How should you plan your performance management system for maximum results? How are top organizations doing it? We answer all your doubts in this article
As performance management takes precedence in growing organizations and comes to be seen as a means to engage, retain and develop talent, our second talent talk focused on diverse aspects of performance management systems (PMS) with Saurabh Deshpande. Saurabh is an independent HR partner and advisor to businesses. He works with startups and growth stage organizations as a consulting CHRO, to help them design and implement scalable HR practices.
He also partners with HR Technology companies as an SME to drive IP creation and product differentiation. Saurabh has 2 decades of experience across HR consulting (with Hewitt Associates - now Aon and Mercer Consulting) and line HR (with InMobi, India's 1st unicorn startup).
Without further ado, let’s begin the discussion.
Saurabh— I believe there are three fundamental aspects of performance management systems:
Therefore, the three fundamental blocks of a performance management system include goal setting, feedback and reviews. In addition, there are other aspects which can be customized to the context of the organization, the culture, and your business, etc.
Saurabh— Let's start with a little history of goal setting. There are 3 major milestones to this.
Management by Objectives or MBOs is a goal setting methodology introduced by Peter Drucker in 1954. Prior to the 1950s, the top management would decide the organizational goals and objectives, which were not cascaded to the lower-level team members as it was considered unnecessary.
Rather, the team members were informed about the specific tasks they were expected to perform, without an understanding of how their contributions would feed into the overall organizational impact. With the introduction of MBOs in 1954, Peter Drucker brought a huge shift in thinking which included:
From a performance management standpoint, this fundamental thinking of sharing goals with everyone and ensuring a structured cascading process prescribed in MBO has been a constant theme across all performance management systems, including balanced scorecards, OKRs, etc.
The MBOs approach for goal setting lasted for about four decades However, there were a few drawbacks of setting goals with MBOs:
Thus, the 1990s saw the rise of the Balanced Scorecard approach by Kaplan and Norton to bridge this gap and laid the foundation for a form of goal setting, focusing on:
While the balanced scorecard approach was fairly comprehensive, it was fairly static throughout the year, once the objectives were set according to the four dimensions.
However, as organizations became more aspirational with a focus on hyper-growth, higher risk appetite, etc., the need arose to adjust and refine goals on a regular basis. Furthermore, both MBOs and balanced scorecards really talk about goals which are directly achievable. For startups or growth phase companies, there is a need to quickly adapt and pivot while setting goals that have a small chance of being realized. This gap was filled by Objectives and Key Results (OKRs) as they are —
Read: Advanced guide to OKRs
Saurabh— Most startups and growth phase organizations tend to adopt an ad hoc approach and hastily take decisions in the face of investor pressure or to gain a competitive edge. However, this needs to change in favor of going back to the fundamentals of goal setting as a means to making everyone in the organization understand what is expected of them, how they will be assessed and receive feedback.
To make an informed choice about the goal setting system, organizations can start by answering the following questions:
For instance, if you are a hyper growth organization, working in a volatile market, OKRs can be an ideal choice
Saurabh— This entirely depends on the levels of management.
At the junior or professional levels, roles are better defined and there is a clarity of expectations, Therefore, OKRs may not be as relevant at the professional level. However, OKRs have worked best at the senior levels as roles get more standardized.
Even the maturity to be able to understand that a goal is set and it’s ok to achieve 75% of that goal is something that may not work at the junior or the professional levels. In fact there are organizations that have adopted OKRs across all levels, which has led to some negative outcomes where it becomes unacceptable to not be hitting goals.
Saurabh— I believe this is where the role of the manager becomes very important as they:
For instance, if the larger objective is customer delight, the KPI for a software engineer can be to reduce the number of errors in the code. Then, it becomes the responsibility of the manager to explain how the reduced number of errors contributes to the larger goal of customer delight.
Saurabh— Goal setting is typically something that should be done annually, with a few important elements:
Saurabh: Before jumping onto feedback as a means to drive performance, let’s understand what performance management systems essentially entails —
In this understanding of performance management systems, feedback plays an important role.
