A Deep Dive into Spotify's Employee Performance Reviews: How to Unlock High Performance and Growth

Have you watched 'The Playlist' — a documentary on how Spotify revolutionized the music industry? 

In one of the scenes, Petra Hansson (who was Spotify's legal advisor for a decade) walks into the Spotify office for a future collaboration opportunity.

At that point, she had been working at the leading Swedish law firm Mannheimer Swartling. 

As she enters the office, Petra is surprised to see the casual and friendly work culture at Spotify, with people throwing paper balls at each other. One of the paper balls even hits her as she walks by one of the cubicles. 

This casual and people-friendly work culture has also influenced the performance review process at Spotify. 

At Spotify, the annual performance review process focuses on helping employees grow with the company.

"We work hard to ensure that the innovative and passionate people who choose to join the Spotify band are empowered to be their very best. That's why we prefer to view our compensation and benefits holistically, as a total package, and why we make that total offer competitive versus our peer group." Spotify's The Band Manifesto

In keeping with this grand goal, Spotify recently launched an internal talent marketplace called Echo.

Echo uses AI automated matching to find relevant projects for their employees.

"We're in the 4th Revolution. We've moved away from the old model of learn, work, retire to a continuous learning cycle. We're beyond the cusp of a new revolution. And let's be clear – we are not on the cusp. This change has already happened." Katarina Berg, Chief Human Resource Officer, Spotify.

By extending the capabilities of AI beyond music, Spotify can constantly encourage every employee to upgrade and find new opportunities within the organization.

That said, Spotify's take on employee performance reviews and career development is just as innovative as its core product. 

The cornerstone of all its people-centric policies, as well as the justification behind them, is beautifully articulated by the team in its official HR blog.

Spotify is building the most cutting-edge technology in an ever-evolving space with the most talented people across the globe. 

Naturally, the human resources function has to create an environment that nurtures this diverse and innovative talent pool.

So, what lessons can we learn from Spotify's stellar people management strategies?

🎶 How does Spotify run performance reviews?

Spotify's employee performance feedback and reviews system finds its basis in this unique team structure. 

So, before we dive deeper into performance reviews, it is important to understand the intricate nature of the team structure at Spotify.

As of 2021, Spotify had 6617 employees.

Spotify groups its employees into self-organizing and agile teams called squads. 

Each squad is accountable for a unique aspect of the product and doesn't have more than eight members. 

Squads are an autonomous unit that decides what to build, how to build it, and whom to work with. 

These squads are further grouped into a light matrix called a tribe. 

When several squads are linked together horizontally, they form a chapter. A chapter is a horizontal grouping that helps to support specific functions such as quality assurance, agile coaching, and web development.

Squads do not have formal leaders, while the chapter leader is a standard manager focusing on mentoring and coaching.

"Our managers bring clarity to their teams, translating complexity into actionable insights and removing any roadblocks. They embrace polarities, identifying issues not as either/or but both/and.

Most importantly, they stay flexible —able to adjust quickly to new circumstances, prioritizing ruthlessly for the right impact." Spotify's The Band Manifesto

🤼 Spotify follows the player-coach model.

Hence all chapter leaders are considered squad members too. Squad members can switch squads and work on different problem statements while retaining the same formal leader. 

The primary role of a chapter is to facilitate learning and competency development throughout the squads. 

Spotify also introduced a third organizational unit called a guild. This new element cuts across chapters and squads, primarily sharing knowledge based on topics of mutual interest and benefit, such as leadership or web delivery.  

They share knowledge related to functions not handled by the chapter.

Besides this, employees can access the GreenHouse learning portal to learn topics their chapter doesn't focus on.

"Our performance development approach is a combination of looking at performance to see what is needed for the company to reach the goals we set up and looking at the development of our people. We believe you can't really separate the two." Johanna Bolin Tingvall, Global Head of GreenHouse, Learning & Development at Spotify.

Squad reviews 

Squads conduct reviews to evaluate the highlights and areas of improvement every few weeks. 

Plus, squads go through an end-to-end analysis of failures to ensure teams learn from their mistakes. 

Some squad rooms have "fail walls" for this type of analysis.

It is important to note that the squad reviews are separate from the employee reviews.

Employee reviews

With its employee review system, Spotify aims to focus on two primary goals:

• Enhancing the performance of the employees and increasing their contribution to the company's growth.
• Helping the employees with their individual career development and professional growth.

There's no heavy performance management system with check-boxes to check.

Instead, there's a recommended performance development system spanning over a year.

Here are the four elements of the employee performance development cycle:

Continuous planning & 1:1s

The 1:1 with the managers can also happen over a coffee! 

The employees discuss their performance, ambition, and any problem they face. 

There is no mandatory schedule or standard agenda. It's all based on the employee and manager agreeing on a system and frequency of meetings. 

