Category Archives: Performance Management

The ABC of Performance

 

winning

Ram Charan wrote in his book execution – the future companies are the ones who will execute well in Strategy, People, and Operations. While strategy and operations are very well defined the challenge has always been in the crucial link “people” – aligning them is the key to organizational success.

Performance Management is a subject where sometimes process’ overwrite people and culture. And somehow we create an environment wherein performance of an individual is judged like a Miss Universe pageant, where you are asked the most clichéd question – why should you be the miss universe and the participants compete how they posses superpowers to heal the world.

 

With so much cacophony around performance management – at qilo we call it performance enablement, the organizations have to first create an ecosystem for an individual to perform and we call it performance ABC driving attitudes, behaviors, and capability.

 

Even if you have best your strategy and process’ in place if your people do not have the right attitude display the right behaviors and are capable to execute their role – growth will never happen.

 

I have heard a lot of leaders talking about lack of readiness in their organization – actually it’s not readiness its fear of change and fuzzy vision of future.

 

So what should be done? My learning so far.

 

1)   Question the design of the performance management framework – it is meant to build leaderboards or create an ecosystem for people to perform

2)   Keep it simple – Business imperatives (strategic) next the role I play in achieving them and how I am doing it

3)   Pay for potential – Build the team that will take you to achieve success in future or lives in the past glory?

4)   Feedback – Tell me how can I improve and do my job better now! Not when I have done it

5)   One size does not fit all – Try to make your performance design align to people, not a stiff upper lip

6)   It’s not a checklist – Do not run a process just for the heck of running it, define the core why you need to do it?

7)   Enroll people not force them into a process – enrollment has larger powers and drives accountability

8)   Start from the top – leaders have to walk the talk, there is simply no way out

9)   Highlight and showcase the positive behaviors even if they are low in numbers glorify them for others to see and follow

10) Make it transparent – there is nothing grey here – it should be either black or white

 

Bring the change now, if you don’t your competitor will.

 

Objectives and key results: For executing your CEO’s priorities

The best way to achieve excellence in execution is a ongoing debate. But the discussion is becoming more and more relevant as every industry is on the verge of being disrupted by new age companies, digital solutions and fourth industrial revolution of AI and robotics. In this article, we will discuss OKR, one such tool to achieve excellence in execution.

The major challenge for any CEO is to manage short-term objectives based on long term plans. As organizations grow, the speed of execution decreases. And at a same time duplication and inefficiencies around planning and resource allocation increases.

“As Andy Grove, Intel’s former CEO said, “I have seen far too many people who upon recognizing today’s gap try very hard to determine what decision has to be made to close it. But today’s gap represents a failure of planning sometime in the past.”

Objectives and Key Results (OKR) is a management tool that brings in the discipline to achieve excellence in execution aligned with organization and CEO’s priorities. OKR is a goal setting framework originally created by Intel and later adopted by Google in the way back in 1999 when it had had not even celebrated its first birthday. OKR has supported Google’s growth from 40 employees (when it first started using OKR) to more than 60,000 today, proving that it can be used by small organizations as well as large corporations. Today, both technology and non-technology companies are moving fast to leverage OKRs to enable a high-performance work culture.

What is OKR?

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Here are a few examples of what could be objectives:

1)  Reduce the variable cost in production by 2.5 %.
2)  Increase revenue from product X by 10%.
3)  Become a more effective sales machine.
4)  Move to the new office by December end to provide a happy environment to employees.
5)  Solidify brand and position as market leader.

And following are some example of ‘Key Results’ with respect to above-stated objectives. There can be more than one key result(s) that can define how one will achieve one’s objectives.

1)  Hire a consultant to review and improve the six-sigma process.
2)  Ensure at least 75% of the sales team members achieve their quota.
3)  Hire three sales managers by end of June.
4)  Identify an office that facilitates company and employee growth for 250+ employees.
5)  Hire a new branding agency by end of Q1.

Benefits of OKR

OKR improves alignment with organizational priorities and helps business leaders identify what is important to be achieved and how to achieve it. It brings in accountability and ownership among employees and helps in achieving operational excellence.

Implementing OKR

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Once you are convinced that OKR can help you get to the next level of business growth, the question that you should be answering is, ‘What is the best approach to implement OKR in my company?’

One of the biggest challenges in implementing OKR is not having a clear approach to implementation. You can’t adopt what worked for Google or Intel or Twitter or Sears. Your organization is unique and your challenges are different from another. You need to understand that OKR is not a methodology, there is no step-by-step guide that you can follow. Instead, OKR has a set of practices that you should understand and customize according to what works for you and your company.

