Rethink your performance plan

 by Prabhakar Gopalan

Tweet this: @PGopalan: Rethink your performance plan http://wp.me/pXBON-2y6 #prodmgt #career

Two plans for 1 measure

The prevailing managerial approach in corporations to promote, measure and reward employee growth primarily consists of two plans – a performance plan and an individual development plan – 2 plans for 1 measure i.e. growth.  Every year, employees fill out a performance plan against which they are measured and rewarded e.g. with an annual bonus, at the end of the year.  Then there is a second plan called the individual development plan that has things you want to do in the long term but are not tracked, measured, and rewarded or penalized if you miss, with the same zeal as the performance plan.  It simply remains a wish list.  In other words, it is ok to miss development goals.  You wonder why?

Here’s an idea to rethink this disconnect between individual performance and development in the corporate setting.  Because these two are interdependent and key drivers for growth, shouldn’t  they be in the same plan?  And if they are indeed in the same integrated growth plan, how should the plan be structured?  To answer these questions, let’s look at insights from successful corporate strategy.

Insights from corporate strategy

Enduring companies balance their portfolios in a 3 horizon approach – operate successfully in the short term, develop the vision and incubate technologies, products or services for the long term, and build for executing in the middle term.  A good way to think of this is how Apple approached the market with iPod, iPhone and iPad products less than 10 years.  Apple had the right product marketing mix for the iPod when it came out, worked on the iPhone while iPod was still bringing a lot of cash, and made plans for the iPad much before any competitor even thought of a mass market touch tablet.  Many even questioned if a touch tablet with a form factor between a smart phone and laptop would ever succeed in the market.  What we know now is a different story.  This meticulous 3 horizon planning isn’t unique to a consumer electronics gadget maker like Apple alone.  In The Alchemy of Growth, Mehrdad Baghai, Steve Coley, David White and Stephen Coley write about a 3-Horizon approach for corporate strategy in building the enduring enterprise, citing examples from many industry verticals.  If enduring corporations plan their growth in 3 horizons, and have management processes to measure and reward growth in 3 horizons, shouldn’t employees too have the same 3 horizon growth plan for themselves?  Why would growth for an employee be any different from growth for the corporation?

How to model a 3 Horizon individual performance plan

So, what would be your considerations for a 3 Horizon individual performance plan?   Three things come to mind. First, figure out what would be a 3 Horizon timespan for your business.  For example,  if you are in information technology, it is probably a shorter timespan than a mature industry vertical.   Second, determine what priority or reward percentage you would allocate to each horizon in that timespan.  You could come up with many models for determining this priority (more posts on this in the future).   You could have a 70-20-10 mix if the business needs all the momentum now,  or a 50-30-20 if you already have the momentum going on (e.g. a blockbuster product or plan for the current operating term) and most growth opportunities for the company are in the medium and long term.  Finally, identify drivers in each horizon and how these align your individual growth plan (development needs) to corporate growth opportunities.  For employees this gives true opportunities of growth within the company and for companies there is no better way to retain employees than prepare them for future growth from within.

Innovative companies like 3M, Google, Atlassian give employees the choice to spend their time on projects not necessarily in their job description or performance plan. As Scott Berkun points out, it is more of an attitude and culture at these places than a rule with a manager tracking how much an individual spends time on his projects. But the underlying idea is simple and clear – to build enduring corporate growth, let your employees grow the same way as you’d want the company to grow.  Counting hours on a timesheet worked for the factory age.  It doesn’t work for knowledge workers.

I would love to hear from readers on what kind of management processes their companies have that reflect the managers’ interest in the long term growth of not just the corporation, but also the long term growth of the employees.

 – Prabhakar

Tweet this: @PGopalan: Rethink your performance plan http://wp.me/pXBON-2y6 #prodmgt #career

  1. David Locke

    It is unlikely that a particular staffer at Apple worked all three of these horizons. Christensen’s separation hints that each of Apple’s horizons addressed different populations, so the horizons were separate.

    As for product managers each of those horizons would have a different product manager.

    Commoditization of a vector of differentiation drives these horizons and their necessary separations. When does a particular staffer’s value fall to zero? What does that staffer do in anticipation of this, so they gain a different differentiator, one that will not commoditize for a while. It takes a long period of investment to switch technologies or skills. This latest vector of differentiation will likewise commoditize, so again we initiate yet another switching of technologies or skills. This is a constant.

    The 3 Horizons are just a stack of many horizons, but one where you can only see the top three horizons. Yeah, a queue really.

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