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Biggest Mistaking in OKR Implementation: Cascading OKR

One of the biggest reasons for failed OKR(Objective & Key Results) implementation is Cascading OKR’s. Cascading means your Line of Business(LOB) Head Key Results becomes the Objectives for the reports of LOB Head. And then the flow of cascading goes own till the last mile in the company. It looks something like this:

OKR Cascading

The 3 major flaws with Cascading OKR’s

  1. If your OKR cycle is quarterly, which means you create and close OKR’s every quarter, then you end up spending too much time going top-to-bottom. What if the cascaded OKR ownership needs to be changed? In 90 days, deciding your OKR’s and then cascading means you end up your entire time in cascading than execution.
  2. Cascading means CXO’s and Managers are not owning any Key Result, which means they are not executing anything. But that’s not true in the real world and should not be true. If that’s what you want to implement, then you are again promoting hierarchy in your company.
  3. Deciding which Key Result to cascade and which to not is not always clear.

We at qilo,  have learned it in a hard way after many implementations. Clients want Cascading, and we have given them what they want. But at the end, any OKR Software success depends on the OKR implementation and adoption by the people who will execute those OKR’s.

That’s why we at qilo, have focused more on 2 things for successful OKR implementation:

A.  Aligning OKR’s with CEO’s Annual Operating Plan or Strategic Initiatives. This approach is bi-directional and works wonderfully. It gives clarity to CEO and his team that as an organization, where we are going, and how we are doing. And for an employee working below the CXO level, it gives them clarity of how they are connected with the big picture. The only trick here is to successfully come up with the set of 3 to 5 business priority statements that don’t overlap and clearly linked with what company wants to achieve in that financial year.

B. Creating Team-based OKR’s: Rather than cascading, create the team-based OKR’s where Key Results are owned by multiple people. These KR’s go beyond the hierarchies and departments.  The concept is bit more difficult to digest at first, as managers want to hold their boundaries and don’t want people coming from different teams and hierarchy coming directly to their OKR’s.  But it beautifully solves the problem of cross-functional communications and collaborations. Mind you, this needs a bit of change management to occur.CEO and/or COO himself has to take the ownership of communicating why we are doing this.

Summary

  1. Cascading OKR’s results in wasting too much time setting OKR’s.
  2. For successful implementation, Align OKR’s with company’s Annual Operating Priorities or Long-term Strategic Priorities.
  3. Creating a team-based OKR’s aligned with the company’s priorities results in better team communication and collaboration.

CEO’s Number One Problem- Accountability in the workplace

When it comes to people specific challenges, what we constantly hear from CEO’s of growing companies is – “People in my company lacks accountability”.  Lack of accountability within individuals and managers is one of the primary reason of inability to scale the company.

Image Credit: Alvin Mahmudov on Unsplash

The term accountability is used interchangeability with responsibility. The main difference between responsibility and accountability is that responsibility can be shared while accountability cannot. Accountability means how well or effectively you carried out what is expected of you.

While there could be many reasons for low accountability, the top 4 reasons why individuals & managers lack accountability are:

  1. Spending far less time in communicating why accountability is important.
  2. Setting accountability before alignment.
  3. Lack of discipline in following rituals to set the accountability.
  4. Not able to link behavior of accountability with rewards.

Spending far less time in communicating why accountability is important

Accountability is what differentiates a good company from a  great company. People are much more career-centric today than before and they want to be the part of success. CEO, functional heads, and managers spend far less time in repeatedly communicating why accountability is important, and how it’s going to impact the company growth and success.

Setting accountability before alignment

If accountability means how well or effectively you carried out what is expected of you, alignment means defining what we should achieve and what we should not achieve as a company. The first step to achieve the highest level of accountability is to start with achieving alignment from top to bottom. The experienced entrepreneurs & CEO’s know why this is important. And spend far more time to get teams aligned on operating plans and strategic priorities.

Lack of discipline in following rituals to set the accountability.

