Performance management in knowledge-intensive businesses

Try to think about a time when you had a performance review with your manager that fundamentally altered a pivotal behavior in a lasting way.

Can’t find one? You are not alone.

Performance management systems fail for a wide variety of reasons. They are biased. They are few and far between. It is not clear if they exist as a method for evaluating your performance, for professional development and career progression, or to help you get tools to perform better. Often, implicitly or explicitly, organizations expect newly recruited ”stars” to simply show up to work every day motivated, aligned, and ready to perform to their max potential. This is an obviously absurd notion. I think that the business world has a lot to learn from the world of professional sports in this domain, why we at Storykit are outlining a new method for performance management at work. Here is the story of how it came about, and how we are currently thinking about it.?

The summer when I got interested in?sports

Early in the summer of 2021, three things coincided for me, in a matter of maybe a week or two. First, I read this fascinating profile on Nikolai Tangen and his use of sports psychologists to help stock brokers take more risks. Second I read this great book on Bill Campbell’s coaching philosophy and why he was such a significant part of the lives of Silicon Valley legends. Third, and most significant, I saw this image of the leaders for the Swedish Men's National Football Team Troupe for the Euros 2021 (ok, this is a more recent image, but the one I saw was very similar).?

(Herrlandslagets ledare 2022; Copyright: Bildbyr?n)

The sheer number of people supporting the team fascinated me. There are almost as many people in this image as in the image of the squad itself. Do they have one manager per player? Obviously not. Most people in the image are not part of what we in the business world would call the “line management organization”. Their roles are rather geared to support the individual players outside of the formal management structure. Yet, in our business, like in all businesses I have ever worked in, these functions are seldom separated — the line management is expected to support and coach the individual players to make sure that they are performing in their roles. Is that a reasonable assumption? Maybe. To some extent. At Storykit, we do not have chefs or physiotherapists on staff, though if our finances would allow for it I would love to. But I do think that we have a duty and responsibility to our “players” to help them know what it takes to perform in their roles, and then help them realize their full potential on the pitch.?

One person in the image particularly stood out to me: Sports Psychologist Daniel Ekwall . Through our mutual friend P?r Lagerstr?m , we got in touch and started talking. I wanted to figure out what his days looked like, what his role was in regard to the players, and how he, as a psychologist, helped the team win. The results of these conversations formed the basis for my (shallow) view on performance psychology and how to use it to increase performance in the business world.?

Shifting focus from results to behaviors

The key to adapting Daniel’s philosophy is to shift from celebrating and reinforcing results to celebrating and reinforcing the behaviors that tend to lead to those results. If a player misses a pass, it does not necessarily mean that he should not have made the pass. Rather the opposite, making the pass may have been the completely correct behavior at that precise moment. But if we count, celebrate, and cheer for successful passes only, the possibility of missing will incite the player to make fewer passes. So instead of counting and celebrating the times that the player “wins”, we should count and celebrate the times the player “does the right thing”.?

In organizations, we do this mistake all the time. We celebrate, high-five, and measure won deals, booked meetings, leads generated, and shipped code. But these are successful outcomes of behaviors that will only lead to those outcomes some percentage of the time. The easiest example of this is in sales (though it is true for any role). In our business, as in many, a great predictor of performance for a quota-bearing rep is their performance in the last period (week, month, quarter). This is because a person can end up in a reinforcing positive loop of correct and winning behaviors, i.e they do the right thing, leading to a good result, and in turn, continuing to reinforce that behavior furthering the positive cycle. On the other side, a sales rep can end up in “the hole”, where they start losing, in turn making them doubt their behavior and hesitate, which reinforces the wrong behaviors and continues the losing streak. If we shift the organization from measuring outcome (you are good because you score) to behaviors (you are good because you take the shot at an agreed-upon moment) we can help individual performers perform consistently better over time.

Avoid the pitfalls of traditional performance processes

The idea of shifting from performance to behavior is not new, in fact, it is central to most performance management processes. I’m sure most of you have been through some variant of “What should I continue doing? What should I do more? What should I stop doing” as the classic line of questioning in any traditional performance review. So why does it not work? I think that there are multiple reasons why it is so hard to fundamentally alter a performance framework from results to behavior, not to mention then actually altering those behaviors. These are reflected in a lot of dysfunctional performance management processes.?

