Here are my notes on performance management insights from Google, from Laszlo Bock’s Work Rules, former HR Manager at Google.
Lisa, a kid from the Simpsons Episode: Look at me! Evaluate and rank me! I’m good, good, good, and oh so smart! Grade me!
There’s a little bit of Lisa Simpson in all of us. As children we line up from shortest to tallest. We’re graded and told we are outstanding, satisfactory, or need improvement. As we get older we are ranked in our classes and take tests that compare us to national averages. We apply to university, mindful of how each school is ranked. Our first 20 years are spent being compared to others.
It’s no wonder, then, that as adults we re-create those same conditions when we design our work environments. It’s what we know! And Google has been no different.
The major problem with performance management systems today is that they have become substitutes for the vital act of actually managing people. Although formal performance management systems are intended to drive … the day-to-day activities of communicating ongoing expectations, setting short-term objectives, and giving continual guidance … these behaviors seem to have become largely disconnected from the formal systems.
In other words: Performance management as practiced by most organisations has become a rule-based, bureaucratic process, existing as an end in itself rather than actually shaping performance. Employees hate it. Managers hate it. Even HR departments hate it.
The focus on process rather than purpose creates an insidious opportunity for sly employees to manipulate the system. A degree of gaming goes into the system.
Companies like Adobe abandoned performance ratings. In place of the traditional performance review, Adobe introduced “The Check-in,” an informal system of ongoing, real-time feedback — in summer of 2012.
Intuitively, this sounds appealing. Employees are unhappy, so throw out the system they don’t like. Simple. And isn’t receiving feedback in real time better than waiting for a year? But there’s no evidence that the systems people use to do this work either. Most real-time feedback systems quickly turn into “attaboy” systems, as people only like telling each other nice things. And how often are your comments structured in a way that actually cause behavior to change? It’s far, far easier and more common to stick with vague pleasantries.
Insights from Google on Better Performance Management
As the author admits, Performance Management System is always a WIP. In the book, he outlines four key practices in place at Google. He believes Google is in the right direction with these in place.
We need people to know how they’re doing, and we’ve evolved what might at first seem like a zanily complex system that shows them where they stand. Along the way, we learned some startling stuff. We’re still working on it, but I feel pretty confident we’re headed in the right direction.
FIRST: SETTING GOALS
Set goals correctly. Make them public. Make them ambitious.
We deliberately set ambitious goals that we know we won’t be able to achieve in all cases. If you’re achieving all your goals, you’re not setting them aggressively enough. If you set a crazy, ambitious goal and miss it, you’ll still achieve something remarkable.
We use OKRs, or Objectives and Key Results. The results must be specific, measurable, and verifiable. If you achieved all your results, you’ve attained your objective. At the beginning of each Q, Larry sets OKR’s for the company, triggering everyone else to make sure their own personal OKRs roughly sync with Google. We don’t however let the perfect be the enemy of good. In addition, everyone’s OKRs are visible to everyone else in the company on our internal website, right next to their phone number and office location. It’s important that there’s a way to find out what other people and teams are doing, and motivating to see how you fit into the broader picture of what Google is trying to achieve. FInally, Larry’s OKRs, followed by his quarterly report on how the company has performed, set the standard for transparency in communication and an appropriately high bar for our goals.
Having goals improve performance. Spending hours cascading goals up and down the company, however, does not. We have a market-driven approach, where over time our goals all converge, because the top OKRs are known and everyone else’s OKRs are visible.
SECOND: WISDOM OF CROWDS
Gather peer feedback. There are a range of online tools. People don’t like being labeled, unless they are labeled as extraordinary. But they love useful information that helps them do their jobs better. It’s this latter piece that most companies miss. Every company has some kind of evaluation system that is then used to disburse rewards. Few have equally disciplined mechanisms for development.
It also helps to make the peer feedback templates more specific. Prior to that, we’d had the same format for many years: List three to five things the person does well; and three to five things they can do better. Now, we asked for one single thing the person should do more of, and one thing they could do differently to have more impact. We reasoned that if people has just one thing to focus on, they’d be more likely to achieve genuine change than if they divided their efforts. Peers should receive some information too: the individuals who are receiving the feedback should write (in no more than 500 words) about the specific projects, their roles, and what they accomplished. Peer reviewers are also expected to rate how well they knew the specific projects mentioned.