A predefined checklist is made that supports managers in conducting these meetings with ease.

"[Continuous planning & 1:1s are] the most important pillar of our performance development approach, everything development revolves around great conversations." Johanna Bolin Tingvall, Global Head of GreenHouse.

📆 The recommendation for 1:1s and planning sessions with formal managers is to conduct them as weekly check-ins.

Development talks

Even if there is continuous interaction between the employee and the manager, Spotify recommends two annual development talks that focus entirely on the employee's growth and personal development.

These development talks aim to match the company's needs with the employee's long-term ambitions.

Every employee owns and drives their development talks: 

• They initiate the meetings.
• They gather feedback from peers. 
• Their primary focus is on the future rather than the past. 

One can collect peer feedback from anyone in the company—manager, team members, or someone from any other department.

There are three success criteria when it comes to performance and development: 

• Mastery-if you are a thought leader in a particular department.
• Achievement-to what degree did you reach your goals?
• Behavior-to what degree you fit in the company culture and have inculcated the company values.

🌟 Performance is about meeting expectations, reaching goals, and being a role model to other employees.

"Talent Snapshot"

The "Talent Snapshot" is like a scoreboard of the team. As the name suggests, it is a snapshot that offers an overview of exactly how the team is doing.

This format helps managers track their team members' performance development journey and provide a "snapshot" of their current performance, strengths, and weaknesses. 

"We do this so we can find both the obvious and the hidden talent in the company and unleash all potential, get great work done, and develop more future leaders." Johanna Bolin Tingvall, Global Head of GreenHouse.

Spotify believes in cultivating a growth mindset, recognizing that individuals wish to grow with the company and that circumstances may change from week to week or quarter after quarter.

For this reason, Spotify has completely done away with performance ratings, which they feared would foster a fixed mindset and box people into arbitrary "ratings" for extended periods.

Spotify's leaders assess their team members' performance and personal aspirations.

The Talent Snapshot looks at where each employee is now without holding them there. It recognizes gaps and ways to reach its full potential. 

The HR team at Spotify conducts Talent Snapshot workshops to equip leaders with the skillsets to assess their team members accurately.

"Managers are courageous enough to set clear expectations and deliver honest feedback to drive results." Spotify's The Band Manifesto

Once managers finish the Snapshot for their team, their primary focus should be moving team members from left [red] to right [green]. 

Leaders at Spotify have the following key action points following the Snapshot:

1. Personal development plan

Managers discuss the personal development plan more carefully to ensure each employee is working towards their potential and personal aspirations. 

2. Recognition 

Each employee brings unique strengths that add value to the wider team and the business. The Snapshot should inspire leaders to acknowledge these contributions publicly. 

3. A concrete plan for the next career step 

As the Snapshot identifies employees with high potential, leaders can fast-track their growth with a concrete action plan in place. 

Compensation review

The compensation review is a separate process, but performance is relevant when deciding the compensation. 

So, Spotify's performance development approach feeds into the compensation process. 

"We believe in rewarding high performance, taking into account a band member's mastery, contributions, and behavior. A similar position, performance, and potential means similar compensation over time.

Offering security while connecting compensation to achievement keeps our teams motivated and reaching for innovation." Spotify's The Band Manifesto

📆 Compensation reviews occur once a year. 

👀 3 Reasons behind Spotify's current performance review system

As a relatively young company (compared to the likes of Cisco or Microsoft), Spotify's performance review process hasn't undergone significant changes since the company was born in 2006. 

However, they have introduced some new elements in favor of employee development.

The squad coaching and feedback sessions happen separately.

To ensure that the squad feedback doesn't get mixed with the employee feedback, Spotify restructured its performance management system to have a separate compensation and performance review for the employees.

Before, managers considered peer feedback for salary reviews. However, this process led to people gathering as many positive reviews as possible. However, the feedback around actual areas of movement was missing.

In Spotify's words, quoted by HBR, "this incentivized people to gather as many favorable reviews as possible rather than getting feedback around their biggest areas of potential improvement."

Now, employees use an internal tool to collect feedback from other employees-managers, peers, and direct reports.

Employees can ask for feedback as often as they choose. 

"The result is a process that everyone needs to own and drive themselves — it is about development and personal growth." Jonas Aman, Spotify employee, quoted by HBR.

To sum up, here are the three reasons why Spotify chose to upgrade their performance review process:

1. Squad reviews shouldn't get mixed with individual reviews because the focus on the employee's performance and development is crucial.
2. Peer feedback should be used for development and not be considered for compensation to eliminate bias.
3. Every employee should be made accountable for their growth. 

🗝️ The key to Spotify's performance review success

The Spotify performance and development approach is flexible and contains a few mandatory elements.

It is all held together by tools and training programs for managers and employees. So every employee should own and drive their development, and every manager should support the employee's ambitions and grow the team.

