In the last post, we found that the purposes of performance reviews are still valid. However, the current HR practices do not satisfy those purposes. So, how do we create a performance management system that satisfies the purposes and motivates the employees?
Before I continue on, I need to stress the importance of having a psychologically safe environment first, otherwise no one would dare speak the truth regardless of the methods used.
I had a 2-prong approach.
- Every quarter, directors would set goals for their organizations. The managers then break those goals down to what it means for their groups. Each team member then comes up with goals based on the higher level goals. You can use any formats for these goals, e.g. OKRs, as long as you don’t focus on outputs, but outcomes and business values.
- For the teams, we use retrospectives and sprint reviews as the basis for performance evaluation.
- Every 2 weeks, during retrospectives, people on the team would give feedback to each other. E.g. “your code sucks”, or QA thanking developers for helping them out. Retrospectives expose both the fantastic stuff and the terrible, never in between.
- We collect these comments as data, and we look at the trend over time, both in terms of positive and negative. We note the trend as part of the performance review.
- During sprint reviews, the entire team is rated based on sprint goals – sprint goals are not defined by managers, but by the team, this is what they are committing to. So, the sprint commitment is part of performance assessment and retrospective. Again, the trend is what matters.
- Every month, the managers would review the goals with the employees (mentioned in the 1st prong), plus the retrospective and sprint review trends. Managers would give feedback, address any issues and act on them early. Then they summarize the results to the directors.
- Every quarter, the managers and directors gather up the data from each month, and that’s the quarterly reviews.
- Every year, the managers and directors gather up the data from every quarter and Voila! Annual performance reviews done!
Please note that managers do not join the retrospectives. They let the team work things out. Scrum masters are the proxies for managers at retrospectives, so managers can get the trend data. There are 2 occasions when managers would step in:
- When things are outside of the team’s control
- When things are still problematic over time
If the managers could not resolve those issues, they would then involve the directors.
- No need for performance improvement plans, issues are already addressed early.
- Managers already know who the top performers are. There is no need to force rank people to fit into a bell curve.
- Documentation is intact, which satisfies legal and HR requirements.
We had offices all over the globe and we started with one office at a time. For the headquarters, HR was not involved at all. We mapped things into the existing HR’s annual process. We only involved them to protect the company when we needed to let go of someone. For other offices, their HRs were onboard in trying new things, so they were involved from the very beginning.
In the next post, we’ll discuss what happens when the company can stomach more improvements, because that’s the time for radical approaches and they would lead to larger organizational changes.
If you want to explore more, please join the upcoming talk that I’ll be giving on August 26, titled “Daring you to open the HR pandora’s box“.