In the last few years, The KPI Institute (TKI) has supported several organizations with the implementation of a hybrid performance management system (PMS), namely a hybrid between a KPI-based framework and OKRs. This is especially useful for entities that want to benefit from a more agile approach to performance management while still retaining part of the control offered by a more stable framework, such as the Balanced Scorecard (BSC). A hybrid methodology was also seen as an option by organizations that were already using a PMS but were not willing to undergo a complete framework change.
The majority of clients that chose this solution as opposed to solely deploying OKRs were already working with a BSC and had prior knowledge of KPIs and the field of performance in general but felt the need to update their framework and incorporate the latest developments from the field into their practices.
Most of our clients that implemented a hybrid solution were facing challenges, mostly at the operational and individual levels. Due to a fast-changing environment, their operations had to learn to adjust with a higher frequency; therefore, a system that encourages such changes and operates within a shorter timeframe became more desirable.
At the individual level, the increasing percentage of millennials and Gen-Z in the workplace made it a necessity to deploy a value-based PMS that not only relies on committed results and business as usual but takes into account employees’ ambitions as well as actively includes them in the setting process of all objectives and results.
Solution
The solution we proposed and the integration of the two systems are usually highly dependent on the specific needs of the client as well as their organizational structure, external stakeholders—especially in the case of governmental entities—or environmental requirements.
The usual stages of a hybrid PMS deployment are as follows, but these are subject to change depending on each project’s specifics:
Needs analysis
Design and documentation of the hybrid PMS at all levels
Education of all stakeholders on the hybrid PMS
Implementation
Reinforcement through communication campaigns or review meetings, among others
A project as described above for a medium-sized organization of around 100-150 employees—if the individual level is included in the project—can take up to one year.
Key Success Factors
The key success factors of implementing any hybrid system are, first and foremost, its compatibility with the organization’s scenario, followed by top management sponsorship, and employees’ openness to learning and operating with two philosophies merged into one.
The hybrid solution that we recommend is easier to use and more versatile; therefore, it can work for most organizations. It is compatible with the BSC on the corporate level, where stability and committed, longer-term objectives are needed, followed by OKRs on the operational levels, where agility is mostly needed. However, this must be customized depending on the organization’s needs and aims.
Alignment
Ensuring alignment between different organizational levels while using a hybrid PMS relies almost exclusively on effective communication between the representatives of those levels. This ensures that by the time the lower level needs to set their performance components, they fully understand what needs to be achieved at the higher level and what their contribution looks like, equipping them for the alignment process.
Response
In most cases, employees are slightly reluctant to accept a hybrid system during the first phase, especially since it is, by default, more complicated than working with only one framework. However, after intensive training and discussions, most of our clients’ employees embraced the idea of a hybrid system and can see the benefits it brings them, such as people-centricity, flexibility, and measuring their value-add or the simple fact that they can be involved and listened to when setting the system’s components.
About the Guest Expert: Alina Miertoiu is a Senior Management Consultant at The KPI Institute. She facilitates on-site and off-site consultancy on OKRs and BSC frameworks in various industries and conducts training courses on OKRs, KPIs, Performance Management, and Benchmarking. She is a PhD candidate in the field of OKRs and Performance Management at Babes-Bolyai University.
Editor’s Note: This was originally published in Performance Magazine Issue No. 28, 2024 – Employee Performance Edition.
Does your organization adopt an employee or customer-centric operating methodology? For decades, the main focus of businesses in the Middle East has been on the customer, embracing mottos such as “The customer is always right” or “Customer comes first,” with the primary objective of attaining high customer satisfaction to expand market share. While this remains a universal goal, the approach to achieving it varies among companies, with some prioritizing employees over customers.
Employee performance management has gained increased attention in recent years compared to previous decades. This shift is largely a result of a changing mindset in both the private and public sectors regarding core business principles and operating methodologies. Companies have started to be more aware that what leads to customer satisfaction is a happy workforce, prompting them to focus more on managing employee performance.
Business magnate Richard Branson encapsulates this shift with his statement: “Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.” This shows us the importance of transitioning towards a more employee-centric business model to keep employees satisfied and engaged while achieving business goals. For all these reasons, employee performance management plays a pivotal role.
To better understand what employee performance management entails, it is important to examine its sub-processes:
Employee performance planning: The planning phase is a prerequisite, establishing the groundwork for the entire process. It is imperative to clarify roles, responsibilities and competencies by having the proper job descriptions and competencies framework developed based on the market’s best practices.
Employee performance measurement: This phase teaches the creation of scorecards at the employee level, guiding the assessment of competencies and behaviors. It also delves into the advantages and disadvantages of creating a final performance index for each employee, incorporating clearly defined criteria such as objectives, KPIs, competencies, and behaviors.
Employee performance review: This phase details organizing and conducting employee performance review meetings, ensuring value for managers and employees. During meetings, managers transparently discuss employee performance, acknowledge achievements and progress, and highlight improvement areas.
Employee performance improvement(talent management): This phase emphasizes the right course of action after the performance review meeting and the enablers of performance improvement. It guides the addressing of low-, medium-, and high-performing staff members, underscoring the importance of a monitoring process to ensure the effective implementation of corrective actions.
