Coinbase, the cryptocurrency exchange platform, is testing a real-time employee feedback system that, if successful, may have other companies rethink how they generate and deliver feedback. Coinbase is no stranger to controversial company policies; it famously churned 5% of its workforce when it banned political speech from the organization by stating that the firm would not advocate for policies unrelated to its product mission. Again, the company is challenging the norms.
The new employee feedback is being captured through Dot Collector, an app invented by Ray Dalio's hedge fund, Bridgewater Associates. According to the creators of the app, “dots are moments of micro-feedback that are systematically collected and shared to improve individual and collective performance, in the moment and over time. By turning colleagues into coaches, the Dot Collector helps teams create a culture of continuous development while empowering collaboration and inclusivity, building trust, and creating transparency.” Ray Dalio further describes Dot Collector in the TED Talk below (around the nine-minute mark).
In a nutshell, a company implementing Dot Collector would have all employees rate their colleagues, from one to 10, on a number of attributes determined by the company. In the case of Bridgewater Associates, employees will rate each other across dozens of attributes, including: assertive and open-minded; fighting to get in synch; willing to touch the nerve; holding people accountable; brightness; conceptual thinking; listens well; managerial courage; composed; synthesizing the situation; and taking the bull by the horns. In addition to a numerical rating, the rater will provide a brief description justifying the score. In theory, this review system will provide “radical transparency” that will help each individual improve and become a better contributor to the organization.
Coinbase Feedback System
Even though Coinbase is not the first company implementing Dot Collector, its rollout is significant. In addition to having more than twice as many employees as Bridgewater Associates (and that gap is likely to increase), it operates more like a typical company than an investment fund. Furthermore, it is part of a group of elite Silicon Valley companies that are often seen as challenging the status quo and reshaping the world.
In the Coinbase implementation, which is a less intense version of Bridgewater Associates, employees review how well their coworkers demonstrate the 10 core values at Coinbase, which include “positive energy,” “efficient execution,” and “clear communication.” Rather than scoring each other on a 10-point scale, employees can give their colleagues a thumbs up, thumbs down, or neutral review. Staffers can only see the ratings they receive (Bridgewater Associates make reviews public).
Areas Of Concern
While the benefits of a system like Dot Collector are clear and widely touted by companies that implement them, the costs of such a program have a quieter voice. If successful companies like Coinbase and Bridgewater Associates attribute much of their success to their feedback systems, more companies may adopt them. Before doing so, these companies should consider the factors below.
One size does not fit all. Even if real-time feedback works for Coinbase and others, it does not mean it is well suited for every organization. Each company has its own culture, and Dot Collector, or something similar, may not be suitable. For example, 30% of employees leave within 18 months of starting at Bridgewater Associates. Coinbase was willing to have 5% of their workforce voluntarily leave. Many companies and cultures do not want to experience this level of employee churn.
Feedback fatigue. Feedback is critical to professional development; however, excessive feedback may make it difficult for an employee to prioritize what to develop. Constant feedback may just become “noise” that employees ascribe less value to over time as they become desensitized to the criticism.
Limits diversity. Employees may be more likely to think favorably about people who share similar views, which could impact the way they rate their colleagues. With feedback shaping the views of employees (or having them leave the company), it may have unintended consequences that challenge diversity initiatives. According to Samir Nurmohamed, Assistant Management Professor at the Wharton School, “if people from marginalized backgrounds are making comments that are not in line with my own values or ideology, I might suddenly penalize them when it comes to these rating systems.”
Coinbase began the pilot in early 2022. Since there has not been much research on these types of feedback systems, insiders and outsiders of the company will be focused on how Coinbase reacts to the results from the pilot. It may not be a binary answer (keep vs. shutdown the program). Coinbase may learn from the feedback it hears about the program and make certain adjustments, including ones that specifically address areas of concern.