Every company who is serious about growing or maintaining the competitive edge sets some rituals to set and enhance the accountability in teams. The weekly Monday meetings are one of those rituals. Those Monday meetings fail to perform because

a) Agenda of those meeting is too broad (b) those meetings are not data-driven (c) the size of the team is too much such that not all get the opportunity to put in their point or share status or share the challenges they are facing  (d) feedback post these meetings are not captured to measure how well these meetings are performing.

Not able to link behavior of accountability with rewards

The behavior of accountability should be directly linked with monthly, quarterly and yearly rewards and bonus from top to bottom. This should not be the KPI per say to be measured but should be the parameter on which you should enable continuous feedback on. The data point generated from this should help in decision making for rewards.

Summary

  1. Communicate often the importance of accountability
  2. Align before you make people accountable
  3. Set rituals to drive accountability
  4. Reward/Punish people for not being accountable

Getting ready for the future of performance, Part -1

Performance Management(PM) is dead. The existing way of performance management has become increasingly bureaucratic/burdensome, costly, low-value to employees and managers. Further to this, it has zero or sometimes negative contribution towards overall company growth.

You probably have read many blogs/articles stating these claims. Everybody is talking about it, but nobody is talking about what is missing in current approach and what needs to be done to be future ready. By merely shifting the annual activity to quarterly will not help. And by just doing way from ratings will also not help, in fact, it can be counter-intuitive and will result in socialist culture in the organization where high-performing people are not rewarded.

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Image Credits:rawpixel @ unsplash

This post is focused on how you can identify what is missing in your current approach of PM. There are two aspects when we talk about getting ready for future:

  • Evaluation of Present Situation: It’s about knowing what is missing in your current approach of PM. And whether you are ready for the change in future or not.
  • Preparing for Future: How to prepare for the future. Part-2 of this post will cover this aspect

Evaluation Of Present PM System

Purpose of Performance Management

The primary purpose of PM should always be to enable and enhance organizational & people performance. The organization performance can only be increased when its people become more accountable towards driving organization objectives, managerial effectiveness is enhanced, and people feel more motivated at work.

Once we have a clarity on the purpose of PM, we can decide whether PM will help us to achieve the organizational performance or not. Your purpose of PM could be one of the items listed below or cloud be the combination of them:

  • Driving accountability towards achieving organization business objectives.
  • Enabling people to perform better in present and future.
  • Compensation/Reward/ Promotions decisions
  • Identification of the high-potential’s for leadership pipeline
  • Future L&D initiatives

The primary purpose of PM till date was to support the decision making related to Compensation, Reward and Promotions. And this decision making is primarily supported by data coming out of annual performance review activity, which was always received with the lowest level of interest by people in the organization. And the core reason of failure was the ‘Design Thinking’. The existing design of PM has brought in too much subjectivity & complexity in the processes which resulted in side effects like ‘Recency Bias’. And because the entire exercise was not data-driven, it has led to more politics and favoritism within the teams.

To prepare for future PM process, you can answer following questions with respect to ‘PM Purpose’

  1. What should be the purpose of my future performance system?
  2. Is my purpose getting fulfilled with existing PM in a way that it reduces subjectivity and complexity?
  3. Does my PM give me enough data points to achieve my PM process

Business Strategy

The strategy is a new management jargon which has come in limelight just 10 to 15 years back. Only few people beyond HBR writes about this. In its simplest form, the strategy is about set of choices CEO and her leadership team makes about the business.  These choices are primarily in following areas

  • How winning future looks like?
  • Where will we play?
  • How will we win?
  • What capabilities are required to win?
  • And what kind of systems and processes are required to win?

It’s often heard that strategy is an execution and people problem. If that’s true the PM is the perfect system to support execution. And further, it can support the change in people behaviours to achieve those strategic priorities.

