Category Archives: Performance Management

Goal Setting gone wrong

In most of the companies, goal-setting is done to either achieve one or all three perspectives mentioned below.

  1. To achieve the annual sales targets.
  2. To achieve the annual operational plan and strategic priorities.
  3. To fulfil the annual checklist activity of performance management.

Ever wondered why all 3 works in silos and doesn’t connect with the big picture? Almost all the companies do the exercise of annual sales target setting but do the half cooked job for setting goals to achieve the annual operational plan and strategic priorities. If done right, goal-setting helps you to accelerate growth, bring alignment and accountability across the organization.

If your goal are not the guiding force of your day to day work, they are not the goals, but just a formality.

There are various goal-setting frameworks that a company can opt to drive their sales, operations and strategic plan. 3 of the major goal setting frameworks that are widely used are:

  1. Hoshin Kanri
  2. Balanced Score Card
  3. OKR

Hoshin Kanri

Hoshin Kanri (also called Policy Deployment) is a method for ensuring that the strategic goals of a company drive progress and action at every level within that company. This eliminates the waste that comes from inconsistent direction and poor communication. Hoshin Kanri strives to get every employee pulling in the same direction at the same time.

It achieves this by aligning the goals of the company (Strategy) with the plans of middle management (Tactics) and the work performed by all employees (Operations). The 4 steps for Hoshin Kanri are:

Hoshin Kanri Step 1: Clarify your current state and identify Mission, Vision, and Behaviours

Your company’s Vision and Mission statements are a good place to start if they have been well written and are still relevant. Answer these questions to help you identify your vision, mission, and behaviors

Mission: Why do we exist as a company? or How is the world a better place because of us?

Vision: Where do we want to be in the future (5-15-30 years)

Behaviors: What are the behaviors that you and your employees should be living by on daily basis to achieve your mission. These behaviors are different from the values which live on your website.

Hoshin Kanri Step 2: Define Breakthrough Objectives (Hoshins)

The breakthrough objectives are mission-critical objectives. These objectives may take 3-5 years to fully accomplish.A few good questions to ask your team to get to these Breakthrough Objectives are:

Q1. In 3 years from now, if we look back on what we have accomplished from now till then, what is the biggest, most significant accomplishment we could achieve?

Q2. What is the single most important objective we need to accomplish to remain competitive 3-5 years from now.

Hoshin Kanri Step 3:  Define Annual Objectives (Goals & Metrics)

Breakthrough Objectives should then be broken down into Annual Objectives. These annual objectives are the basis for your departmental and even individual annual strategic plans.

Hoshin Kanri Step 4: Deploy Annual Objectives through the organization (Catch-ball)

Cascading your goals is a powerful and important part of Hoshin Planning. Each Annual Goal or Objective must be broken down into specific goals and projects for each functional group or team. It is only when each team member has a challenging yet achievable goal that they can see how they contribute to the overall Hoshin Plan.

Balanced Score Card

KPIs traditionally have had a bias by measuring past costs, revenues, and profits but offering little insight into how an organization was likely to perform in the future. Robert Kaplan and David Norton’s balanced scorecard framework, introduced in 1992, revolutionized how businesses connected KPIs to the company’s broader mission. The balanced scorecard, incorporating financial and nonfinancial measures to guide operational and strategic goals achievement.

If you’ve ever seen the Balanced Scorecard in action, you’ll know it’s essentially a strategic framework, divided into four areas (called “perspectives”) that are critical to business success.

OKR(Objective & Key Result)

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.

Here are a few examples of what objectives could be:

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.

Whatever goal-setting framework you are selecting, expecting it to work out magically and contribute towards your company growth without the involvement of your leadership is naïve. At qilo, we have seen many implementations succeeding when leadership from the CEO to every business gets involved, and many fail when you implement these frameworks just for the sake of implementing it because someone else is also doing it.

 

Why have we made Performance Management Complex?

When we started qilo, we had only one Purpose in mind- how can we make Organizations Perform Better?

During this journey meeting with hundreds of CXOs across the globe, one unifying theme that came out – THE only matrix of Performance which matters is Company Performance if that is not happening rest all is just execution with zero results.

So, if this is the main agenda then what is the reason for the disbelief amongst CXOs and employees is the way Performance Management process is executed?

Here are my top reasons why companies are struggling in this.

1) Lack of Alignment; on company’s goals with teams and individual’s execution. How many of us know the execution we are doing every day is contributing to companies goals and it’s growth?

2) Ownership of the Process; Performance management is one job which no one want’s to own and is passed to HR who is not the right owner. Performance management has to be designed, owned and executed by business. HR plays an important role which is organization capability building and design and it has to stick to that only, doing interventions on low performers and transforming them.

3) 1980,s style of Management. While things around us have changed, some of our management practices haven’t changed, not going to debate, why? Today we need Agility in organizations and our MBO driven industrial style of managed limits that. Perhaps we need to rewrite few of old schools management books, which were written by executives of GE, Ford etc.. relevant in that era not NOW! 

4) Culture– Haha! Another monkey which has no takers. We all want to build High Performing Culture, and what do we do to drive this? Make cool offices … Culture is built on the foundation of purpose and vision. Things we put as posters on the wall and are discussed during induction!! (Pun intended) There is only one person responsible for culture -CEO! Accountability starts from his office. We take about open work environment but don’t trust employees while sharing Strategy, numbers.

