I recently had an exchange with Jurgen Appelo on Twitter about measuring people’s performance. During the conversation, he said it was impossible to fit the dozen or so recommendations he had into a single tweet.
It all just sounded too complex (complicated? ) to me and why bother with measuring individual performance when there are more useful ways to improve outcomes? So this blog post is to present my own perspective.
You can follow Jurgen’s original tweet and the conversation here.
Jurgen said ‘Before you “measure” someone else’s performance, explain how you measure your own’. It rings true enough – many managers are quick to judge and measure their staff without any sensible way of measuring their own performance.
But why are we measuring individual performance in the first place? There’s a deeper question here.
It might sound obvious and taken-for-granted but this is worth examining.
In a world where the performance of organisations is believed to be principally down to the performance of their individuals, then measuring their performance makes a lot of sense. The theory is that if only the people perform well then so will the organisation.
This is a world of performance appraisals, coaching and personal incentives (money, benefits) tied solely to individual achievements.
But do most of us live in such a world?
For the vast majority of people working in organisations they are constrained by the systems in those organisations. Rules, processes, hierarchies, rituals, structures – all of these things conspire to limit the difference that an individual can make. This makes perfect sense since most people do not deliver a product or service on their own; they are part of a bigger structure.
Deming said that only 5% of the performance of an organisation (system) is down to individuals, 95% to the system. Whatever the figures in an individual case, it is a powerful argument to look at outcomes, not individuals. More recently, John Seddon and others have been raising awareness of the same issue decades after Deming.
The purpose of most organisations is to deliver an end-to-end product or service to customers. That’s what we need to focus on: performance measures that align to end-to-end delivery.
Focusing on individual performance forces team members to compete within each team. This is destructive competition, since it pits people against each other – when in fact they need to collaborate together to deliver an end-to-end service.
It encourages hoarding information and protecting personal advantage. It also is time-consuming and expensive: creating an industry of performance tracking and assessment for every staff member.
In a similar vein, when an organisation is structured into functionally-seperated units or departments, competition between departments pits groups against each other – when in fact they need to collaborate together to deliver an end-to-end service.
It encourages delays and waste due to each group making their own work “the most important thing”.
Both approaches undermine an organisation’s true purpose. They may be well-intentioned but they undermine it nonetheless.
True constructive competition within businesses should be between independent units who deliver an independent slice of end-to-end demand (i.e. different services or products).
Then open competition (visibility and sharing of all information) is constructive: teams borrow the best from each other and compete to make their service delivery the best it can be – but never at the expense of other groups. They share the same end-to-end measures of outcomes.
Instead of focusing on individual performance, define a simple set of end-to-end outcome measures for each product or service, based around these three simple measures:
If you focus on incrementally reducing Cycle Time, then you drive waste and delay out of your organisation; simultaneously cutting costs and improving service.
If you focus on incrementally reducing Lead Time, then you create flexibility and ability to respond rapidly to changing needs. That enables taking advantage of opportunities that are impossible with a huge tanker of projects that takes months to change direction. It also avoids huge missed-opportunity and delay costs.
If you focus on incrementally improving Right-First-Time, then you drive both improved quality with lower costs (re-work is always expensive for both products and services).
You can always bring in outcome measures alongside individual ones.
As you learn what the outcome measures do for performance you can then retire the others. Implementation first starts with making the end-to-end work visible, which you can do using an approach like Kanban.
These are all group goals: they act to bring people together to cooperatively and collaboratively drive improvements. This is far more effective than isolated hero efforts.
Apply these measures to the groups responsible for operating and delivering each service or product (assuming of course that you’ve already organised your people into cross-functional teams).
Of course this isn’t exhaustive – you may well need other measures. But fewer is better because good measures are hard to define and bad measures drive bad behaviour.
Avoid any use of targets because they act to limit ambition. If the goal is to improve service quality by 5% then no-one will look for or seriously push major improvements that might improve it 50%. Remember that the goal isn’t targets, it’s the fastest route to improved outcomes.
At this point some people are apoplectic about the lack of individual performance measures.
“Surely if you don’t have those, some people won’t work hard or put the effort in?”
With a properly collaborative environment where the only outcomes that matter are end-to-end ones then there is nowhere to hide – so there’s more incentive for them to shape up. Everyone can see if someone isn’t performing. It’s obvious. You don’t need a manager’s performance appraisal to know it.
When people aren’t performing, then it’s a manager’s job to find out why and help them.
If you don’t have a properly collaborative environment then (again) create one quickly; without it you’ll struggle to get anywhere.
“But what about promotions?”
In a similar vein, people who make a bigger contribution than average will stand-out.
So promote them. It’s as simple as that.
“What if I need to get rid of someone?”
Then do it.
Individual performance justifications are always excuses in such cases. You don’t need the huge bureaucracy of individual performance management to change your team. There’s always a way.
My challenge to Jurgen was to condense his answer to “How do you measure your own performance?” into a single Tweet, so it is only fair that I do that here:
You don’t. Measure e2e outcome per service/prod, not individuals. How fast (cycle time), how long (lead time) & how well (right-first-time).
Good luck defining sensible performance measures in your organisation.
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