THIRD: CALIBRATION
For evaluation, adopt some kind of calibration process. We prefer meetings where managers sit together and review people as a group. It takes more time, but it gives you a reliable, just process for assessment and decision making. As side effect is that it’s good for the culture for people to sit together, reconnect, and affirm what we value.
It’s fair to say that without calibration, our rating process would be far less fair, trusted, and effective. A manager’s assessments (draft ratings) are compared to those of managers leading similar teams, and they review their employees collectively. It ensures that the end results reflect a shared expectation of performance, since managers often have different expectations for their people and interpret performance standards in their own idiosyncratic manner — just like in a school, where some teachers were easy graders and others were tough. Calibration diminishes bias by forcing managers to justify their decisions to one another.
Even if you are a small company, you’ll have better results, and happier employees, if assessments are based on a group discussion rather than the whims of a single manager.
Even when calibrating, however, managers in group settings can make bad decisions. For example, recency bias is when you overweight a recent experience because it’s fresh in your memory. We addressed this by starting most calibration meetings with a single handout, describing the most common errors assessors make and how to fix them.
This WIKI Article has a whole list of cognitive biases!
https://en.wikipedia.org/wiki/List_of_cognitive_biases
FOURTH: AVOID DEFENSIVENESS AND PROMOTE LEARNING
A fair process for rating gets you only so far. As a manager, you want to tell people not only how they did, but also how to do better in future. The question is: What is the most effective way to deliver those two messages? The answer: do it in two distinct conversations. Split reward conversations from development conversations. Combining the two kills learning. This holds true for companies of any size.
Intrinsic motivation is the key to growth, but conventional performance systems destroy that motivation. But introduce extrinsic motivations, such as a promise of promotion or a raise, and the willingness and ability of the apprentice to learn starts to shut down.
Intrinsic motivation drives not just higher performance, but also better personal outcomes in terns of greater vitality, self-esteem, and well-being. Workplaces that permit employees more freedom tap into that natural intrinsic motivation, which in turn helps employees feel even more autonomous and capable.
A similar dynamic exists when managers sit down to give employees their annual review and salary increase. The employees focus on the extrinsic rewards — a raise, a higher rating — and learning shuts down.
Traditional performance management systems make a big mistake. They combine two things that should be completely separate: performance evaluation and people development. Evaluation is necessary to distribute finite resources, like salary increases or bonus dollars. Development is just as necessary so people grow and improve. If you want people to grow, don’t have those two conversations at the same time. Make development a constant back-and-forth between you and your team members, rather than a year-end surprise.
Your team has tails
Anything you can measure follows some kind of distribution from low to high, small to big, near to far.
Most companies manage people using a normal distribution, with most people labeled as average and two tails of weak and strong performers pushed out to the sides. The tails aren’t as symmetrical as when you look at height, because failing employees get fired and the worst don’t even make it in the door, so the left tail is cut short. That’s an error. Equally, most organizations undervalue and under-reward their best people, without even knowing they are doing it.
Most companies get rid of the “bottom tail” performers, who live in purgatory failure and fear they could be fired at any moment. For the “top tail,” life couldn’t be better, with ready promotions, bonuses, and the adulation of their peers and management.
Help those in need
What most organizations miss is that people in the bottom tail represent the biggest opportunity to improve performance in your company, and the top tail will teach you exactly how to realize that opportunity.
At Google, we regularly identity the bottom-performing 5 percent or so of our employees. We’re not looking to fire people. We’re finding the people who need help. It would however be madness to force the manager of a team of all superstars to rank someone as failing. So this is a human process, not an algorithmic one.
Rather than following the traditional path of making “poor performance” the kiss of death, we decided to take a different approach: Our goal is to tell every person in the bottom 5 percent that they are in the group. “I know that doesn’t feel good. The reason I’m telling you this is that I want to help you grow and get better.”
