As part of its ongoing efforts to increase efficiency and productivity, the parent company of Facebook, Meta (formerly known as Facebook), has announced plans to implement changes to employee bonuses and increase performance reviews. The move comes as the company aims to reduce costs and streamline its operations.
Changes to Bonus Payment System
One of the significant changes announced by Meta is the reduction in bonus payments for employees who receive a rating of “met most expectations” in their year-end reviews. The company has reportedly slashed the bonus multiplier for this category of workers from 85% to 65%. However, high-performing employees may still receive double or triple the value of their base salary in restricted stock unit (RSU) grants.
Increased Focus on Performance Reviews
Aside from bonus cuts, Meta also plans to increase the frequency and emphasis on employee performance reviews. The company will hold performance reviews twice per year, with the mid-year review kicking off in June. This will involve classifying employees into three categories – below expectations, at or above expectations, or significantly above expectations.
The move is designed to provide a “calibrated performance signal for fairness,” according to a memo seen by The Wall Street Journal. Employees who receive two consecutive negative performance reviews will be ousted from the company. Supervisors have been directed to put more employees into lower performing categories since last year.
Employee Layoffs
These changes come amidst a second round of layoffs at Meta that are expected to impact approximately 10,000 employees in total. Engineers and tech employees are set to be hit first in April, followed by business departments in May.
Despite these measures being well-received among investors, laid-off employees have expressed disappointment and frustration on social media platforms. Some have described the situation as “a hunger games.” However, a Meta spokesperson stated that these changes were not related to workforce restructuring, and the company remained focused on accelerating its innovation and growth.
Performance Reviews as a Tool for Managing Employee Performance
Meta is not alone in implementing changes to employee performance reviews. Large companies worldwide are also setting higher standards to weed out underperformers and cut down on rising labor costs. Some have brought back performance reviews after a pandemic-induced hiatus.
Lack of opportunity for growth remains one of the leading reasons for elevated rates of voluntary employee turnover. By connecting individual employee goals with organizational development goals, employers are hoping to increase engagement and satisfaction.
To achieve this, they should also communicate how their organizations are becoming fairer and more thoughtful entities, rather than espousing the need for workers to “work harder and leaner.” Employees may hesitate to set more ambitious goals if they fear punishment for not meeting targets. Employers must be conscious about rewarding employees’ growth mentality.
Some leading companies, including Amazon, Goldman Sachs, Google, Salesforce, and Meta, have updated their performance management systems to focus on tangible contributions to organizational growth. These companies have different systems of evaluating and ranking employees, with some even setting quotas for cutting low-performing employees or laying off workers.
The Bottom Line
In conclusion, Meta’s plans to cut employee bonuses may upset some workers but could boost efficiency by providing clearer incentives for top-performers. The increased emphasis on performance reviews may help identify areas where employees can improve their performance. However, the effects of such changes on morale remain to be seen as companies worldwide grapple with managing employee performance amid ongoing economic uncertainty.
Image Source: Wikimedia Commons