Even if an organization finds itself stretched for resources and seeks to reduce the administrative load, it can still replace formal annual reviews with more candid conversations
Offering employees feedback and recognition is extremely important. It can play a major role in letting employees know that you value them and are willing to invest in them. This small act of taking out time for feedback by a manager makes an employee feel valued. Thus, to drive performance, even if you are stretched for resources, honest, considerate feedback can take you a long way.
Saurabh— Undoubtedly, feedback is an ongoing process. However, while feedback should be given as regularly as possible, there should be enough time given to synthesize it too. For instance, as a manager if you are giving honest and sincere feedback to your team members on a daily basis, you need to pause and reflect on the volume of feedback that the employee will receive at the end of a month or so.
Thus, in addition to giving feedback, managers need to help people synthesize and make sense of the feedback for growth. Furthermore, the regular feedback must melt into the annual reviews. The feedback from different situations must collectively help evaluate employee performance on different goals and create a comprehensive development plan.
Furthermore, feedback needs to go beyond being just a corrective measure where managers share the areas of improvement and highlight the weaknesses and gaps in performance. Employee feedback needs to also be a reinforcement tool to illustrate to employees certain behaviors that need to continue, focusing on positive psychology. This will help your team members identify their strengths.
Saurabh— There are different aspects that feedback needs to look at:
The moment you add action items to the overall feedback, it becomes very powerful.
Furthermore, I believe that one should not get overly carried away by templates because:
Saurabh— I believe that despite the best intentions, managers and employees can lose track of the importance of feedback in the light of other business priorities, unless it’s part of a process. To facilitate the same, people managers should have a dual focus:
Saurabh— Undoubtedly, reviews are important because they:
Invariably, performance reviews often become the basis for increments and bonus. In fact, in recent times, reviews and increments are seen to go hand in hand where performance management has boiled down to a reflection of the increment for the employee.
That’s not what performance management systems seek to achieve. To break this cycle, organizations are focusing on having different performance management and increment conversations, to illustrate that performance management is much larger than the salary increments.
Increments should be based on one’s capability and its value in the market. Whereas, proficiency in performance should be seen as growth through the learning phase of a particular role where consistently exceeding expectations should be understood as being in the expert level for that role, and, therefore, a related increment
Furthermore, with the rise in market correction and other related trends, organizations are moving away from specific increments ranges linked to ratings. Thus, there needs to be a focus on using the performance conversation to assess the proficiency level of a team member and determine their pay range.
Increment is related to performance but it's not a direct translation. Bonuses, on the other hand, tend to be for previous year’s performance and therefore, there is a direct linkage of your bonus payout to your rating.
In addition to increments and bonuses, reviews also need to focus on the career movement.
Thus, performance review at the end of the year should cover goal achievement, strengths, development areas and proficiency for the role. Based on this, increments, bonuses, career movements, etc. can be direct or related outcomes.
Saurabh— There are two steps that need to be taken into consideration.
While ratings are important for compensation management, performance calibration, etc. at scale, that's an internal administrative process. That doesn’t have to be the primary goal of the performance review which should focus on areas of strength and areas to develop and not on labels.
When it comes to justifying the increment, organizations should focus on the employee’s proficiency for the role because that is the basis of the new salary
Saurabh— There's no one size fits all. What's more important is to ensure that once the frequency is set, it is adhered to. If not, it will lead to a feeling of being undervalued by the employee.
Here’s where the HR needs to play a little bit of a balancing act. Put simply, if HR professionals are spending all their time on ensuring feedback, synthesizing it and doing performance check-ins, there will be no time left for other work.
If organizations are able make performance check ins or the performance discussions quick, regular and not overly taxing in terms of the huge amounts of documentation, etc., then quarterly actually is still a great frequency
Three months is a good amount of time to observe a person's performance and to be able to synthesize feedback and give them the larger picture. However, if that’s not viable, performance reviews need to be done six monthly. It's in the organization’s best interest to make sure that that person does well and the more frequent feedback is delivered, the more they will get a chance for course correction, the better it is.
Saurabh— There are two components at play here, the stakeholders and parameters.