Ranked at the top spot of "America's Most Loved Workplaces" rankings in 2021, Spotify is using people analytics to influence critical business and talent decisions in the company.

"For instance, there're a couple of things that we see with the data when it comes to leadership and [...] when people feel less or more stress. And also where they find direction and if they live in a bit of uncertainty, which is a stressful place to be. 

‍So, for instance, what we saw, not quite early on but when we started to work with this [...] was all the managers that have or contact one on ones, weekly or bi-weekly, all their employees that have managers or do that together with their manager, have less stress, have more clarity, feel much more satisfied with their work, and feel that they can impact more." Katarina Berg, Chief Human Resource Officer at Spotify.

Spotify's company culture is people-friendly, which also reflects in the performance review system. 

The performance review system believes in enabling your people and helping them grow with the company.

Spotify believes that the performance and development of your employees are highly interlinked. Moreover, your employees can only develop if you match your company's needs with their long-term ambitions.

Few factors which make Spotify's performance review stand out:

People-first culture

Spotify believes that your people are your greatest asset. As a result, each team has a lot of flexibility and a safe environment for all employees to thrive. 

In addition, employees are encouraged to grow and take up organizational projects that can enhance their skill sets.

Not your run-of-the-mill performance review system

The performance development system is a recommended process for every team. 

The managers and employees can mutually decide to change the frequency of 1:1 meetings. 

So managers can review without any looming deadlines, giving the entire review system a more human touch.

Use of people analytics enhanced with human experience

Using technology to collect data points and make critical talent decisions helps Spotify address employee concerns. 

For example, people analytics helped them identify that employees with frequent 1:1's with their managers displayed less stress and increased clarity and job satisfaction.

However, Katarina Berg stresses the role of People Ops in interpreting data and using their experience to connect the dots rather than just collecting the dots:

"If you only - or if you let yourself be driven only by data, it could actually lead you down a rabbit hole. It can make you make wrong decisions.

But I think [as] human being[s] [our] intuition and experience is super important. And also where all the data could point us in one direction, but something tells us - 'You know, we have seen this before, we have seen the pattern.'. So it's not just about collecting the dots. You also have to connect the dots. And here, I think, is where HR is important."

➡️ How can you run a performance development process like Spotify? 

Zavvy lets you run a performance review process like Spotify.

Manager training, collecting feedback, carrying weekly check-ins, and structuring development plans and conversations are elements from Spotify's set-up that you can replicate with Zavvy.

The process is simple. Here is a step-by-step breakdown.

🤺 Train your leaders, just like Spotify

Spotify is constantly pursuing development, not just for its employees but also for its leaders. This enables leaders at Spotify to better asses, spot, and groom future talent.

You can recreate the HR workshops that Spotify conducts and the training mindset for its leaders easily with Zavvy.

Using Zavvy's training features, you can easily create workshops, self-paced learning journeys, and more for your managers and enable peer learning among them, in a digestible and easy-to-consume format, via email or daily slack nudges. 

You can also create other features with the workflow and journey builder for your leaders. 

For example, Zavvy helped Freeletics create a leadership training program that saw a great return on investment, with 100% of all managers feeling supported in their growth:

• "People Manager Roundtable" - The leadership roundtable brings together leaders from different departments every six weeks. Two facilitators are responsible for picking a topic and preparing the session for every group. To do so, they follow a step-by-step process on Zavvy.
• "Microlearning" - Learning through Short weekly nudges that are easy to consume. Small challenges and reminders motivate ongoing behavioral change. This feature would be essential for equipping your leaders with the skillsets to coach and assess their team members accurately and techniques for giving constructive feedback.

You can assign our Microlessons on Leadership to managers to study at their convenience. This program will help:

1. Train your managers to be effective leaders.
2. Make leadership training an effortless process.
3. Improve your employee satisfaction and retention rates.
4. Develop your managers' leadership and self-leadership skills.

✅ Check in with your employees frequently using Zavvy

At Spotify, managers are encouraged to have frequent 1:1s and continuous check-ins with their employees.

Zavvy allows all, not just forthcoming employees, to set up a 1:1 cadence with their managers.

Here's a snapshot of the manager dashboard for their team, as well as the check-in cadence they can set up.

Managers can set the frequency, day, and recurring questions and agenda for their 1:1 cadence.

Zavvy sends all involved automated reminders. And the manager could get the checklist as a separate message/reminder.

Pressing questions like "recent achievements," "radical honesty," and "priorities for next week" can be asked through this feature.

🔁 Run a performance and development process, just like Spotify

Spotify emphasizes that leaders should give actionable holistic feedback to their employees. 

Owing to this, they create a Talent Snapshot that gives them insights into employee strengths and weaknesses.

With Zavvy, you can replicate this process with ease. 