To prepare for future, you can answer following questions with respect to your ‘business strategy’

  1. Should my PM support execution of my business strategy?
  2. Will we able to drive the behaviours using our PM to achieve our company strategy?

Nature of Work

The nature of work has changed in last 30 years because of the growth of service economy. Employees are expected to play multiple roles during their company tenure and must deliver results at a much faster pace. This has resulted in more stress at work and the human brain is still getting adapted to new norms of speed, and high levels of anxiety. At the same time, employees are demanding much more flexibility at work to reduce their level of stress

The kind of work which is happening in the companies’ demand people to work in teams and that to cross-functionally. Your PM should be supporting the team ecosystem to achieve your goals. And should support performance evaluation not just based on how the individual has performed, but also how the team has performed to which individual was part of. Once this approach is supported, you are giving a clear signal to your people that team performance also matters.

To prepare for future, you can answer following questions with respect to your ‘Nature of Work’

  1. Should my Performance Management(PM) support team performance evaluation plus individual performance evaluation?
  2. Do I need to capture data points against all the action plans/KPI individual people have worked on throughout the year?

Millennial Readiness

The service-based economy is mostly supported by new age employees a.ka. millennials. Millennials are people who have joined the workforce post-1984 and have grown up with the social networks and heavy usage of technology. They don’t hesitate to share their views publicly. They have a very high quotient of finding the meaning of their life through their work. To find the meaning they need more feedback from your managers and more growth opportunities. And they can’t just work in a fixed role, which in-fact is good for you as an organization. They want to move horizontally and vertically. And they expect much more transparency from the organizations. In a nutshell, they are way more demanding of their employers than previous generations.

Your PM should support transparency or at least improve the perception of transparency. And it should support frequent feedback in a very informal way. If you can achieve this, you will see more stickiness of this generation with your organization.

To prepare for future, you can answer following questions with respect to your ‘Millennial Readiness’

  1. Should your Performance Management(PM) support in improving the level of transparency or at least improving the perception of transparency?
  2. Should your PM support more frequent feedbacks, which should be enabled every day/week/month/quarter?

Organization Culture

Organization cultures is about how work gets done in your company. Organization Culture can be divided into 4 archetypes.  You need a good mix & balance of all the 4 types to achieve the success.

  • Market-driven culture: where people are result-oriented, competitive and goal-oriented. The leaders are hard drivers, producers, and competitors. And the success is defined in terms of market share and penetration.
  • Hierarchical Culture: where procedures govern what people do. The leaders pride themselves on being good coordinators and organizers. And the Success is defined in terms of dependable delivery, smooth scheduling, and low cost.
  • Clan Culture: where people share a lot of personal information where leaders or heads of the organization are seen as mentors. And the success is defined in terms of sensitivity to customers and concern for people
  • Adhocracy culture: where people are entrepreneurial and creativity is valued at work. The leaders are considered innovators and risk takers. And the success means gaining unique and new products or services.

Your PM should help you to achieve the proper mix of above-stated culture archetypes. Let’s say, if you want to enhance the market-driven culture in your company, whereas your culture is still inclined towards Clan or Hierarchical, can your PM support in achieving the desired organization culture.

To prepare for future, you can answer following questions with respect to your ‘Organization Culture’

  1. Should my PM support in achieving the kind of culture mix I want to achieve in my organization?
  2. Can I drive the behaviours using my PM that can help me achieve my right culture mix?

Cost of PM 

The cost of your PM can be determined based on two variables, direct cost, and indirect cost.

According to a study, one company has spent close to $11 million dollars in last 5 years in supporting the traditional approach of PM process (direct cost involving people + technology cost).And according to Deloitte, companies spend approx. 2 million hours of effort on completed the PM process which employee and managers don’t even see value in(this is an indirect cost).

The indirect cost includes attrition because of post-performance review, negative employee morale, loss to productivity and overall employer brand image.