Saurabh— I would like to share three takeaways:
It is no longer an assumption that the traditional approach to annual goal setting and review has run its course. The VUCA world demands more quick and adaptable business models.
While the agile values and methodology was initially created for software delivery, you can apply the same to transform how you set and achieve your business goals.
In this article, we will focus on:
Traditionally, goal setting has been a very static and long-term process for organizations. Here are a few key components of traditional goal setting and performance management:
This form of goal setting and performance management had relevance for organizations operating in steady and stable market conditions.
However, in today’s VUCA world, the pace of change is skyrocketing and organizations unable to tide with the same are finding it extremely difficult to survive, let alone thrive.
Some of the reasons to reimagine goal setting for VUCA world include:
While it may not be apparent in the first look, agile and OKRs are quite complementary and combining the two can be a great step for growing organizations. Here’s why —
Here are a few reasons why you should combine agile and OKRs for your organization:
Now that it is clear why working agile and OKRs together makes sense for growing organizations, let’s quickly explore the top ways in which you can apply agile techniques to your OKR framework to make goal setting and performance management suitable for the VUCA world.
In this last section of agile and OKR for better goal setting and performance management, we will uncover the top framework.
We have combined the best components of different frameworks like waterfall goals, delivery agile, scaling, full stack agile, into a single framework with 5 major components that can help you enhance the complementary potential of agile and OKR
This approach can help you leverage the benefits of agile methodologies and OKR framework to impact all aspects of organizational structure for achievement of goals, including the culture, strategy, initiatives, tactics, etc. The framework is premised on:
If you are struggling with combining agile and OKRs for your organizations, chances are you are focusing on activity based key results which often resemble agile steps, leading to confusion and inability to meet goals.
For instance, if you have an event coming up and wish to successfully execute the same, the objective will be common, with specific value based key results for each team.
If you look closely, while the objective is shared, key results are spread across sales, marketing, and even product/ services teams
Your agile and OKR framework should enable you to get the best of both worlds when it comes to results. Agile results by nature are qualitative in nature and focus on the features that you wish to ascertain in a specific period of time. On the other hand, OKRs are driven by metrics. Thus, you can use a combination of the two for effective results:
The combination can help you create an ideal balance between outputs and outcomes which are both critical when it comes to goal achievement and performance management.
Using data and not relying solely on opinions will help you set agile OKRs which don’t under or over estimate the goals. For instance, if the market data on traffic to a new website in your industry is 20,000 clicks in one week, your OKR can focus on reaching 25,000 to make it aspirational but achievable up to 80%.
However, if you set the target at 50,000 or above, it will become too far fetched and the team might not even strive for it. On the flip side, if the target is only at 10,000, it will not encourage your employees to push the boundaries. Thus, you need to replace opinions and command OKRs with data backed experimentation.
Self organizing teams are important for growing organizations as they proactively take onus and ownership of achieving OKRs and lead to a greater degree of success. Step away from controlling detailed plans for each OKR and encourage the leadership to provide direction.
To conclude, if you combine agile and OKR, you have for yourself a clear model for success which you can easily apply to goal setting and performance management. Furthermore, leveraging the right technology resources can help you stay on track and enable you to thrive in the VUCA world.
Like most fast growing organizations, you might also be leveraging the OKR methodology to set, implement and facilitate effective goal setting to maximize growth. If not, you should start using OKRs ASAP.
OKRs not only provide an excellent goal setting framework but also drive high performance when implemented strategically. Most importantly, with enhanced goal visibility and transparency, OKRs ensure that everyone is on the same page which is the foundation of a cohesive and high performing culture.
In this article, we will discuss 8 ways in which you can adopt the OKR methodology to build a thriving company culture.
A high performance and thriving company culture is based on the foundation of clarity and focus. When there are 100 things to focus on, your employees will eventually lose sight of what’s actually important and might feel burdened with non-priority tasks. This will lead to a poor employee experience and limited productivity, both situations that prevent an impactful culture.
However, when you apply the OKR methodology, you will be able to limit your focus on 3-5 top priorities which will attract attention, energy and efforts across the organization. You will then be able to create a high performance culture by dedicating all your resources to the key priorities to realize impact.