Here's how: 

1) Name your cycle and briefly describe it

Choose a clear name, so all your stakeholders understand its purpose, e.g., annual manager feedback. 

For example, you can use "Performance and Development cycle" to replicate the Spotify model.

2) Select the appropriate feedback types and customize the feedback forms

You can choose:

• self-review; 
• downward feedback; 
• upward feedback; 

Although Spotify does not endorse the 360-feedback framework per se, they recommend that employees collect peer feedback and reflect on their development and career growth ambitions. 

So, let's select: 

1. Self-review - to be customized with questions exclusively focused on development ambitions. 
2. Downward feedback - where the manager can reflect on the employee's strengths, weaknesses, and performance.
3. Peer feedback - where peers can tip in with reflections on the reviewee's contribution to team performance and could share constructive recommendations for growth.

This set-up will also replicate Spotify's Development talks, where employees collect feedback from managers and peers and actively seek conversations about their professional development.

For example, you could ask peers about the level of "mastery" and "thought leadership" they possessed in certain areas and collect insights about how peers assess an employee based on company culture factors.

Customize the self-evaluation form with development-focused questions such as:

• What are your short-term and long-term goals?
• What accomplishment are you most proud of in your current role/ team?
• What projects or responsibilities would you like to take on? 
• What experiences or achievements do you consider essential for taking on higher-stake tasks?
• What support can we provide over the next 6-12 months to help you get to the next stage in your development?
• What activity would have the most significant impact on your development? Is there anything stopping us from starting right away?

For your downward feedback, include some of the following questions:

1. What do you believe are the employee's greatest strengths?
2. In what areas could the employee improve?
3. How does the employee's performance compare to others in the same role?
4. Are there any specific goals or projects the employee has excelled at?
5. Are there any areas where the employee's performance has been lacking?
6. Are there any specific skills or knowledge the employee lacks that they need for their role?
7. Are there any opportunities for the employee to receive additional training or development?
8. Are there any suggestions you have for how the employee can improve their performance in their role?

To collect insights from peers, you can use the following questions: 

• How does your peer contribute to the team's overall performance and goals?
• Are there any specific areas where the reviewee excels in their role?
• Are there any areas where your peer could improve their contributions to the team?
• How does your peer handle conflicts or challenges within the team?
• Are there any suggestions you have for how your peer can continue to grow and develop as a team member?

3) Select the participants for your review cycle

It's up to you if you want to launch a company-wide cycle or create custom cycles for each department or team. 

4) Define the timeline

Here are some examples of deadlines to consider:

• For employees submitting their self-reviews.
• For employees nominating their peers.
• For managers submitting feedback. 
• For reviewing and calibrating the preliminary results.
• For sharing and discussing the results.

5) Launch your new performance development cycle 🎉

🎯 Use Zavvy's heat map feature to replicate Spotify's Talent Snapshot

Remember how managers have to move employees from red to green? 

Our heat map will enable your managers to apply the same strategy. 

You can also configure the heat map to display specific teams and competencies. 

And the best thing is that you can even compare results from previous cycles. 

You can filter for a question or competency from a previous cycle and another question or competency from the current cycle and analyze the scores side by side.

🌱 Grow your employees with ease using Zavvy

Following the Talent Snapshot, leaders at Spotify reflect upon each employee's strengths and invest in their growth accordingly.

With Zavvy's "Growth Cycles" feature, you can model a development plan for your organization.

Zavvy empowers employees to use insights or recommendations from their performance feedback and turn them into focus areas directly tied to their growth plans.

So, based on frequent manager assessments and peer contributions, employees can extract actionable insights from the "My Feedback" view and add them to their development plan.

You can also create a career development framework to fast-track the growth of high-potential employees.

A role card will represent one of the levels of a career framework, for example, from junior sales manager to mid-level sales manager to senior sales manager. 

This approach will give your employees a clear path for continuous learning and career growth. 

💪 Bonus features of Zavvy

Some more features that make Zavvy stand out in conducting industry-standard performance reviews: 

• Ready-to-use survey templates designed by qualified learning scientists

Our survey questions and feedback cycle templates are a by-product of our keeping up[ with academic research and the best HR practices at companies like Microsoft and Google.

• The 360° feedback builder is highly customizable, allowing you to build feedback and performance review processes that match your organizational culture.
• The advanced anonymity settings allow you to decide what needs to be anonymous and what needs to be transparent.

The best part? 

Iterative feedback correlates with other use cases, like career frameworks and growth plans. 

Plus, your employees can automatically create a new focus area to work on, derived directly from the feedback cycle.

Combining technology with research rooted in the best people management practices, Zavvy can improve performance outcomes across leading organizations worldwide. 

Book a free 30-minute demo to see how to craft the best performance review system that enhances your organization's productivity.