Your organization needs to be able change quickly and frequently (as the world does), all while keeping personnel aligned and highly productive. This is where agile performance management can help. Just as you can implement lean processes to successfully develop new programs and products (find product-market fit), implement lean processes for large-scale manufacturing and implement lean processes for software development, there are also ways you can implement lean processes to manage your people. I call this agile performance management.
Performance management hasn’t changed much in 100 years–until now. Many companies, including Google and Zynga to name a couple, are embracing and shaping new methodologies that are more appropriate to the fast-changing world we now live in. As a consultant focusing on this area for smaller/medium sized companies and nonprofits, I spend my time helping organizations implement these processes. Here are four tips critical to successfully implementing an agile performance management system at your organization.
- Use monthly goal-setting to focus your employees on their priorities
- Create accountability mechanisms that foster continuous improvement
- Nurture just-in-time (JIT) support systems that maximize self-development
- Do semi-annual employee “retrospectives” – not “reviews” or “appraisals”
#1. Use monthly goal-setting to focus your employees on their priorities.
Today long-term (e.g. annual) goal setting for individuals is no longer useful because goals quickly become irrelevant as the context changes. On the other hand, if done more frequently (e.g. monthly), goal setting becomes an extremely powerful way to establish clear direction, set clear expectations, ensure organizational alignment and reinforce a results-oriented, meritocratic culture.
Make sure that:
- The organization has quarterly goals
- Every employee develops monthly goals
- Employee goals are aligned with organizational goals
- All goals are measurable and impact-oriented
- Metrics exist to measure and track results
- Use new (OKR or SMART) goal methodologies to structure the goals correctly. I prefer OKRs (Objectives and Key Results)
- Get top management to buy-in before implementing anything
- Allocate extra time and effort to get adoption over the first 3 months
- Focus on getting high-quality goals. This is the most common implementation problem – garbage in/garbage out
- Use software to track goals. There are a number of new and effective systems. Avoid most of the established performance management systems that were built to support the old goal management processes
#2. Create accountability mechanisms that foster continuous improvement.
Good accountability systems are the secret to high employee autonomy and performance. They are also the secret to reduced management overhead. I stress the word, “good”, because if poorly implemented, accountability mechanisms quickly become a demoralizing force for employees.
Track performance results using the measureable monthly goals mentioned in tip #1.
- Score overall monthly performance from 1-100 — based on the percentage of the monthly impact targets that the employee sets for herself
Don’t communicate performance scores as an evaluation tool but rather as a mechanism to track and support continuous improvement. Performance goals clearly serve both purposes, but their primary purpose should be to increase performance (drive personal and organizational growth) not to judge performance.
- Reinforce this messaging by tracking and rewarding improvement
#3. Nurture self-organizing, just-in-time (JIT) support systems that maximize self-development.
In most organizations, especially the fast-growing ones I usually work with, there isn’t a lot of time and resources to dedicate to formal employee training and development. Instead management should create the environment and support systems that allow employee self-development to flourish.
Establish trust at all levels: resolve all low-trust relationships, especially among leadership.
Practice “JIT coaching”:
- Provide immediate coaching and organizational support to under-performers.
- Ensure all employees have strong support networks by doing these 3 things:
- Good coaching relationships with their manager
- Peer-coaches within the organization (i.e. peers and senior management)
- Coaches/mentors outside the organization (i.e. formal colleagues, former manager, mentor, parent, etc.)
#4. Do semi-annual employee “retrospectives” – not “reviews” or “appraisals”
There are strong reasons to avoid traditional performance reviews (all based on rigorous studies that are not questioned today):
- HR executives grade their own performance review system at “C” or below
- Two thirds of appraisals have zero or negative effects on performance after the feedback meeting
- 87% of employees and managers feel that performance reviews are neither useful nor effective
In other words, don’t do something that has generally proven to not work. In fact it hurts: at least 30% of performance reviews decrease employee performance! There are much better alternatives. I advocate the “retrospective” where the goal is not to evaluate performance but rather to find ways to improve going forwards.
Managers and direct reports meet 1:1 twice a year to discuss how performance can be improved: both individual performance and organizational/team performance.
- Reciprocal feedback: feedback both to and from the employee
- The goal of the retrospective meeting is not to communicate performance levels (that’s already taken care of in the monthly performance goal tracking)
- It’s not a meeting to discuss compensation decisions. A separate annual meeting is needed to communicate salary/bonus/equity decisions
Mark Pincus, the founder and CEO of Zynga, said it best in a 2010 New York Times interview:
You can manage 50 people through the strength of your personality and lack of sleep. You can touch them all in a week and make sure they’re all pointed in the right direction. By 150, it’s clear that that’s not going to scale, and you’ve got to find some way to keep everybody going in productive directions when you’re not in the room.
And that, to me, is a huge amount of what it means to manage. But I went to Harvard Business School and that never occurred to me the whole time. And I’d started a bunch of companies and never gotten to that understanding, even with one company I had that I did take up to over 200 people.
Go agile! If you want to maximize your impact, there is nothing more effective than putting in place lean people-management systems. The earlier you do it, the easier it is.
Your turn: How does your organization currently implement lean? Please share your tips below in the Comments section!