To prepare for future, you can answer following questions with respect to your ‘Cost of PM’

  1. What kind of direct and indirect cost involved with PM?
  2. Is my PM enabling us to enhance the organization performance resulting in more revenue growth and cost saving?

 

Every change starts with evaluation or needs to change. You might be wondering can a PM impact so many areas. If you look at PM through the lens that its core is compensation or HR compliance, it might not. But if you look at it through the lens that its core is organization performance, the possibilities are immense.

The part-2 of this blog post covers details that when you have decided to look at your Performance Management as a way to enhance Organization Performance , how you can achieve that.

Summary

  • Start by identifying the primary purpose of your PM.
  • Evaluate is your PM supporting the execution of your business strategy.
  • The nature of work has changed and became much more complex. Is your PM supporting the team to chase the goals?
  • Is your PM supporting the kind of culture mix you want to achieve in your organization?
  • What kind of direct and indirect cost involved in the current Performance Management process?

People Practices in Indian Companies are still @ 1990’s

A couple of months back I was reading “Drive by Daniel Pink”. It’s a masterpiece to understand what motivates people at work for doing the work.  It talks mainly about intrinsic & extrinsic behaviors. And the main theme of the book is about purpose, mastery, and autonomy as dimensions of achieving the productivity at work.

anton-mishin-328089                But if I co-relate the concept mentioned in the book with Indian context, I see challenges of India companies are bit different. Here am I am NOT talking about Indian companies serving fortune 500. Indian companies serving fortune 500 global companies are still able to improve or have been forced to improve their people operations & practices by working closely with them. But for companies working in India serving Indian customers; people operations & practices are still at very early stage.

The two reason when companies in a specific economy start improving their people operations & practices:

  • There is a huge gap between talent supply and demand. And the cost involved in losing a high potential/performing employee is very high.
  • As an organization, you are aspiring to scale faster, bigger and going beyond your current boundaries & potential.

At qilo, we are meeting and working with CEO’s and HR leaders across industries and was fortunate enough to work with all levels of the hierarchy. Here are learning that we had in our journey so far.

  1. Most of the businesses are still focused on daily execution and lack strategic orientation for the organization. If you focus on getting more transactions & time from your employee, you will get that only. As economy will improve and grow, competition is going to increase in every field with entry barriers for every business going down. Winning organizations will be those will strong people, process and technology practices. And it’s not that leadership don’t’ understand that, but bringing the required change in the organization about strategic orientation is not an easy job.
  2. Non-supporting government policies, infrastructure issues and being a cost-sensitive market, doing business in India is still very difficult. Companies are always under the constant pressure of keeping the cost low. This means that organizations are always in the survival mode. To keep the cost low, they don’t invest in the improving the people operations & practices. All this leads to leadership being in-the-business rather than being on-the-business.
  3. The nature of work we have done so far as a country is mostly services oriented. As India moves from service-based economy to product and innovation-driven economy, organizations are bound to focus on giving more freedom and autonomy to people to be more creative and innovative at work.
  4. The spiritual gurus of Indus culture have always encouraged people to seek the meaning of their life. And it’s been always prescribed that to achieve meaning of life; the person should see herself as a separate entity from her relationship, family, and profession. The approach towards life was always exploratory rather than goal oriented. But this is changing fast with new generation. The new generation is finding the meaning of their life through the work they do. Thus organization are bound to improve their hierarchical structure to give more growth opportunities to their people

Practical guide to identify and establish your organization culture

ROI of establishing a unique organizational culture is equal to ROI of gaining the intellectual capital. Think of it as you are able to discover a life-saving drug and you can capitalize on that for next 20 years.

The biggest problem is the understanding of what makes a culture. Culture is not about fun Friday’s, yoga sessions and allowing unlimited holidays.Here are the 7 recommendations that can enable you to identify and establish your organization culture.

