A brief history of corporate performance management

Since the first industrial Revolution, mankind has experienced the age of steam, the age of electricity, the age of information, and the coming of the age of intelligence. In the age of steam and electricity, the core resources to promote economic and social development are non-renewable material energy and capital. In the information age, knowledge and information have become the core strategic resources of enterprises, and employees must have higher knowledge and skills to better complete all kinds of information processing work such as software and hardware research and development. After entering the age of intelligence, creativity has gradually become a necessary condition for efficient organization, and low-technology enterprises are gradually being replaced by high-creativity enterprises.

Refer to kuang Yang from Performance Enablement

Corresponding to these four eras, the performance management of enterprises also corresponds to four processes:

• In the steam era, management focused on attendance. Workers had to show up on time and were paid for the number of days they showed up.
• In the electrical age, Taylor, the father of scientific management, was born. He carefully analyzed the efficiency optimization of workers in each work step in the factory to improve the efficiency of the whole work, and each work can set clear high, medium and low performance standards according to the results. Scientific management opened the performance assessment in the industrial age.
• In the information age, job complexity and integration more and more high, based on the results of the performance evaluation of a large number of knowledge workers increasingly ineffective, and no one is willing to have been cited as a screw, drucker was proposed in 1954 by target oriented management style (MBO), advocated by the target transfer the personal sense of responsibility to improve organizational performance.
• When the age of intelligence is fully arrived, science has reached the twilight zone, and even the results are nowhere to be found, performance management begins to pay more attention to coaching and developing employees, helping employees to give full play to their creativity, rather than evaluating, judging and driving employees.

A brief review of the past and future of performance management is to help readers understand that performance management is continuously evolving with production mode. What kind of performance management is more suitable for knowledge workers? Let’s take a concrete look at how OKR, KPI, and CFR can complement each other to help companies shape more agile, dynamic, and creative teams.

Performance navigator: OKR

Many managers should be deeply aware of the disadvantages brought by the traditional performance indicator assessment method (single performance indicator assessment). For enterprises, a lot of work is difficult to quantify, in order to statistics performance, need to spend a lot of energy and time. Moreover, the performance management cycle often lags behind the business cycle because the business changes rapidly and performance indicators are seldom refreshed synchronously; For individuals, when business results are strongly linked to monetary rewards, work becomes a game of fearful survival, and problems such as difficulty in collaboration, shifting the pot to dig holes, stagnation of innovation, the pursuit of short-term profits, and falsification of performance data begin to emerge.

Therefore, if we only rely on external stimulation, not only the management cost will be higher and higher, but also the employees will fall into the black hole of catering to the assessment indicators, and the pride and identity of the employees will be lower and lower. Finally, both the employer and the employees will be dissatisfied. How to mobilize the internal spiritual motivation of employees, achieve a balance between internal and external motivation, to provide employees with continuous work motivation?

How to improve employee autonomy

In the Practice of Management, Drucker describes several ways to motivate employees to produce optimal performance, including:

• Managers need to give their employees the information they need to control themselves. An employee must be able to control, measure and direct his or her own performance. He or she should know how he or she is performing and not have to wait for someone else to tell him or her. The enterprise must also try to hold the employee responsible for the consequences. He should know how his work is related to the overall development of the enterprise, and he should know how he contributes to the enterprise and, through the enterprise, to society.

• Employees are motivated to be highly responsible only when they have a manager’s vision. If an employee can view an enterprise from the perspective of a manager and believe that his performance will affect the rise and fall of the enterprise, then he will assume the responsibility to achieve the highest performance.

The management principle of giving full play to individual ability and responsibility, while establishing a common vision and direction of effort, building the spirit of teamwork, harmony between individuals and common goals — this is the origin of THE IDEA of OKR.

This is OKR

OKR was officially born at Intel and has since been widely used by Google, Oracle, linkedin, Adobe and others. O stands for Objective and KR stands for Key Results. A goal is what you want to do (say, launch a mobile game), and setting a goal helps you think about the value and significance of what you do, and then how you measure what you don’t do, which is the key outcome (say, 50,000 downloads a day).