A culture that thrives on collaboration, teamwork and alignment is one which creates maximum impact. The OKR methodology can help achieve this in an effective manner. On one hand, everyone is clear about their role in the OKR achievement, which makes collaboration seamless because everyone is on the same page and no one steps on the shoes of others.
On the other hand, OKRs can help your employees align their responsibilities and tasks with the overall vision of the organization, motivating them to contribute to the big picture.
To learn more about how to align teams using OKRs, read this
Recent times have shown that uncertainty and ambiguity will continue to mark the new normal. Thus, a culture of agility, resilience and responsiveness is critical for fast growing organizations. The OKR methodology can help achieve the same.
OKRs are cognizant of the changing environment and have the flexibility to be adapted to the same.
More importantly, you can leverage the OKR methodology to foster a culture that focuses on outcomes and is not fixated on the tasks to achieve the outcome at hand.
One of the top challenges of building a great company culture is a siloed approach and annual reflection. This leads to surfacing of major risks and problems which result in high rates of attrition, absenteeism and lower levels of motivation, productivity, etc.
However, the OKR methodology adopts an approach of continuous engagement and reflection. You can create a regular cadence to check OKR progress for each of your team members, even daily is effective.
This continuous engagement and reflection can enable you to preempt risks before they surface and leverage the power of communication to address them in real-time. Invariably, a culture built on continuous engagement leads to greater impact and high levels of performance as well as employee satisfaction.
The lack of transparency is one of the key obstacles for many fast growing organizations that seek to create a thriving company culture. A way out often seems difficult to navigate. Fortunately, the OKR methodology can help address this challenge as well. When you use OKR, especially with the support of an effective OKR tool, you can facilitate high levels of transparency.
Everyone in the organization will not only know their role, but also will have a complete view of the level of performance for others. Such transparency can help you increase coordination of efforts and give everyone the visibility of what’s happening across the company.
You may agree that most fast growing organizations these days seek to replace a strict hierarchy with a more flat organizational structure that facilitates inclusion of diverse ideas, thoughts and opinions. However, many struggle when it comes to actually implementing this thought.
Adopting OKRs can solve this problem.
By nature, the OKR methodology is based on a collaborative foundation where a top-down approach compliments a bottom-down approach for goal setting.
This suggests that while the skeletal structure of the goals might be laid down by those in the top leadership, you can give all employees the freedom and autonomy to create OKRs for their teams and verticals.
When your employees participate in setting the OKRs they have to execute, the level of ownership is much higher. Thus, you can leverage the OKR methodology to create a thriving culture built on greater ownership and a flat organizational structure.
With a focus on continuous engagement and reflection, the OKR methodology can help you facilitate open communication and feedback. Many studies have shown that a culture that facilitates regular feedback along with open channels of communication is more likely to thrive than one which does not.
In the OKR methodology, when you constantly track your OKR progress (download our free template for tracking OKRs), you will be armed with data backed insights to offer regular feedback for your employees. Furthermore, you can also leverage the same to start meaningful conversations with your team members in case you feel that there is any kind of disconnect. Such open communication can help you create a truly inclusive culture when employees feel their voice is heard.
Finally, a company culture that thrives has two major components supporting it, accountability and recognition.
The OKR methodology is an answer to both these challenges.
Now that you know how the OKR methodology can help you in many ways to create a thriving culture, it is also true that as a fast growing organization with multi-pronged focus, leveraging OKRs is a challenging task. To address the same, you can collaborate with an integrated OKR tool like SuperBeings to automate the OKR adoption and maintenance.
With SuperBeings, you get to —
With performance management becoming a critical part of organizational success, giving effective employee reviews is becoming a crucial part of a manager’s responsibilities. While regular employee performance reviews focus on illustrating the strengths and what worked for employees and the organization at large, there needs to be an equal focus on areas of development in case of poor work performance.
If you look closely, writing negative employee reviews is often considered to be more difficult because the words need to be chosen very carefully. It needs to have a developmental tone rather than a critical one.