1. Identify your core: this means answering questions like

  • What you want your customer to achieve?
  • What are the means of achieving your core?
  • What should be the outcome of achievement?

qilo coreCredits: balsamiq

We keep answering these questions within our team as we are evolving. I always thought and confused this exercise with “marketing”. It’s Vipul in our team who is always able to identify and guide us internally on identifying the core.“Identifying your core” will help you to define your purpose, short term & long term priorities.

2. Identify the habits and behaviors that will help you to achieve your core, short term & long term priorities. Identifying behaviors and habits is not an easy part. And there is no standard steps or process for this. But if you have answered the questions stated in “Identifying your core”, it will also help you to come up with those behaviors. You have to keep your customers in the center while identifying your expected behaviors.

3.Communication about your core and expected behaviors: Once you have identified your core and behaviors or on the path of identifying it, you have to communicate this with every single person in your company. You want people to inculcate those behaviors while they are achieving your organization priorities and while they are working in teams.At qilo, we are able to articulate in well after 2 year of our journey.

qilo values

4.Recognize your people when they showcase those behaviors: Once you have identified those behaviors, it’s imperative to recognize those people who showcase those behaviors. And do not link it with incentives, gift cards or bounce. Recognizing people is different from identifying an employee of the month because here frequency should not be the criteria. And make sure that the recognition is visible to the entire organization so that it can influence others on showcasing those behaviors

5.Keep evolving your core and expected behaviors: Nothing is constant in this world, not even your core and expected behaviors. They need to be evolved or changed based on the competitive landscape.

6.Define process on how your employees are evaluated: The way you evaluate your people is the way they will perform. Giving performance review is a very complicated and difficult business. And managers don’t do an especially good job at it. The fundamental purpose of performance reviews is to improve the person performance in future. The review process also represents the leadership thinking. Current practices of performance reviews are discovered in industrial age, its not apt for this digital age

7.Share customer feedback (bad for sure) and success stories constantly: Customers are the reasons your organization is surviving. What she thinks, feel and experience should be far more important than anything else. The feedback they are giving should not be just restricted to your customer facing team, but to people at large. It’s your customers who will at the end enable you to evolve you on your core, your expected behaviors from people, internal communication and how people are evaluated.

The concluding note: To identify and improve your culture, you have to think beyond chasing numbers and doing daily transactions. For a while get out of it and spend some time on this. Defining, evolving and fixing culture has helped many companies accelerate the growth, beat the competition and gain more market share. It’s not a theory and it works.

Are you game?

Building Organizations to Scale: Session by Hari T.N, HR Head Big Basket

Attended a wonderful session by Hari T.N, HR Head at Big Basket on “Building Organizations to Scale” in SME Talent Week by People Matters

Here are the notes from the session. He discussed 5 tenants that can help in “Building Organizations to Scale”.

Hari T

Tenant 1) Create a high-performance culture .

Culture is very important in high growth startup. Culture is about the belief of a group of people. These group of people may be running nations, companies or departments or teams within the departments.Culture can result in high growth and does impact the top and bottom lines.How to create Creating a high-performance

Focusing on organization culture can result in high growth and does impact the top and bottom lines.How to create Creating a high-performance culture :-
a) As an organization, you should have a sense of urgency. This means we should have less and less follow-up’s
b) Employees should be accountable. Accountability comes when you make people accountable for the outcome, not for the transaction.
c) Conducting insightful reviews and make feedback as part of the day to day work
d) Communicate often where you are going. Most companies and leaders fail to communicate effectively internally.

Tenant 2) Roles must outgrow people in start-up.

Tenant 3) As you scale in your Start-up journey, understand that each phase comes with its own challenge. While you address these challenges, you have to keep your focus on organization development.He shared an excellent article on this topic (https://hbr.org/1998/05/evolution-and-revolution-as-organizations-grow)

Tenant 4) Role of the founders keep changing. Between the founders the right kind of balance is required for disrupting and stabilizers.

Tenant 5) Focus on right candidate hiring and always hire A players. This applies at all the levels. Avoid hiring wrong candidates in the sense of urgency.