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Open Source Startup: Performance Management Framework (OKR's)

Welcome to Chapter 2 of Open Source Startup: Performance Management Framework (OKR's). For a table of contents, head over to the Introduction here

Once you start building a team, the single most important thing to do is get them aligned with the vision and get them moving in the same direction (as fast as possible). Do not underestimate how difficult this is. You may think everyone is in the same boat simply because they arrive at the same office. More often than not, everyone is rowing in a different direction and the cox (you, the person in charge of the boat) keeps changing the orders.


You can read for months on how to set up a performance management framework (we prefer to call it Goals, far less authoritarian) - and by no means do I think ours is the best. I've just always liked to go for something that is simple, something that can be created and moulded together with your employees and something that errs on the side of transparency.

There is a movement towards competency-based performance reviews - which is largely fancy talk for actually engaging with your employees around performance. Figure out WHY a goal was hit or missed. Include skills and personal development goals in expected outcomes. Don't be scared to remove goals that are irrelevant, especially when the goal posts change. Be fair. That's how you grow people.

The real buzzword at the moment is OKR's. Objectives and Key Results. And partly by luck, partly by research and iteration, the framework we built at forgood fits perfectly into an OKR-based approach. Here's a great intro post on OKR's by Niket Desai.


Notes and things to think through:

Have a strategy. You can't expect everyone to move in the same direction if you can't codify the direction. The simplest way to do this is to come up with 3 or 4 strategic drivers that best describe what you're trying to achieve in this cycle (usually a year). Strategy grows and morphs, but if you can't keep it consistent for a 6-12 month period, you're probably not giving yourself enough time to test it - or you've got the wrong strategy.

A strategy can be as simple as you like. It's a direction pointer, nothing more. Remember the framework.

Strategy (which way you want to go) ==> Objectives or Goals (the things you want to do to get there) ==> Key Results (how you're going to measure that you actually got there).

Here's an example of some of forgood's strategic drivers.

2017: 
  • Make forgood for Business work 
  • Get more clients (or fail fast at this model)
  • Prepare for SCALE (build process and structure)
  • Build cool shit (that people actually want) as quickly as possible
  • Create an Ecosystem of Value
  • Keep the public site growing
  • Add value to Causes above and beyond volunteers/goods donations
2018:
  • Increase stability, runway and revenue
  • Grow the platform (bigger, better and more engaged activity from users)
  • Better Giving Experiences. Improve the quality of Volunteers.
  • Better Giving Experiences. Improve the quality of Causes and their level of engagement.
  • Create New Giving Experiences.
2019:
  • Increase platform activity on corporate clients by X%
  • Reduce cash gap from X to Y per month
  • Ensure 70% of experiences had by volunteers and Causes are 4* and above. 

You can see how these slowly mature with the business and as certain approaches are successful or fail. You want to get to more specific numbers-based goals as quickly as possible (amount of revenue, % growth, % engagement/uptake). We tended to add these numbers into the detail of each driver - but increasingly brought those numerical targets into the core strategy. It's liberating. 

Once you've got a strategy, you now have a framework to align performance management to. 

You can't set a goal (or OKR) or require an output that doesn't fit under a strategic driver. Common sense, no? If you find that you're setting goals for employees that don't really fit under one of your strategic drivers, you're doing something wrong. Don't delude yourself, it's easy to do - allow this check and balance to help you set the correct outcomes for your team. 

Think about the scale you're going to use. The scale you'll find in the template is quite complex, but that's why I like it. It allows for nuance. 

There are two levels: achieving the outcome and quality of output. On this scale, anything above a 6 is good. 6.5 is really good. 7+ is great. This obviously introduces its own set of complexities, as people are trained to think that 6 out of 10 on a 10 point scale is pretty crappy. So consider yourself warned. 

This approach does solve many of the problems typical rating scales have: lack of nuance, too easy to choose a midpoint and too hard to defend your position (my 4 out of 5 could be very different to your 4 out of 5).

We've also aligned the scale to a typical OKR approach (which merely measures objective completion, from 0% to 100%) - have a look. And feel free to substitute any scale you feel comfortable with.
  • 3 point scale: below expectations, meets expectations, exceeds expectations (bleh)
  • 5 star scale (easy midpoint)
  • Out of 10 scale (easy midpoint, anything less than an 8 feels awful)
  • 4 point scale (has no midpoint, useful)
  • Pure OKR scale of "objective is 0% to 100% achieved"

Weighted scorecards help create focus. A simple weighting against each of the strategic drivers then provides an effective way of carving out roles. Sales roles will look very different to support roles - and will focus on different parts of the strategy.

The template allows for 3 strategic drivers and a Personal Development section - and generates an overall score based on the weighting attributed to each driver.

Think about how often you're going to do performance reviews. Many big companies do performance reviews once a year. It simply isn't enough in the world of fast-moving companies - the goal posts change too often. Currently at forgood, we do "goal reviews" every 4 months, with check-ins at least every 2 weeks. This provides enough time to get a good chunk of work done, but also allows for outputs to shape against the changing nature of business.

Link performance management to incentives. Here's the real trick: there's no point putting so much effort into performance management (and the requisite coaching and communication it requires) if you can't link it to incentives. Create a policy where scores affect bonuses (or incentives like additional leave if you're not profitable) - then you make it real.

Don't know if you can afford a bonus for your team yet? Just use the phrase "% of available bonus" when describing it. If you're not profitable, then there is no available bonus. You can get innovative with incentives to fill the gap - just beware - incentives are powerful drivers of behaviour... Sometimes they drive the right behaviour, sometimes the wrong - and they can be hard to undo.

Go forth, have those "tough conversations" and get everyone rowing in the same direction!


Disclaimer: The information in these posts work for us. I cannot and will not guarantee that they'll work for you. Consult the right professional to make sure.

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