How to measure and incentivize behaviours that matter 📈
Is there any evidence which behaviors drive success and financial performance?
Over the years (🦖) I have seen some pretty horrendous performance and feedback structures. Long, wordy forms and documentation with open text fields, confusing questions, and impossible quantities of qualitative data to produce (and synthesize).
Some of the performance review and appraisal processes I have encountered have been just ineffective, others have been almost offensive.
I am on a personal mission to demystify and “productise” how your team are working together and performing, and the current way we do that is really not a great customer experience. Why are we so terrible at it, and could the basis of our failing be that we are focussing on too much because we aren’t quite sure what really matters?
In my approach to People Operations, I approach the employee experience as a product, and one which is strategically connected to your other two products: the customer product, and the investment vehicle. With this mindset, I think about performance review as a “customer health-score” of sorts.
So how do we find out if our customers are healthy usually? Two main ways come to mind, one is self-reported, and one is a behavioural output (which I enjoy, but can be harder).
NPS
NPS (Net Promoter Scores) scores are nothing new, and they split a crowd: some hate them, some love them. The same is true for the identical metric in People Ops, ENPS (Employee Net Promoter Scores). The two primary (and there are plenty) reasons I dislike NPS:
Firstly, it does not employ any mechanism of considering the volume or number of data points when creating a calculation. This means if you have an employee data set with one 0 and one 10 is considered exactly equivalent to a data set with one million 0’s and one million 10’s. Generally the sizes of data sets HR leaders are dealing with is quite small comparative to customer data sets, so there can be issues with the quality of the output.
Further, people do have very different understandings of how to respond to an NPS. I had a very interesting slack message from a colleague who once told me “no Eastern European is ever going to vote 10 on an NPS, it’s culturally impossible!” Whether or not you agree with that statement, it’s clear people’s approaches to understanding a question and responding can only be normalised through large volumes of data and tracking actual behaviours.
Regardless of all of this, NPS (or a score like it) is not a great way to assess performance. It’s not even a good one. Even if you asked your team a question like, “Would I suggest the company hire me again based on my performance” you’re going to get some pretty wild reactions I presume (although I’d be interested to run a test of this… who is game?)
The reason this analogous use of NPS is a problem when it comes to Performance Assessment specifically is because it’s a self-reported metric. It’s asking someone to just tell you something about themselves in a much too simple way, not identify any other behaviours or outcomes they are affecting. Performance assessment is not, as we know, reliably measured purely by self reporting. So, for that reason we move on…
Behaviour as data
Another way to assess customer health is to identify core behaviours which can be tracked to assess customer health. For example, they may be “logging into the app” or “purchasing an upsell”. These kinds of output metrics are great because even if a customer has a great experience using your product, and is inclined to give you a positive NPS, their actions may tell a very different story. This means it mitigates (or highlights) the bias of NPS as I mentioned earlier. If someone rates you a 6 but logs in every day and is purchasing more of your product, it may be worth considering if they are just a conservative scorer.
The way performance management tends to mimic this (measuring behaviours) approach to “customer health” is through asking other people about your output, recording KPI outcomes, and collecting data on performance as reported through outcomes. This effective means of “customer health” is, however, where I see the absolute worst of HR.
The least effective reviews I’ve encountered are non-specific and often contain broad sweeping questions like “Over the past X months how has this teammate contributed to our success?” or “Are they operating at the expected level? {Insert link to 16 tab progression framework}”
From there, the managers must collect anywhere from one to ten versions of this wordy, vague data and collate it into something useable. Practical. Humans just aren’t that good at understanding huge swathes of qualitative data, which is why we run calibration sessions that can be labourious and political.
I’ve written recently quite a bit about building some kind of rubric or structure to look at performance which has two axis. I said in the linked blog that:
“Throughout my years I’ve ebbed and flowed between ‘siding with’ different measurements for performance: 9box grids, scales, outcome metrics, decimal ratings […] I’ve come to realise that I don’t really care which one is used. The only thing I care about is whatever you pick being something that moves the behaviour of your team towards your aspirational cultural strategy. This means I encourage you to build something that actively guides and moves people, not something purely role-competency based.”
Today I’m going to expand on that a bit and talk specifically about the kinds of behaviours are best used to do that, and ask whether we’re better off just asking a simple set of questions rather than requiring large, unwieldy review templates and forms.
So what are the Behaviours that Matter?
I deeply care about not just assessing performance and rewarding a teams fairly, but I also deeply care about rewarding the behaviors that research proves really matter when it comes to affecting my company’s top-line growth. At Whereby, we saw that was autonomous growth, and performance (execution).
