Do you dare to overhaul performance management?

Low Coding Vectors by Vecteezy

“Not everything that counts can be counted and not everything that can be counted counts.” – Albert Einstein

In the past couple months, I’ve been writing and talking about performance management and reward & recognition. We even explore whether we need HR in an agile world. Today, I want to challenge us to a broader performance evaluation. This is the radical performance assessment!

Many people talk about OKRs (Objectives and Key Results) nowadays as a way of measurement, instead of using MBOs (Management By Objectives) or KPIs (Key Performance Indicators). To be honest, either OKRs or MBOs are fine if we carry out their original purposes. The “O” in OKR or in MBO refers to objectives. Those are outcomes, not outputs. They are inspirational and ambitious, not SMART goals (Specific, Measurable, Achievable, Relevant, and Time-Bound), i.e. you do not expect people to complete the objectives every quarter. As to KPIs, they are, by definition, indicators. They do not always tell the full story.

Whether you use OKRs or MBOs or SMART goals or KPIs, you are focusing on delivery. I would like to challenge us to up-level the delivery measurement and add another dimension: behavior.

We are used to being measured for delivering against a goal or delivering towards an objective. Have you thought of measuring how good you are in translating ambition to action? I.e. 

  • Where are we going (strategic objectives)? 
  • What are the risks? 
  • How do we get there – managing risks (forecast)? 
  • How do we measure progress (indicators)?
  • What is our/my contribution (delivery + behavior)?

And you don’t know how good you are unless you have “pressure tested” the results. E.g. 

  • How ambitious are the objectives? 
  • If the assumptions are changed, are there positive or negative effects? 
  • Which risks were taken? 
  • Are the delivered results sustainable? 

Measuring delivery is only half of the equation. Let’s look at the other half, behavior. This is to measure how good you are in living out the agile values. These can be observed daily in how people conduct business, in how people work with their colleagues. On top of the daily observations, you also send out surveys periodically.

So, how does one reward this kind of holistic assessment? How does one recognize a “high performer”?

Remember that this is a growth journey. People improve after being pressure tested for a while, they would even come up with new pressure tests. Living out agile values every day is hard to do if one is not used to it or if one is conditioned to behave differently under traditional performance assessments (i.e. focusing on individuals). So, a “high performer” is no longer people who deliver against goals that align with strategic objectives, but people who improve in their behavior and their delivery that are aligned to agile values.

I need to point out that the above would only succeed if it’s managed in an agile fashion. This involves practicing adaptive management and agile/lean finance. Those two are big topics for a later time. However, I’ll mention one aspect of agile leadership. It means management is now more like a coach and a guide who provides a safe environment. It is no longer about measuring project status or having a single “wreckable” neck to blame when things go sideways. Remember, F.A.I.L. is First Attempt In Learning. So, failure is ok as long as people learn and grow from it, and management will have to model that behavior.

On Sept. 29, I’m giving a talk on performance management and reward & recognition as I dare you to open the HR pandora’s box. Hope to see you there!

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