In other words, this isn’t a “shape-up or ship-out” conversation; it’s a sensitive talk about how to help someone develop. A colleague once described it as “compassionate pragmatism.” Poor performance is rarely because the person is incompetent or a bad person. It’s typically a result of a gap in skill (which is either fixable or not) or will (where the person is not motivated to do the work). In fact, the way we de-emphasize role-related knowledge in hiring leaves us a bit vulnerable to this issue, because we like to hire people who may not know how to do a job.
We offer a range of training and coaching to help them build their capabilities. Our interventions here are for the small handful of people who struggle most, rather than for everyone. If that doesn’t work, we then help the person find another role in Google. Typically, this results in the person’s performance improving to average levels. For the remaining people, some choose to leave and others we need to fire. It sounds harsh, but they tend to end up happier because we’ve shown sensitivity to their situation and invested in them along the way, and we give them time to find an organization where they can excel.
This cycle of investing in the bottom tail of the distribution means your teams improve .. a lot. People either improve dramatically or they leave and succeed elsewhere.
I can’t underscore enough that our identifying the bottom 5 percent is not the same as “stack raning” employees, a method of forcing all employees to fall into performance categories with a fixed distribution. That approach can poison a culture as employees turn on one another in a fierce struggle to avoid being at the bottom.
If you believe people are fundamentally good and worthy of trust, you must be honest and transparent with them. That includes telling them when they are lagging behind in their performance. But having a mission-driven, purposeful workplace also requires that you approach people with sensitivity. Most people who are performing poorly know it and want to get better. It’s important to give them that chance.
Put your best people under a microscope
At the same time, the top tail, the very best performers, experience a company differently than average or mediocre performers do. Our data show us that they find it easier to get things done, feel more valued, feel that their work is more meaningful, and leave the company at one-fifth the rate that our lowest performers do. Why? Because top performers live in virtuous cycle of great output, great feedback, more great output, and more great feedback. They get so much love on a daily basis that the extra programs you might offer can’t actually make them much happier.
More important is to learn from your best performers. Every company has the seeds of its future success in its best people, yet most fail to study them closely. This is a missed opportunity, as, high performance is highly context dependent. Benchmarking and best practices will tell you what worked elsewhere, but not what will work for you.
In contrast, understanding precisely what makes your best people succeed in your unique environment is important. If success depends on specific, local conditions, then you are best served by studying the interplay of high performance and those local conditions.
As you might expect, we study our best people very closely at Google. We have People and Innovation Lab (PiLab), an internal research team and think tank with the mandate to advance the science of how people experience work. Their initial research agenda gives a sense of what you can learn by studying your best people:
- Project Oxygen initially set out to prove that managers don’t matter and ended up demonstrating that good managers were crucial
- Project Gifted Youngsters was targeted at explaining what people who sustain the highest performance for long periods of time do differently from everyone else.
- The Honeydew Enterprise strove to understand the behaviors and practices that most foster and inhibit innovation among software engineers
- Project Milgram explored the most effective ways to mine social networks for knowledge within Google
Managing your two tails
Project Oxygen is an exceptional illustration of what can be learned and accomplished by focusing on the two tails of performance. Looking at average managers didn’t help, nor did benchmarking. Comparing the extremes allowed us to see meaningful differences in behavior and outcomes, which then formed a basis for unceasing improvements in how people experienced Google.
Second, it illustrates the notion of compassionate pragmatism. Letting those who are at the bottom of the performance distribution know it, without tying that directly to pay or career outcomes, altered and motivated them in as positive way as possible.
Third, and finally, any team can replicate this. I chose to invest precious resources in building the PiLab, at the expense of funding more traditional areas of HR such as training. But there’s a shortcut: Care about upgrading your organization. Everyone says they do, but few really take action. As a team leader, a manager, or an executive, you have to be willing to act personally on the results you see, changing your own behavior if needed, and to be consistent over time in staying focused on these issues.
Addressing the two tails is where you’ll see the biggest performance improvements.
Studying your strongest people closely and then building programs to measure and reinforce their best attributes for the entire company changes the character of your company. If you also are able to get those who struggle the most to be substantially better, you’ll have created a cycle of constant improvement.
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