When working as an advisor, many of my clients have asked us for their guidance on selecting which behaviors are most appropriate to measure within their organization. For that reason I worked with the Peerful Team and embarked on a small research project to pinpoint the employee behaviors that drive remarkable company performance. By diving deep into expert case studies, books, and research articles, we unearthed some consistent trends.
Execution and Driving Results:
In other words, Impact. This is very regularly already an axis on a 9box grid in some companies in how they describe “performance.” Employees who excel at executing and driving results are those who are able to:
- Set clear, specific, and achievable goals and priorities that align with the company’s objectives,
- Are independently /and effectively able to overcomes obstacles in order to deliver results, and
- Deploy the right resources efficiently to execute the task at hand.
Customer Centricity:
Highlighted by Kotter as a key trait, Customer Centricity doesn’t mean understanding the customer is “always right” but requires your team to:
- Think commercially about the “ideal customer profile”, conceptualizing the macroeconomic-environment in which your company exists,
- Puts these customer’s needs at the forefront, ensuring products and services exceed expectations, and
- Effectively handle customer concerns and knows how to turn a customer’s day around. [2]
Teamwork and Collaboration:
Even those in your business who are incredibly skilled individual contributors must work with others in order to succeed. That looks like a team member who:
- Bridges gaps across teams and influences others with tact and intelligence, using a broad range of strategies,
- Makes practical and thoughtful trade offs and finds win-win resolutions when facing conflicting agendas, and
- Engages proactively in team discussions, projects, and activities to contribute one’s skills and expertise, sharing ideas and feedback transparently.
Adaptability:
Businesses, teams, and strategies change frequently in successful companies. Even those in the most senior roles are required to look into their experience for new solutions to problems. Recognized by industry leaders like GhSmart, Kotter, and McKinsey, adaptable folks in your business will:
- Seamlessly respond to change with innovative solutions, taking stock of the resources, team, and information available to them,
- Stays attuned to market shifts and is resilient when those trends mean their ideas or path is altered, and
- Sees change as an exciting challenge, one which they’re galvanized to overcome, rather than a disruption to their existing ways of working.
Motivating and Growing Others:
Great performance spreads, and those who are high performers will want to motivate and growth others around them for the success of the team. They will:
- Make time to assist other colleagues, offering help, and sharing knowledge to foster a collaborative environment and team success,
- If they are in leadership roles they cultivate high-performing teams and align roles with individual strengths [3], and
- Actively mentors and guides team members, helping them soar to new professional heights, even if they are in non-managerial roles.
It’s not just what you do, it’s how you do it…
Through the research, we also found three values-based behaviors, supported by behavioral economics, which can be incredibly powerful when combined with the behaviors above. Think of these as the “how” behaviors within the “what you do” of those listed above.
Integrity, Respect, and Honesty:
- Holds strong ethical values and makes decisions with a clear conscience.
- Stands by the truth, even when it’s challenging, and takes responsibility.
- Backed by The Center for Creative Leadership.
Self-Motivation and Grit:
- Sets ambitious targets and has the tenacity to reach them.
- Relies on inner motivation and faces challenges with a can-do attitude.
- Insights fromAngela Duckworth.
Inclusivity and Fostering Psychological Safety:
- Champions diversity and ensures every team member feels valued.
- Leverages diverse perspectives for holistic decision-making.
- The Center for Creative Leadership.
It is worth noting that some of these behaviours are more important than others in various industries, for example Integrity is more aligned with company performance in hospitality and retail than in tech. This is what I mean when you should think of a set of behaviours which are aligned with your company and product strategy (which should be directly informing your People product strategy!)
So what do I do with this information?
Well, firstly, it’s time to start looking at whether your current performance assessment process articulately asks for insights into these behaviours. If you aren’t asking outright, perhaps it’s time to. If you’re asking long, wordy questions which leave room for management and employees to hide behind behaviours which may not drive you forward, I’d suggest removing (and not replacing where possible! keep it simple!) those questions entirely.
What is this about Peerful?
Good question! I am working with a pretty incredible team of academics on developing a powerful algorithmic approach to performance assessment and calibration. One that is able to calibrate performance instantly (no more sitting in rooms arguing over performance frameworks) and which show you trends across company, leadership, and individual performance, improving your ROI in People. I’m hoping we can build something that genuinely democratizes meritocracy and gives your leaders time back from calibration, time you can instead spend on surfacing insights and progression (or improvement) plans for your people.
The world of performance measurement is exciting and ever-evolving. Stay tuned for more insights and keep innovating! 🚀
Ok that’s all from me, folks. 👋
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