OKR decouples achievement of goals from performance evaluation. In OKR mode, target completion is only used as an improvement direction, and performance evaluation does not need to look at the completion rate of the original target, but only focuses on the final performance contribution. Maybe an employee sets a particularly challenging OKR, for example, doubling the number of paying users by 2021, when in fact it only increased by 60%, and the target completion rate was only 60%, but the 60% was a significant breakthrough, and the employee’s final performance rating could still be excellent.

Transparent and open OKR provides employees with the information and vision they need to manage themselves. In OKR mode, both the organization level and the individual level OKR are fully exposed. When an employee can always see where the lighthouse is, they will know if they are drifting. OKR “screens” corporate strategy into employees’ daily work, not just at annual staff meetings, and when you have a context for your goals, spontaneous collaboration is more likely to happen.

OKR makes enterprise objective management more agile and flexible. The OKR tempo is set to match the business tempo and can be quarterly, semi-annual, or annual. OKR is not static after it is set. In the process of target implementation, it also needs to adjust quickly with the development of business. Adaptability and adaptability are also emphasized by OKR. This means that the team needs to check the OKR every now and then, rather than opening a self-filled performance form at the beginning and end of the review cycle.

Involving employees in the goal setting process can inspire motivation and creativity among front-line employees. In a fuzzy and volatile environment, where supervisors may not be able to see specific business problems more clearly than subordinates, giving front-line personnel some space to set goals autonomously may bring surprises. And when employees’ self-set goals are made public internally, the job adds a level of commitment, and employees can clearly see their contribution to the team’s goals, gradually shifting from “ask me to do” to “I will do it.”

Transparency, agile openness, bottom-up, and decoupling of goals and metrics are four characteristics of OKR. Gradually to the “people-oriented” approach to the concept of performance management, to help us break the past scientific management in the industrial era to enterprise performance management set up the ideological “cage”. OKR is like a navigation device on the road, keeping track of whether we’re on the right path and making course corrections when needed.

Performance dashboard: KPIs

After solving the problem of business navigation in the process of performance management, we also need to know whether the business operation is normal.

Overused KPIs

KPI (KeyPerformance Indicators) refers to the KeyPerformance indicator, which is a target-oriented quantitative management indicator to measure the process performance by sampling and analyzing the key parameters of the internal process of an organization. The theoretical basis of KPI is Pareto’s Principle, an economic principle proposed by The Italian economist Pareto: only about 20% of variables control 80% of the situation. That is, in the process of value creation of an enterprise, 80% of the work tasks of each department and each employee are completed by 20% of the key behaviors.

With the further development of management by objectives and balanced scorecard, the industry has formed the KPI system known to us today. The original intention of KPI is to motivate employees to achieve their goals through objective quantitative data and incentive system. However, as KPI becomes more and more difficult to cope with the complex and changeable external environment, more and more enterprises give up the single KPI indicator performance management.

In the traditional performance management process, THE abuse of KPI is also easy to occur. Common mistakes include:

• Confusing goals and metrics

When communicating performance requirements, superiors and subordinates often directly regard indicators as targets, lacking the information of original targets, and simple indicators are difficult to be understood. For example, if the original goal was to build a building, the KPI might be digging a hole in 10 days.

• Judge a hero only by his success or failure

Because KPI takes results as the performance appraisal target, if the “results” are only reviewed in the appraisal and the process of achieving the goal is ignored, the supervisor may not be able to see why the employees succeed or fail.

• Single KPI dimension

For example, when developing KPI, only focus on the performance dimension. Take technical research and development as an example, they usually only pay attention to the KPI of online time, and seldom pay attention to quality dimensions such as the stability of online system and users’ functional complaints and feedback.

• Only the theory of data

They put data first, lose the judgment of values, and even meet unrealistic indicators at the cost of enterprise credit and sustainability, which is harmful to the development of enterprises.

