I’m happy to announce that we are undertaking a thorough, public trial of an alternative to the traditional performance review.
ratings pic.pptx.jpgDo you ever wonder if and how you could call a halt to your performance review process? Do you think traditional processes are marred by the distribution curve (and forced rankings), huge time investments and low impact on performance improvements? Maybe you agree that your processes have their faults, but you think that it’s not sensible to abolish performance appraisals altogether or replace them with coaching sessions.
Keep reading… Let us be your guinea pig! We’ll blog the results of our new performance review model for everyone to see.
From speaking to HR executives in tech companies, I’ve learned that many people face similar issues with their current process. Often they think their organisation’s review and reward culture is too entrenched in their organisational processes, that it’s hard just to change the performance review model without any evidence and alternatives. We hope that other growing, or even established tech companies can learn from our experimentation, challenges and results.

Why a new model?

For years, Atlassian’s performance review model was in line with ‘HR Best Practice’. Twice a year, people would review themselves and their peers via 360-degree reviews. Managers would review their team members and determine their final performance rating on a simple 5-point scale that determined their bonus. I believe it’s a similar model to that of many other tech companies like Google and Salesforce.
So, what was the problem? In short, twice a year the model did exactly the opposite to what we wanted to accomplish. Instead of an inspiring discussion about how to enhance people’s performance, the reviews caused disruptions, anxiety and de-motivated team members and managers. Also, even though our model was extremely lean and simple, the time investment was significant.

The Trial

For 12 months, we will trial a new review methodology. We’ll make iterative improvements along the way. What’s more, we’ll blog everything  here
Here are the outlines of the trial:

  • We’ll replace the traditional performance review structure with a more lightweight, continuous model.
  • We’ll incorporate the constructive aspects of reviews in the existing one-on-one meetings. Atlassian managers already have weekly one-on-ones with their team members. Now, every month, one of these meetings is dedicated to a discussion on how the person can enhance their own performance and play to their strengths.
  • We’ll provide managers with a conversation guide to help them structure these one-on-ones.
  • We’ll remove the distribution curve.
  • We’ll stop paying individual performance bonuses. Instead, we’ll give everyone a salary bump (similar to Netflix’s approach, paying top market salaries rather than bonuses).
  • Every six months, managers and team members use a one-on-one catch up to discuss their performance and how often they have challenged themselves in the last six months. Unlike in traditional performance reviews, there will be no requirements to write lengthy written assessments in preparation for the catch up
  • At the beginning of each six month period, we’d like everyone to focus on some personal areas where they can challenge themselves either by capitalising on activities they already love or by improving a weakness.

The Impact

This will mean that employees will have more regular chats with their managers about how they’d like to work, not just about everyday tasks. Also, managers won’t have to spend hours on thinking back and recording people’s past performance during lengthy performance review cycles.

Motivation according to Dan Pink

Thumbnail image for dan-pink-drive-book.jpgAlso, whilst we have been pretty good in concentrating on people’s ‘weaknesses’, we seldom focus on developing areas that people are intrinsically motivated by. Research shows that people don’t change that much. Put simply, we may be wasting time by only concentrating on flaws. Instead, we will make a shift where we can try to enhance existing strengths to make full use of them. This should have a positive impact on the individual and on the team. Managers will have monthly short conversations with their team members to coach them in enhancing their effectiveness and discussing their progress in the short and longer term. Some managers, who primarily talk about operational progress, may have to adopt new ways of guiding these conversations.
Our broadest goal is that all software companies can learn about how to break out of the traditional performance review process that, no doubt, like us, you have been struggling with. Also, if you were thinking of implementing a review process, we hope that technical companies can learn from our experimentation and results.

How do we judge success?

One of the trickiest questions we’ve looked at internally is, “How do we really know if it works?” For us, the ultimate test is this: Do people find that they are better managed and more challenged? And do managers feel that their team members are enhancing their performance more?

Where do I find out more?

Simple – keep reading! We’ll be covering the performance review experiment from all angles. Engineers, team leads, directors and founders/CEOs will all be pitching in with their candid thoughts. Some of them won’t be happy, some of them will be loving it.