As the term suggests, negative employee reviews are reviews delivered to employees who have underperformed and need to be pulled up to the expected levels. It involves a variety of components which include:
To get actionable ideas of how to deal with poor performance issues at work, read this
Writing and delivering negative employee reviews is very important for any organization that seeks to maintain a high level of employee performance. It is critical to ensure that:
When you are writing negative employee performance reviews, you need to be extremely cautious of the words you choose. Using the right words will help the receiver acknowledge and work on the suggested points, while using words that are too harsh or critical can lead to adverse consequences. There are a few reasons which make the choice of words extremely important.
The same review when offered with the right words can be more powerful and have a larger influence.
For instance a statement like ‘you interfere too much in the work of others’ can be seen as a personal attack and may yield a defensive response from the receiver.
However if you frame it in a different manner like ‘if you give others greater autonomy and freedom to work in their own way, you will be able to inspire greater creativity and innovation’, you will be able to put your message across and also help your employees understand how it will make a difference.
Download: Free guided 1:1 meetings template to get personalized meeting recommendations
In addition to being cautious of the words you use, there are a few other tips which you must keep in mind while writing negative performance reviews, including:
While giving negative reviews is difficult, don’t beat around the bush and get straight to the point. However, instead of directly saying what isn’t going well, try adopting the sandwich approach. Start with a positive comment, add areas of improvement and end it with some suggestions and action items.
Example: Tina has an excellent eye for detail and is very dedicated to her work. However, she often misses the deadlines which has led to a delay in 30% of her projects resulting in poor client experience. It would help her performance greatly, if she is able to prioritize her work better and keep an organized calendar for timely delivery. She can consider using the latest project management tools to facilitate better prioritization.
Second, negative employee reviews should focus on the job or the role and not the person specifically. Steer away from using words or phrases which may end up combining performance and personality of the person. Your review should be specific towards performance challenges and not generalize that performance challenge is a personality trait.
Example: Instead of saying, “you are not punctual”, you can say that “I have seen you arrive late for meetings frequently, leaving shorter time for discussions. It would be best if you could be more punctual to respect others' time and make the most effective use of the same.”
When you are writing negative performance reviews, you must focus on the progress and how a change in behavior and attitude can help them in the long run. Simply mentioning what went wrong and the associated process might lead to demotivation.
Example: Some of your work has had grammatical errors in the past, maybe because you were trying to complete a lot at once. I am sure if you prioritize some tasks and create an action plan, your work quality will be better.
Don’t simply give negative employee reviews about the problem area, but back it up with facts and data points. This will help you illustrate a pattern and establish that your review is not based on a single incident. Also, it will make your review more credible and authentic and not just a few words strung together. This will also help you in being very specific.
Example: It has been observed that 40% of your customers claim that you don’t have adequate knowledge of your product, leading to a poor experience.
There might be some performance parameters which are difficult to add quantitative data points to. In such cases, you can offer specific examples of underperformance, especially if it has been repetitive. It is ideal to have at least 2-3 instances of poor performance to make your point stronger.
Example: It has been noticed that in the aspiration to get your work perfect, you end up delaying projects. It was observed in project X with client A, project Y with client B as well as when the internal submission for Z was due.
Pro-tip: Use our free Performance Review Phrases template to get 50+ examples of writing a negative review positively
Once you write the negative employee reviews, you exactly know what you want to say to your employees. However, the way you deliver it also has a big impact on how it is received. To make the process simple, we have compiled a list of some of the best practices to help you deliver a poor performance review in the best way possible:
If you are delivering a negative performance review, it is best to do it in person, or if your team is remote, over a video call. If you deliver it over an email, you cannot be sure of the tone and context in which your words will be read.
It might backfire by being read as more critical than developmental as per the intent. Furthermore, when you are delivering the negative reviews face to face, you can also use your gestures and body language to facilitate authenticity and empathy.
No matter how poor the performance has been, when you are delivering negative employee reviews, you should stay away from yelling or using foul language. Since the focus is on facilitating development for your employee, yelling will only defeat the purpose, making the employee demotivated and pushing them towards even lower levels of confidence and motivation. Furthermore, it will negatively impact your organization from an employer brand perspective. It can also create a negative impact on the wellbeing of your employees.