There are different opinions about KPI in the industry, including two sides. One side denies KPI completely and thinks THAT KPI is completely unsuitable for performance management in the Internet industry. On the other hand, it is believed that KPI is wrongly used and that the management personnel of the organization neglect the understanding and communication of “people” to the target. But back to the origin of performance management, when business objectives are properly decomposed and quantified, KPI as a key indicator in the business can help the organization master the progress of the target.

How do OKR and KPI go together

Introducing the differences between the two does not mean that we have to choose between them. OKR and KPI provide a different perspective of enterprise performance management. In OKR mode, you can think of kpIs as KRS in OKR. If the OKR is your GPS, the KPIs are the dials on the dashboard of your car — they tell you if everything else is okay. Kpis help you track the overall health of your business, and as long as they stay within predefined thresholds, you don’t have to take additional action to move in a given direction.

You can also choose the right performance management style for each business. For example, if you want to slightly expand or improve a previously completed plan or project, and the results of your work are clear, a KPI may be a better choice. They are straightforward and you can add measurement systems to ongoing projects and processes. But if you have a bigger vision, or want to make a breakthrough, or if the target attributes are hard to quantify, OKR might be a better choice. They are more malleable and allow you to expand your goals further, making your team’s execution more creative, exploratory, and agile.

Performance gas station: CFR

The above has been emphasizing the understanding and communication of the target of the performance management process. Then what kind of performance coaching method is suitable for the current changing environment?

Continuous performance management

CFR is an implementation tool of Continuous Performance Management (CPM), which represents dialogue, feedback and recognition.

Traditional annual performance management focuses on how to objectively evaluate the past performance, but ignores the guidance and improvement of future work, which brings many problems to performance management:

• The feedback cycle is too long. Having a performance review once or twice a year is slow and laborious, and you may not know about your mistakes until the end of the year.
• Incredibly time consuming. Squeezing a year’s worth of evaluation and feedback into one or two interactions can be a nightmare for both managers and employees.
• Annual assessments are not helpful for personal development. If you want to help your employees improve their performance, you need to invest more time and energy.
• Increased stress and anxiety for everyone. Not only does this create a backlog of work, it makes employees feel like they only have one or two conversations a year with their supervisor.

Continuous performance management focuses on improving the quality of work through frequent feedback. It encourages direct, two-way communication between superiors and subordinates. Regular, one-on-one conversations minimize bad decisions by department employees. Frequent reviews by team leaders also improve transparency and efficiency throughout the organization.

Mutually reinforcing OKR and CFR

CFR is the “irritant” of effective communication, which motivates OKR and puts it on the right track. If the conversation is only about whether you achieved your goals and did you get the job done, it loses its value. We need to propose communication topics from the perspective of continuous performance management, such as: Is this target more difficult to achieve than you originally thought, what do you need me to help, what is your idea about career planning, etc., so that CFR can help OKR to continue to implement.

Agile performance = OKR + CFR + KPI

In the era of VUCA, in the face of frequent changes in the external environment, the cultivation of internal skills became particularly important. The management style of the big industrial era has been unable to cope with areas such as software development, creativity, games, and venture capital. This requires enterprises to improve agility in strategic management, performance management, and r&d and production management. The comprehensive use of OKR, KPI and CFR can help technology enterprises to stimulate the potential of talents and combat effectiveness of organizations.

In addition to people, tools and processes, organizational culture is also crucial. R&d teams in China are working towards a flexible, agile, classless working environment. In this process, we need to start from the first principles, combined with our own business rhythm and organizational culture characteristics to choose the right tool, because management is a practice.

reference

1. The Chinese Edition by Peter Drucker
2. John Doerr, This Is OKR (Chinese Edition)
3. Kuang Yang performance Enablement
4. Daniel Pinker, Drive (Chinese Edition)
5. medium.com/@meetfelipe…
6. zhuanlan.zhihu.com/p/131293343