Usually, OKRs are set on a quarterly basis and progress is measured weekly or monthly. But again, it depends on your business priorities and you can set them at a calendar that works for you.

You can start implementing OKR in incremental steps, one role or one business unit at a time.And research shows that it makes more sense to start the implementation at the top of the organization. Start creating objectives (what needs to be achieved) on a monthly basis. Don’t create individual objectives at the start of the implementation. Once that is done, start creating Key Results (how you will achieve the objective) involving team members from same or different business units. This will also help in breaking organizational silos and enhance business communication.

You probably will fail at first attempt, don’t stop there. It takes 2 to 3 quarters to understand how you should structure the objectives for your organization and how it can help you achieve your organizational priorities. The effort spent is worth as it gives the organization and leadership visibility on where the organization is going on their priorities, every week. Teams and individuals will adopt this because it’s linked to their day to day work, and help them see the big picture of their work.

At the end, please remember that OKR is not a tool to measure employee performance. It’s a management tool to align execution with organizational priorities and track the progress of execution for those priorities. As Intel’s Andy Grove, wrote, ‘It is not a legal document upon which to base a performance review, but should be just one input used to determine how well an individual or a team is doing.’

From 1855 to 2017, leaders still face same issue: performance accountability

1855 was an interesting year. This was the year when for the first time someone thought seriously about how to bring execution closer to organizational priorities, measuring employee progress on those priorities and enhance overall employees effectiveness. If you talk to any of the CEO’s or business leaders, they will be stating the same kind of challenges. The credit for seeding the initial idea of enhancing people effectiveness goes to Daniel McCallum, a railroad engineer at the New York & Erie Railroad Company.

Daniel Craig McCallum was a Scottish-born American engineer known as one of the early pioneers of management.

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Daniel McCallum. Image credit: Wikipedia

He set down a set of general principles of management and is credited for having developed the first modern organizational chart. The of the major problems faced by then large railroad companies like “New York & Erie Railroad” was the rising cost of operations compare to smaller companies. He wrote a letter to highlight this issue to his higher-ups and CEOs. And he presumed that the root cause of this problem was people performance issues and inefficient internal organization.

McCallum’s letter outlined five key challenges posed as questions. Read them carefully, and you will realize that they still hold true even today.

  • How do you get a group of people to work together to common business priorities & goals?
  • How do you give people the right amount of responsibility?
  • How do you make sure the job gets done?
  • How do you know how things are going?
  • How do you do all this with respect for others?
Lithographic_Drawing_of_McCullam_s_Patent_Timber_Bridge_akfkvc
Lithographic drawing of McCullam’s Patent Timber Bridge, 1852. Image credit: Wikipedia

Because of his constant focus on enhancing execution excellence, McCallum retired as General Manager controlling over 5000 people.

Take a pause now and think about the questions McCallum has highlighted 161 years back. These questions were asked more than a century ago before Peter Ducker started helping organizations understand management science. The astonishing bit? Even after 161 years and three industrial revolutions later, McCallum’s questions are still valid and relevant for today’s corporate world. The need of the hour is to answer these questions for your organization and find up an appropriate solution to avoid losing the market share to small companies and start-up’s, or the repercussions could be huge.

While you process the story of Mr. McCallum, here’s another interesting story, this time about Andy Grove, known as the ‘guy who taught Silicon Valley how to do Business’. Grove was Intel’s former CEO and mentored business superstars, the likes of Steve Jobs and Larry Ellison. He was among the first business leaders to implement the MBO (Management By Objectives) model – a management model popularized by inimitable Peter Drucker.

Andy Grove, with his team (1978). . Image credit: Wikipedia
Andy Grove, with his team (1978). . Image credit: Wikipedia

At Intel, Grove and team later gave birth to OKR (Objectives and Key Results), which according to Grove had two important components.

  • What do I want to achieve? (The Objective)
  • How will I pace myself to see if I am getting there to achieve that? (a set of Key Results)

OKR which over the years has been adopted by leading organizations across the world such as Google, Uber, Sears Holdings, Vox Media, Zynga, etc, helps in creating a culture of high performance that is focused on results. The core concept in OKR is to align the organization with the CEO’s priorities. OKR is very different from traditional goal setting frameworks which lately are showing signs of aging. Adopting OKRs enables organization, teams, and individuals to:

Work together for common business priorities & goals.
Helps in ensuring that the job gets done and done well
Enables you see in real time the progress people make while achieving their targets.
The bottom line is, every thoughtful business leader, be it McCallum or Ducker or Grove are able to re-invent the processes to enable better performance in their people. They were able to identify new ways to make people accountable for their own performance. Organizations that don’t focus on building or re-inventing themselves to leverage people power will always lose the battle to their competitors.