While delivering the review, you may want to add some personal stories or anecdotes if you have yourself been through something on those lines. This will help you connect better with your employees and make them trust you more. Furthermore, it can enable you to illustrate how they can turn poor performance into something better with a live example in front of them.
Your negative review shouldn’t be a monologue where you deliver what you have written with the employee absorbing it as a passive recipient. Instead, make it a dialogue by putting forward questions to understand the reasons behind poor performance and how you and the organization as a whole can help turn the table. Hearing their side of the story is extremely important before deciding on the next steps.
When you are delivering negative employee reviews, you need to create a safe environment. It should not be harsh and the employee should feel comfortable in receiving what you have to offer. Also, make sure you deliver the review privately and not publicly shame your employee. They should see it as a developmental conversation in a safe environment, where they can also voice their opinions.
Finally, negative employee reviews need to be regular and not come as a surprise to your employees at the end of the year. Regular reviews will give your employees enough room to improve their performance. Furthermore, it will give them a clear picture of what to expect when the year closes.
To learn how SuperBeings can help you have guided conversations around negative performance review with AI recommendations based on performance and goals history as well as maintain a steady cadence to maximize the impact of such conversations, see this
After you have delivered the negative reviews to employees, the natural next step is to create a plan for improvement to help your employees reach the level of performance you expect out of them. This is a critical part of the performance management and talent development process for employees who have been consistently underperforming. Here are a few ways you can help your employees improve their performance.
If you have reached this level of negative employee reviews, you and your employee would be on the same page about their level of performance. Thus, it is best to create a list of action items that can help them improve their performance. To create the next steps, you must:
Next, your focus should not only be on planning the action items, but documenting them as well, because once they are out of sight, they’ll be out of mind. Furthermore, documenting them will help you remember the agreed steps and track progress every now and then.
Clearly document what needs to be achieved, by when and how. It can be a good idea to encourage your team members to constantly document their experience as well to help discuss what has been working well and what needs to improve.
Depending on the performance issue, you may want to introduce a performance improvement plan for your employee. It is a formal tool to address performance challenges which outlines specific goals and expectations along with clear actions that need to be undertaken over a duration of 30-90 days.
For more details on PIP, check out A guide to implementing a performance improvement plan (PIP)
You also must set up a cadence to discuss performance improvements or challenges once the next steps are agreed upon. Unless you connect regularly to discuss the status, you might find yourself at square one at the end of the next performance review period as well.
Depending on what needs to be achieved, you can set a weekly, fortnightly or monthly cadence to connect with your poor performers. While it may be seen as a regular review, it will also act as a reinforcer for them to ensure there is some improvement everytime the cadence to meet comes up.
When you are determining the next steps, it is important to identify the associated metrics as well. For instance, if you want your employee to become more detail oriented, your metric can focus on reduction in errors by a specific percentage over a specific duration of time.
The metrics will help you measure whether or not there has been an improvement in the performance as desired or not. At the same time, the metrics will help your employee move towards a specific goal.
While you have a set cadence, you may also want to check-in or follow up from time to time to make your employee comfortable enough to reach out to you in between your cadence for connecting. The follow ups can be over emails or calls or simple messages to check if everything is on track and to offer them any support whichever is needed. Especially in the beginning, you may need to check from time to time in case there’s any additional support that the employee needs to work on the action items.
Finally, to ensure that your negative employee reviews translate to impact, you must focus on evaluating progress. Use the metrics you defined to gauge the level of progress and document it whenever you evaluate the same. This will help you establish a trend over time.
Furthermore, if you feel the progress is below expectations, try to understand the rationale behind the same to check if putting the employee on a performance improvement plan will make more sense.
By now, you must have gained a clear understanding of how to write, deliver and follow up on negative employee performance reviews constructively. If you are keen to learn how best to connect negative performance issues with regular 1:1 meetings with your team members with technology, book a quick demo with one of our executives. We would love to show you around :)