The process needs a crystal clear purpose

Most performance systems that I have taken part in have an ambiguous purpose. They exist both to develop me in the role I have and prepare me for a potential next step in my career, as well as being an opportunity for my manager (or others in the case of 360) to evaluate my performance in the last period. This evaluation then, in turn, affects my chances for promotion, salary increases, and bonuses. It is really hard to accept feedback and be motivated for real behavioral change in a setting where I am being evaluated. So instead, I think that any performance framework needs to be centered on one thing, and one thing only: Maximizing the individual's performance in their current role.?

Successful behaviors are specific and clearly defined

When I think about my own behavior I can think about behaviors that I like and dislike, and even have hypotheses about which behaviors are effective and which ones are not. But the truth is that I don’t know. Being a sample of one, I really have no idea which behaviors correlate with success in my role. Finding out can only be done by looking at a cross-section of individuals in similar roles, performing at different levels, with different outcomes. It is also a function of strategy — are we a team that passes a lot? A creative team? A physical team? The strategy will impact which behaviors are valued and important. So the first piece needed to drive a successful performance system, I believe, is an honest assessment and documentation of what behaviors drive success in a specific role. This step is often overlooked. Instead, companies use generic value statements from the very top of the organization (We’re an ambitious team!) and try to trickle those down to what they mean for specific roles, without actually studying the role or thinking deeply about which behaviors actually affect performance.?

Identifying and reinforcing behavior is a professional skill

Changing the way we behave is hard. And helping others to change is possibly even harder. Luckily, there is a full profession and a highly developed academic field (Psychology) based on doing this. When we try to change personal behavior (Fear of spiders! Losing weight! Fixing a relationship!) we realize that we need to see a real pro to help us do it. But at work, we delegate this task to managers who are seldom trained (at least not with a 5-year university degree) and who have limited experience in guiding behavioral change. Why do we think that would work? Instead, we need trained professionals to both to identify the behaviors that matter and help create structures and routines to reinforce those behaviors

Behavioral change is continuous work

Performance reviews are often treated as discrete processes (i.e. “We have a quarterly review”). But behavioral change does not happen discretely. You don’t go to your psychologist to get rid of a phobia, once every quarter, with no real training in between. But in an organization, daily life is always a struggle of priorities. Because behavioral change is slow and gradual, and seldom delivers immediate results, we put way too little emphasis on it in our regular structure (weekly meetings, 1:1s, reports, etc). Getting this into the weekly routine, with actionable concrete reinforcement structures is key to change.?

Excessive process creates false security

Instead of real change, what we tend to get is a process and trivial employee perks — great intentions, boxes checked, but no real behavioral change. “We have a really nice tool and system for 360 feedback”. “We are using a pulse tool to gauge how people are feeling”. “We have a masseur on the job once every two weeks”. All of these are good things, don’t get me wrong. But none of them will deliver real and lasting performance increases without putting some real actionable work around it.?

Mixing up performance with wellbeing

Performance and wellbeing are tightly correlated, it’s hard to get a personal best in a marathon if you have a cold. But feeling well is not itself a guarantee for performance. When wellbeing (avoidance of negative stress, physical and psychosocial health) is at the core of a performance process, we ensure that employees have the opportunity to perform, but we do not give them the tools for performance itself. Well-being is a kind of precondition for performance management, but in itself not enough to ensure consistent and lasting performance.?

Trying to build something useful

With all of the above in mind, we are trying to build a system for maximizing performance for each individual in their current role. And by we, I am really speaking of Amanda Held who is the Psychologist hired at Storykit to run this program. In essence, this program has three broad steps:

1. Identify behaviors in every role that align with strategy and correlate with success
2. Develop routines to reinforce these behaviors on a team and, eventually, at an individual level
3. Measure and feedback results to create a continuous loop of improvement

This looks easy, but I can assure you it is not. We are investing a significant amount of resources from the organization to make sure that we are doing this right.?

Over time, the data from (1) can be used in a multitude of ways, like implementing better behavioral interviews in recruiting, matching individuals with their next role at the company, and so forth, but our primary reason for doing this is to help people perform where they are today. There are pitfalls here, as well. How do you build trust with a third party like Amanda, who is so deeply entrenched with management? How do you avoid the psychologist “picking the starting 11” or having opinions on who should or should not be on the team? How do you avoid the team feeling like they have a “resident shrink to solve their personal issues”? But none of these things are impossible to get around, using the right routines, reporting structures, and mindset.?

This is new for us, we started in the spring and even though we have had awesome help from Daniel Ekvall , we are on somewhat unchartered territory. I’m looking forward to seeing the results and sharing how this experiment goes. Let me know what questions, suggestions, further reading, or other interesting experiments you are seeing in the field.