It’s time to close 2014 regarding goal achievements and to plan new goals for 2015. Is it your task to define and administer the system? Or are you the one who’s performance gets evaluated via goals?

With this post I’ll share a way to work with goals and minimize the administrative overhead + implement a cultural hack.

As you maybe already know – I’m not at all a fan of working with money based goal systems and using the classical performance appraisals.

Why? Because it stifles motivation, leads to misleading behavior and works against teams (see for more details below in the background section). Imho – it is a real impediment.

What I realized is that a lot of time gets consumed by feeding the system:

  • Define the goals – often for a longer period e.g. the whole year
  • Discuss the goals with your team(s) or even individual team members. For fulfilling the SMART criteria – you need some level of detail to get it in a negotiable format
  • Measure the level of goal achievement throughout the year, adjust and negotiate. A cycle that can get costly if you have to change goals often (what will for sure occur the longer your period is) 
  • I guess you know much more time consuming parts of it… 

Compared to the amount of connected variable salary parts – do the math and you’ll see that it is unbalanced. Especially if you consider the fact that previous bonus payments lead to expectations and these systems often automatically adjust to an achievement range (if you paid the last 3 years on average 85% – you’ll get in trouble justifying 70% of the bonus). Losing a team member because of some missing percentage of a goal achievement is a costly drawback. You may say – sometimes it’s exactly what you would like to achieve – but let’s be honest – maybe time to rethink your way of management and consider that saying the truth directly is much better than hiding it via the bonus game.

Let’s consider time as one catching argument. The argument mainly counts if you work with additional goals that somehow exist beside your Scrum/Agile inherited goals (like delivery, quality, customer satisfaction). I worked in areas having such artificial topics, that somehow undermined our sprints, lead to submarines – independent of goals for a whole team or even worse – goals on individual level.

On the other hand – getting rid of such a system is a huge step. Seems easy – just remove it, adjust contracts properly (remove variable salary part and convert it to a fixed one) – and you’re done. But be aware of all the counter arguments. It’s a really heavy change process as it’s a long practice and many people still believe in it (some good suggestions how to work on it – see recommended sources below).

Now – as promised – a proposal for a small culture hack to address the topic and use the system.

The hack

Let’s use the Scrum/Agile inherited goals.

A simple step would be – the sprint result equals to the goal achievement. You calculate your achieved velocity/planned velocity and thats the percentage of your goal achievement. E.g. – you planned to deliver 10 story points but delivered 8 SP – means 80% achievement, you delivered 12 SP – means 120%. You can tune it – with over achievements that can be combined with “bad” sprint outcomes. If you have a fixed bonus amount – cut it to a maximum of 100% possible.

If you work with sprint goals – you can use the goals instead of the velocity. Works the same way.

Seems silly, doesn’t it? And indeed it is – but it’s simple and as the whole goals+money combination is misleading – let’s choose the simplest way to work with the system.

What will happen?

  • The teams will forecast the planned velocity more defensive – for sure! And they will achieve most of their sprint goals. They tune to the measurement – as always.
  • At least you have some more predictability regarding velocity 😉
  • The time investment to keep the system alive is reduced a lot. As it’s in the system. But be aware – as soon as someone starts challenging the team’s forecast it gets dirty! And you’ll lose time in debating – as you’ll anyway as soon as you speak about money. 
  • Less side tracks and submarines. The sprint has the focus that it needs. Congratulations
  • Teams are happy – as they learn FAST 

Looks like a Win:Win situation?! And – the time saved by this approach can be invested to prepare for changing the whole appraisal system.

What’s your opinion about this proposal? Did you face similar problems and how did you solve it?

Further readings – What’s wrong with performance appraisals and what to do instead

For a more detailed description I highly recommend reading the book Abolishing Performance Appraisals: Why they backfire and what to do instead by Tom Coens and Mary Jenkins. (If interested in my summary – its available as a google doc).

Luis Goncalves is currently preparing more hands on input with his book Get rid of performance appraisals. In addition check out his blog posts.

Not to forget the famous Drive: The surprising truth about what motivates us by Dan Pink