5) Technology – Companies have invested heavily in capacity management, sales, and financial software. What about business alignment? As an organization, we want everyone to go beyond their role, your technology is binding them in ‘roles’ and giving a clear message it’s not my job, why bother? 

6) Communication – An organization that talk’s get talked about. The sheer concept of communication misleads us; every engagement survey throws out lack of communication in an organization and what we do post that -Town Hall or employee newsletter. We need to understand what communication means. What the employee is seeking is very simple- where are we going, how can I help and how am I performing? Rest all is gibberish and that’s the reason why a stupid question like cafeteria food comes often in Town Halls. Managers have to own communication on performance while CEO is aligning on vision and direction.

7) Going beyond frameworks – Business management frameworks like OKR, BSC, Hoshin Kanri are amazing guiding principles, don’t make them Holy Grail, use them as guiding principles and build your strategy execution customized to your needs around them. Cascade them in teams, unifying them with Objectives, not Roles!!

My learning so far is that; when the leadership has the intent and wants to make people accountable for Performance, Organisation’s Culture and Execution goes to the next level.

Rest all plans for the next QBR to identify the reasons and necks for failures.

On a parting note – Just ask one question to yourself, does your organization have 4 Objectives or 400?

Cheers – Do share your views …

 

 

 

 

 

Getting ready for the future of performance, Part -2

In Part 1 of this post, we looked at what should be the purpose of your Performance Management(PM). If the core purpose of PM is beyond annual Performance Measurement, keep reading. If you think that process of performance management can be one of those interventions that can help you to achieve higher levels of productivity and performance at the organization, congratulations you are able to realize the potential of PM. At qilo, we call this new potential of PM as Performance Enablement.

Just think of your organization as a machine, a well define PM process can help you to enhance the accountability on running those parts of machine smoothly and helps you to visualize how those parts are working with each other.

Let’s look at how the 3 core processes involved in traditional PM processes can be reinvented:

  • Re-inventing the Goal Setting
  • Re-inventing Manager / Employee Conversations(1-On-1’s)
  • Re-inventing the Acknowledgement and Feedback

Re-inventing the goal setting

The traditional approach to goal setting is to define the goals & KPI’s with respect to roles people play in the company. During the annual ritual of PM process, every person in the organization tries to prove that they have moved beyond what the KPI’s are stating. Here are the flaws of traditional goal setting process :

  • Goals are too longish in nature that it’s difficult to remain focused on them. By the time you finish define the goal, because of the dynamics of the business environment, goal post changes.
  • The KPI achievement is rating and perception driven NOT data driven. Per Phycology Today, humans tend to lie about their performance.
  • Defining KPI weightages add to more confusion and doesn’t help an employee to judge where she should spend her time.
  • KPI’s itself are too subjective in nature defined in a complex way that a normal person can’t understand it.
  • Most of the KPI’s are lag indicators and are not combined with the lead indicators which can tell us more story on why its not achieved what you are supposed to achieve.
  • Word matter. Pick up any goal or KPI statement, most of them are hardly motivating that a person feels like chasing those.

The new way of goal setting should be Agile in nature and should focus on:

  • Shorter duration goals (monthly or quarterly) backed by the action plan on how that goal will be achieved. The action plan will reduce the subjectivity involved.
  • The progress on action plan should be updated on the weekly or monthly basis, which will help reflect how the person is going on the goal, and whether it will be achieved or not.
  • Each goal should be linked to the overall company objectives thus giving visibility to the leadership on how the company is performing on strategic and operations priorities.

While the advantages of setting the Agile goal process are enormous, implementing the agile process at scale need a high level of discipline within the company.  The success of implementing the new way highly depends on the content(which means goals and its action plan) which goes into the system. Otherwise , the new way will also face the same challenges of traditional way which lacks adoption by people.

Re-inventing Manager / Employee Conversations(1-On-1’s)

While the manager-employee conversation is the core to enable employee evolution, most companies don’t know how to facilitate this in right way. In the traditional way of PM, the formal performance discussion between the employee and manager leads to manager justifying the rating given to employee. The successful implementation of manager and employee conversation starts with

  • Training managers on how to conduct a conversation and give feedback to the employee on how to be more productive and perform better.
  • Give the context to the conversation which forces the open-ended discussions between employee and manager.
  • Collect data points from the discussion to check at company level how conversation are going and how managers are leading these conversations.
  • Combine this process of discussion with the Agile process of goal setting so that manager and employee have the conversation about goal progress.

Re-inventing Acknowledgement and Feedback

At the time when you give feedback to your Uber driver by the time you are out of your cab, feedback to an employee is given once a year. Feedback and acknowledgment of the work should be continuous & real time. While setting up the 1-On-1 process and conducting in quarterly will help you to re-invent the wheel of feedback, what if someone has to give feedback to someone after the meeting or a product launch or after a particular event in the company.

The data generated from the agile goal process, 1-On-1 and continuous feedback should generate enough data for you to help understand how your culture, people, and metrics are performing. And as Ray Dalio, famous CEO of Bridgewater Consultants and author of the book Principles says

“If you can’t visualize how your culture, your people, and your metrics are performing, you will inevitably fail to realize your organization potentials and growth”

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?

OKR_Image_1_recyie

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

OKR_Image_2_mmpsjm

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.

Daniel_McCallum_zk7zm2
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