Redeem now - Jack Dorsey says Block will no longer do performance reviews or performance-improvement plans.
- I talked to Business Insider's Tim Paradis, who recently wrote about other companies using PIPs
- He says Dorsey is swimming against the tide when it comes to eliminating the plans.
Block, the company founded by Jack Dorsey that includes Square, Cash App, and Tidal, has announced a bold new HR strategy: No more wasting time on annual reviews or giving lagging workers a performance-improvement plan, also known as a PIP.
Instead, the company will give workers a rating of "exceeds, meets, or fall below" expectations. (Earlier this month, we reported that Dorsey warned of upcoming job cuts at Block.)
This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. Have an account? Log in.Last week, Business Insider reported about how some HR experts are calling for the exact opposite of Dorsey's new approach. They're saying more companies should be using PIPs.
So what's the deal with Dorsey's move? Is this going to kill morale and make Block employees live in fear of suddenly getting the ax — without the benefit of a plan to improve? Or will it free people up from annoying annual reviews?
I asked Tim Paradis, BI's future-of-work correspondent who's written about PIPs, to tell me more about Block's move, based on his reporting on recent HR trends.
The following interview has been edited for brevity — and to make Tim and me sound like we don't say "um" constantly.
Tim, tell me a little about what you write about.
I write about careers, the future of work, and just basically all the things that are happening in the workplace today – you've got all these battles over returning to the office vs. hybrid or remote work.
I also write about the concerns about what AI will do to people's careers and jobs, trends like quiet quitting, and Gen Z in the workplace.
You wrote this story last week: More workers should be on PIPs, but they have to be used right first. Why?
I was talking to an expert from Korn Ferry, the big recruiting company. She told me she thought PIPs — performance improvement plans — were underused because companies don't necessarily want to do the legwork that often goes with them. I was really surprised by that: I always had PIPs in my head having bad connotations.
Her point was: If they're used properly, they're not automatically a death sentence. They can actually be a mechanism for bosses to come up with a plan with the worker. She speculated that perhaps half of the people who are on PIPs should graduate from those and move back into the good graces of the company and get back on track.
Jack Dorsey's Block just announced that they're going to stop doing PIPs and just fire people who aren't up to snuff. Based on your reporting, what could go wrong with that?
The people I talk to who work in HR would tell you that most PIPs need to be 90 days minimum, maybe six months. You need to give people a chance to right the ship. That kind of "cut fast and cut loose" approach would be less paperwork for the company, and maybe less trauma for the worker, but also I could see where you're throwing good workers out.
Inadvertently, if there was maybe just one bad spell or something like that — or even just, you know, none of us are perfect at our jobs all the time. So, having some ability to correct your things you're doing wrong — that's important.
Block is also getting rid of annual performance reviews. That's efficient for managers, who don't have to spend time doing these yearly reviews or writing up PIPs. Is that a good thing?
I can't speculate what's in Dorsey's mind, but I think that the idea of constant and regular feedback, as opposed to a long drawn out process, makes a lot of sense.
All the HR people I talked to say if you get a performance review, nothing should be surprising — there should be regular communication from your manager about how you're doing. So constant feedback in place of an annual review or in place of a big formalized process, I can definitely see where that makes sense.
A lot of a lot of other CEOs and companies look to Silicon Valley tech firms for fresh ideas about how to run their business. Do you think that this could catch on as a trend?
I would guess that it won't catch on as a trend. There are a lot of larger companies have more entrenched HR cultures and policies that would say, "this isn't how we operate."
But the other piece — you've seen some reporting on this over the years by us — is that the annualized performance review should be diminished in favor of that routine, regular feedback on how you're doing. Once a year you maybe do something kind of formalized, but it's not quite this big, momentous thing on the calendar.
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