Originally published at: People Matters , India’s leading HR focused media company

Moving from performance management to enablement (Part 2)

In the two-part series of “Moving from performance measurement to enablement”, part 1 highlighted the problems we have with current performance management process. In part-2, will be discussing on how organizations can move from performance management to performance enablement.

As stated in part 1, the annual ritual of performance management is dead, future belongs to performance enablement.  Companies who will not leverage this change will potentially lose an opportunity to increase their revenue by up to 9% and reduce cost by up to 7%(Source:: Mckinsey).

The outcome of enabling performance are clear. Done right, it can lead to engaged at work & will be more effective as their careers progress. Let’s look at how you can enable the performance.

1.Re-focus on the Core: Organization Culture

Organization culture is not about dogs at work or yoga (Ben Horowitz). Organization culture is about “how works get done and people alignment with organization customers”. To understand your culture, start with analyzing or run diagnosis about what kind of culture or subcultures have been created in your teams in all these years.  And then put down on paper what kind of culture is required to meet and exceed your customer expectations.The output of this activity will be the expected behaviors from the people in the organization. Identified behaviors should be constantly communicated to employees, and should NOT be limited to poster exercises. This may sound like a theory, but believe me, it’s a science. The only difference is, the secret of this science and how to implement it was till date was available with a handful of companies.

2.Enabling Business Heads and Managers to be Better Coaches

There are two aspects which can enable managers and BU head’s to be better coaches:

  • The way communication is happens
  • The way conversations are handled on giving feedback

The way communication is happens

Your business heads and managers are continuously focused on getting transactions done. They occasionally communicate with their team members about what they are feeling and what challenges they are facing. The medium of communication ‘Town Halls’ and ‘Corporate Emails’ are not effective. Managers and business heads need to be more colloquial with their communication so that people in their team feel more connected to them. The art of chasing numbers are easy, but the art of communication is difficult. You need to enable them to think creatively to communicate well.

The way conversations are handled on giving feedback

How frequently your manager gives feedback to their team members. Either it’s annual, during the performance management process or when projects/assignment & targets turn red. You have to put in a discipline throughout the company to enable these conversations to happen more frequently (at least quarterly).  And employees and managers should be kept in the center for this to avoid adoption failure.

3.Implement a Dynamic Goal Setting Framework

The business world is dynamic where targets and priorities keep changing continuously. But the goals to be achieved remain static throughout the year. And they largely don’t get connected to the day to day work of the employee. An ideal goal setting framework gets connected with the daily, weekly, monthly & quarterly assignments. It should be simple enough to change and track. And it should have the ability to define the performance metrics for every role in the company. OKR is one such goal setting framework which acts more like a management tool and has the ability to link entire organization with CEO’s priorities.

4.Enable More Transparency

Transparency can be enhanced at two level: – team level and company level.

4.1Transparency at team level

There are 3 types of team members. One who think he is a Hercules, one who know he is Hercules and the one who needs to know whether he can become Hercules or not. Within the team, if you can show the data and enable calling a “SPADE a SPADE”, it will help in achieving excellence in execution.What is the different between a non-performer employee of corporate and start-up? In start-up, the shelf life of non-performers is maximum 2 to 3 month; in the corporate its 12 months or more. By enhancing transparency, you will be able to identify non-performers in lesser time and can start working on their development at the faster pace.

4.2Transparency at organization level

An employee always keeps guessing how my work is affecting overall organization progress. And few of them want exposure to more opportunities available, to enhance their career growth. A simple way to achieve this is by making all goals transparent at the company level. You need to show them the path for growth.Employees who want to grow will be able to figure out how to travel on that path.

To conclude, as an HR leader, being an early adopter of initiating the journey of performance enablement,   you will be able to contribute towards business growth in a tangle manner. Newly empowered employees of the digital age are constantly looking for the value proposition from their employers. Companies, new and old alike, and their HR leaders cannot afford to sit on the sidelines.

Summary

  1. Focus on how you can determine your sub-culture(s) and fix them.
  2. Enable your managers to be better coaches with continues feedback.
  3. Implement a more dynamic goal setting framework with goals making sense to employees.
  4. Enable transparency in teams with data to identify non-performers by implementing team level OKR’s.