Performance recognition: This process guides the creation of rewarding models for acknowledging high-performing individuals and teams, enabling the design of a sustainable reward system encompassing financial and non-financial rewards.
In 2023, several aspects of performance management, especially employee performance management, have evolved. This shift is a response to the so-called “post-pandemic new normal,” forcing businesses to rethink survival strategies for 2024 and beyond. Six main trends have emerged:
A noteworthy change is the evolution of the job landscape. Financial security, which once deterred employees from leaving their jobs, is no longer the sole factor. Jobs now offer employees opportunities for growth, continuous feedback, flexible working hours, remote or hybrid work options, and comprehensive benefits, enhancing their work-life balance. These trends underscore the imperative for businesses to shift towards employee-centricity to achieve strategic objectives and foster sustainable business practices with reduced turnover.
Employee performance management will witness further changes, particularly in performance review and goal-setting. The workplace will increasingly focus on personal and professional goals, transforming performance reviews from a process into project-based evaluations, enhancing the workspace and contributing to a more sustainable business.
To prepare you for the year ahead, The KPI Institute can equip you with the industry-leading tools and skills required to nurture employee performance. Sign up for the Certified Employee Performance Management Professional and Practitioner courses now and secure your slot here.
In today’s dynamic business landscape, enhancing employee performance is crucial for sustained success. To build high-performing teams, it’s important to establish the right framework and processes for performance measurement, including the selection and deployment of tools like key performance indicators (KPIs). But how can organizations successfully unlock employee potential through performance measurement?
Here is how renowned company Adobe transformed its employee performance strategies to obtain outstanding outcomes.
Case Study: Adobe
Adobe’s transformation journey is a testament to the potential of strategic performance measurement and KPIs. Adobe has faced issues with its yearly performance evaluation process. These were:
Employees were frustrated with annual performance reviews as they found the process cumbersome and bureaucratic.
The process created barriers to teamwork since the experience of being rated and stack-ranked for compensation left many employees feeling undervalued.
Adobe estimated that a total of 80,000 hours of its managers’ time was required each year to conduct all of the reviews, the equivalent of nearly 40 full-time employees working year-round.
Adobe realized that it should not wait until the end of year to share feedback. So, the company made a surprising change that improved employee engagement and transformed the company culture.
Employee-centric approach: Adobe’s departure from traditional performance reviews towards a more frequent and less formal “check-in” process demonstrates its commitment to an employee-centric approach. These regular discussions—done at least once a quarter—provide a platform for managers and employees to engage in meaningful conversations about expectations, growth, and development. This shift reflects Adobe’s recognition that empowering employees with continuous feedback and opportunities for improvement is more effective in driving performance excellence than the conventional annual review model.
Setting clear, measurable goals: The new strategy adopted by Adobe focused on providing its staff with specific, measurable goals. Employees could clearly understand what was expected of them and how their performance would be assessed because these goals were cascaded down from the organizational and departmental goals and aligned with each other. Companies that have aligned goals tend to outperform organizations that lack a direct connection between top company priorities and employees’ individual aims.
Real-time performance insights: Adobe enabled its managers to give employees real-time insight into their performance by integrating technology. Adobe launched a digitally-enabled check-in, providing all employees and managers with a web-based destination to document their goals, development, and growth. Individual goals are documented in a centralized place, reviewed regularly, and can be updated in real-time by managers and employees alike. All of this made it possible for timely feedback and course correction, ensuring employees stayed on track with their objectives and KPIs year-round.
The results of the transformation were spectacular and resonated with employees—employee attrition dropped by 30% while involuntary departures rose by 50%. This change allowed managers to give more timely and useful feedback while empowering employees to take responsibility for their own advancement. The employees thus felt engaged, valued, and aligned with the company’s goals.
What are the key takeaways from Adobe’s case? Performance measurement best practices should always include the following:
Alignment with organizational goals: A strong performance measurement approach starts by matching team objectives and individual objectives with the organization’s overarching mission. Employee performance becomes a key factor in the organization’s success when they are aware of how their work supports corporate objectives.
Keeping qualitative and quantitative metrics in balance: Effective performance measurement goes beyond simply counting numbers, as it needs a comprehensive understanding of an employee’s contributions and their influence on the expansion of the business. This is made possible by incorporating qualitative elements like engagement, collaboration, and innovation.
Continuous feedback and growth: Many businesses are using continuous feedback loops instead of the traditional annual reviews. Periodic performance reviews and regular check-ins encourage ongoing conversations between managers and employees, facilitate growth discussions, and identify areas that need improvement.
In conclusion, the modern business landscape demands a strategic approach to unlocking employee potential. Performance measurement and KPIs are not just tools but pathways to aligning individual aspirations with organizational goals, combining qualitative and quantitative insights for a thorough understanding of employee contributions, and motivating continual improvement through timely feedback. By adopting best practices and an employee-centric approach, businesses may begin on a journey that empowers their staff, inspires innovation, and drives them to sustainable success in the dynamic global marketplace.
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This article is written byMuhammad Ali Moustafa isa Business Management Consultant at The KPI Institute. He is a Certified KPI Professional (C-KPI) and Certified Performance Management Systems Audit Professional (C-PA). He has diverse professional experience in which he had the opportunity to work on advisory projects with different organizations, ranging from startups to multinationals.
