do is build a PM process that is fair, transparent, and free of bias.

By focusing on culture, building manager capabilities, and encouraging connections, organizations can better engage employees and improve manager effectiveness while meeting their business goals. Organizations should proactively plan and integrate these practices when designing performance management for hybrid work.

Given the ongoing and upcoming changes surrounding the workplace and hybrid working, many organizations will likely revisit their existing PM practices. Whether they listen to their employees and implement processes that ultimately help them develop and perform their best remains to be seen.