Designing Better Performance Management Systems

Continuous feedback + check-ins against clearly articulated expectations

Note: I wrote this as my hiring challenge for Quill, though I’ve updated a few things to reflect how this process has evolved. One thing I learned after joining is that most people want some form of formal evaluation, provided it meets the principles laid out below. This makes sense — another thing I learned when re-reading Thanks for the Feedback is that while most feedback should be coaching, people also need evaluation to know where they stand. To do this, we are implementing career ladders so that people have a better sense of what’s expected in their roles and what skills are needed for future roles.

Here are my essentials for a successful performance management system. You can use this as a guide in thinking about performance management at your company.

Continuous Performance Management: The Basics

I believe these fundamentals are critical to any performance management system:

1. Fairness
2. Bias to coaching
3. Give guidance regularly
4. Everyone should feel comfortable requesting feedback at any time
5. Treat people as adults
6. Don’t waste time
7. Expect iteration

Fairness & Goal Setting

The system we use should be fair; everyone should know what to expect, what their goals are, and how to achieve them. We can achieve fairness via clearly defining our system, clearly identifying and tracking goals, and periodically revisiting our system to make sure there is no favoritism or bias.

At the company level, I like Betterment’s approach of setting one or two high-level company objectives, defining KPIs that measure business health, and allowing teams to set their own goals that map to the high-level metrics. (Note: Right now we’re experimenting with company-level OKRs.)

For specifics, team feedback will be especially important, since there are multiple viable frameworks we could use to set goals (e.g. OKRs and SMART goals). While OKRs are valuable for setting goals, though, it’s important to remember that they shouldn’t be used as the basis for a review. This is because the OKR framework encourages setting goals that you know you may not reach, and if OKRs are the basis for reviews, then people can be incentivized to instead set the easiest goals and focus on gaming metrics.

So, for reviews, I plan to look at 1) what team members achieved, regardless of whether or not the achievement was in their OKRs 2) what people learned over the past 2 quarters 3) how people are performing relative to our ladders (which are in progress now) and 4) how people are embodying our values.

Cultivating a Coaching Mindset.

To achieve 2–4, an organization needs a culture of coaching.

For coaching to be successful, it needs to be delivered regularly. Just like students are most likely to learn from immediate feedback on their writing, employees are most likely to learn from immediate, actionable feedback. This feedback should be constructive, and should not include any evaluation.

Radical candor is a framework for creating “a culture of healthy feedback.” Kim Scott discusses this in her book, Radical Candor, and two First Round Review articles describe her approach: The Surprising Secret to Being a Good Boss and On Receiving (And Truly Hearing) Radical Candor. At the center of radical candor is the idea of giving guidance regularly, and regularly asking for feedback from others (especially your direct reports). For this guidance to be impactful, managers need to “care personally” and “challenge directly,” i.e.create a safe space for delivering honest guidance by develop trusting relationships with their reports.

To create forums for delivering this feedback, I recommend implementing weekly (or bi-weekly) 1:1s with managers, quarterly (or more) skip-level 1:1s, and a vehicle for giving/requesting feedback to/from anyone, at any time. Currently I’m doing mostly bi-weekly one-on-ones, but this is largely a function of how much time I have, and the trust I hopefully built when doing weekly one-on-ones. We also did career conversations, which I found enormously helpful and which I’ll write about in a future post.

1:1s

For 1:1s to be successful, managers should structure the meetings to provide feedback and draw out their reports, encouraging them to speak openly about their challenges. In The Coaching Habit, Michael Bungay Stanier sets out seven key questions to ask employees in 1:1s. This framework can help build the trust Scott describes by making the one on one about the substantive issues on the person’s mind, instead of a weekly check-in on project status. This type of 1:1 builds trust as it demonstrates that the manager cares personally about her team.

Other Feedback

Regular 1–1s are just one area for giving/receiving guidance. Skip-level 1–1s (e.g. meeting with your managers manager) are also valuable, as are avenues that allow for peer feedback. One way to do this is through software such as Clear Review or Small Improvements. Another is to focus on sharing mistakes so that everyone can learn from each other and feel comfortable giving feedback in team meetings. One of my favorite anecdotes from On Receiving (And Truly Hearing) Radical Candor, involves a game called “Whoops the Monkey,” where people are rewarded for sharing their mistakes and learnings. We’ve now implementing this via our “Fail Whale.”

One thing I initially left out in writing this is positive feedback. As I wrote about last week, giving thanks and appreciation is something that’s easy to forget but so important to do. So we also do “Props” at our weekly team meeting.

Structured Feedback: Quarterly Check-ins

Initially, I recommended quarterly check-ins to assess performance. Now, we’re trying two types of check-ins. For Q1 and Q3, we’re doing “practice” reviews, where we have an informal performance conversation. This gives the person a quarter to account for any surprises and incorporate feedback in the next quarter (note to my team: I don’t think there will be any surprises). Then in the summer and winter we’ll do “formal” reviews using the criteria described above — assuming we get these ladders in place. Quill currently awards bonuses based on whether teams meet their goals, and I like this approach (studies show that individual bonuses can create unhealthy competition and end up discouraging people, e.g. this Harvard Business Review article).

I was initially biased toward informal check-ins. After speaking to the team, I learned that people do value formal feedback and because they want their “progress and growth documented” (e.g. Quizlet), so we will iterate on different systems to find the most efficient way of providing this feedback, e.g. the AltSchool approach. The quarterly check-in meeting could also take many other forms, such as an informal 360 evaluation, or a structured Career Conversation. Here I value treating people like adults, e.g. the Netflix approach and not wasting time.

To summarize, give people regular feedback and combine that with check-ins against clearly articulated goals. The most important thing is that when you do formal reviews, they shouldn’t contain any surprises.

If you end up trying any of these practices, I’d love to hear from you (you can comment or email me at tltcoaches@gmail.com). And if you’re interested in coaching, you can find me at The Leadership Team.