Moving from performance management to enablement (Part 1)

If an organization is spending 2 million hours of effort on measuring performance, an annual activity that’s doesn’t make sense to anyone, we have strong reason to relook at the cost and effort spent on this activity. The countless number of hours spent on filling self-reviews, manager review forms, meeting, arranging and collating performance data is certainly not justified.

During my corporate career, my team and I always expected two outcomes from performance review (mid-year and annual):

  1. Feedback from my manager on how I have done
  2. What will be the increment in my salary

While both the reasons are strong enough to hold my team’s and my interest in performance reviews, it was always disengaging. HR, Business Unit Heads, and team managers have to follow up endlessly with people to get self-reviews completed. It’s a strong enough evidence that people are not looking forward to this annual ritual. Further, a study by Willis Tower Waston fond that ONLY 20% of employers believes that merit pay is effective in driving higher levels of individual performance in their organizations.  Here are the top 5 reasons of dis-engagement with performance review process:-

  1. Performance management process is not employee centric: The yearly performance review process and system are designed to get top 10, average 70 and bottom 20 percentile of people to facilitate C&B (Compensation & Benefit). To achieve this activity, organization’s and HR leaders forgot to put employees and managers in the center of doing performance review process(now day’s it’s also called as design thinking). As an employee, if I know that outcome of the annual performance management process is money, my projections about my performance will always be HIGH. And the manager will be more focused on justifying the rating and/or percentage of salary hike. In this all, giving actual feedback to the employee on how she has performed and how she can improve in future takes back stage.
  2. Measurement on KRA/KPI/questioners which doesn’t make sense: KRA’s are static in nature; today’s business world is way too dynamic. Team’s priorities and targets keep changing on day to day, month to month and quarter to quarter basis. And team members are not able to correlate their day to day work with assigned KRA’s and KPI’s. Even if they are able to correlate, how much progress they have done to achieve the KPI(s) cannot be measured quantitatively and qualitatively. Don’t believe me, ask your employees. At the end, the current process leaves the judgment of how well I have performed on manager’s wisdom.
  3. Lack of clear communication on expectations and what should be done to grow: When was the last time your organization has clearly communicated to your employee on competencies they need to get better on. And which competencies they need to acquire to grow to next level. Team members often come up with an assumption that they are ready for next role, without realizing whether they are even ready for that or not. And managers don’t have enough data to tell the team member why they are not getting promoted to the next level.
  4. Recency bias in evaluation: – How many times you have observed that when performance reviews and appraisals are approaching, team members suddenly become more proactive, disciplined, showcase best of their behaviors and start delivering things on time beyond expectations. I still remember one such incident: One of my team members who was sitting in different office location started sharing the status update on time, without follow-ups, was calling me on regular basis to tell me how lucky she is being in this assignment. As a manager, you will tend to take the decision based on recent events and perceptions.
  5. No transparency: – Organizations lacks transparency in the entire performance management process with too much dependency on manager’s decision. While manager’s role cannot be denied in the process, it’s the employee peer’s who know how this person has performed throughout the year and whether she is a good team player or not. And though increment has always depended on the how the company has performed and on macroeconomic conditions, managers give feedback to justifying the bell curve rating or to justify the rating communicated to her from the higher management.

The way you measure performance defines the core culture of your organization and it will define how your people will perform in the future.

In part 2 of this post, I will share how you can take the journey of moving your organization from performance measurement process to performance enablement process.

Summary:

  1. Performance management is dead, future belongs to enabling the performance.
  2. Current Performance management process is not employee centric.
  3. Managers lags data of employee performance through the year, leading to recency bais in evaluation
  4. If done right, enabling performance will accelerate business growth

Part-2 of this article can be found here.

Enable a productive environment to perform.

When it comes to performance and productivity, measurement is the word which pops ups. What about enablement?

Creating an environment to perform is the investment we need to make- measurement is an outcome.

Taking a cue from India’s participation and results in Olympics, the discussion is always on the number of medals not on building an ecosystem, which enables performance.

Similarly, in teams, today review conversions have superseded coaching conversations. Which leads to transactions, not value! The questions we have to ask -are we enabling performance of our team members or just measuring outcome?

At qilo, we did a work place culture study, wherein we asked people what does it take you to perform in an organisation. Two most important factors and dimensions, which came out, were alignment and coaching.

Clear direction, defined roles and continuous coaching and feedback enable performance. Critical areas we miss out in while driving and focusing on transactions.

Performance measurement is an output – Enablement is an input.

Focus on input outcome will definitely be great!