Managing Performance Without Killing Collaboration: A Global Wake-Up Call

Envision this: It's Monday morning at GlobalTech, a multinational software company. Sarah, the star sales representative, has just closed another million-dollar deal, her fifth this quarter. Meanwhile, Marcus from the implementation team is located just a few meters away he is working overnight, and is trying really hard to customize the software for Sarah's latest client. The customer is angry as the features promised by Sarah don't function as expected, whereas, she has already left for her next target. Marcus is likely to be blamed for the delays, but Sarah is going to have a fantastic appraisal.

Does that ring a bell? You are witnessing traditional performance management at its worst; a system that is so individually metric oriented that it unintentionally tears apart the collaboration, that is vital for the survival of modern businesses.

The Illusion of Success

The narrative above is not mere fiction. A survey by the Harvard Business Review shows that this is a common issue in 70% of the organizations: the teams meet the individual targets while the customers get no value. It is what professional performance management adviser Heidi Gardner called "the collaboration paradox," when our outputs also cause undesirable behavior and therefore hurt the organization as a whole.

An example could be the Goal-Setting Theory of Locke and Latham that suggests setting specific, difficult goals can be defined as the most effective technique to improve the performance of an individual; they never thought of it as an isolated method for the organization to create these isolated performance bubbles. They are not the ones to blame. The organizational culture we live in at the moment is the culprit. We have turned measuring individual success into a sacred rite, and in doing so, we forgot that success is a collective achievement.

 

Traditional Performance Management

          

              

                                                                 Traditional Performance Management 

A Tale of Two Cultures

This performance management crisis is interpreted widely depending on the place, and the prevailing culture happens to be more essential than we think.

In Japan, we have a different scenario where the automotive brand Toyota is observed as a vendo of a parts makers' cooperative umbrella. Their performance reviews contain "kaizen contributions," which quantifies how much an employee helped the team become more productive. So when Hiroshi from quality control makes a suggestion that improves the assembly line's performance, both departments celebrate the win together. This marks Japan as a collectivistic culture where high interdependence values are proposed by Hofstede's dimensions of Culture.

Now let's take it to Silicon Valley, another tech startup where a different story has been told. The engineers competed with each other based on the quarterly ranking system, thus creating a "forced competition" as termed by psychologists. The outcome? Knowledge hoarding, duplicated efforts, and brilliant minds working in isolation. The company's product breakthrough was postponed by half a year just because the teams didn't want to exchange knowledge that possibly would help their competitors in the ranking system.

                                    

            Hofstede's Cultural Dimensions - Individualism vs. Collectivism scores 

The Netflix Revolution

On the other hand, some organizations are completely redesigning their operational procedures. Netflix is no less than a revelation in the whole corporate world, as they totally scrapped traditional performance reviews which were replaced by "keeper tests". Managers regularly ask themselves this question, "Would I fight to keep this person if they wanted to leave?"

"The context, not control" is more essential than this, which is a philosophy of where the success of an individual is dependent upon their contribution to the success of the whole group. So if a content analyst at Netflix finds a trend which helps the recommendation algorithm team, then both of them are being honored equally. This operational scheme embraces Norton and Chapman’s Social Interdependence Theory which argues that people succeed in their individual tasks in the midst of others’ success.

Netflix keeper test model explained

The Amazon Contradiction

Amazon is such a paradox, though. Their leadership principles dictate that "customer obsession" and "think big" inherently collaborative concepts, and thus the company as a whole should be highly cooperative, which contradicts their general ranking system that produces what many former employees have described as a "gladiator culture."

Just the opposite is found in  Amazon Web Services. Their performance management theme is "working back from the customer," making it a team effort rather than an individual one to solve problems. They have even reached a milestone of becoming the most profitable division in Amazon, proving that focusing on collaboration through performance management yields tangible business benefits.

The AI Disruption

Although artificial intelligence is in the forefront of the revolution of performance management, it doesn't go the usual way that it does. Microsoft is recruiting an AI system that tracks "collaboration indicators" which means how employees share knowledge, how many cross-functional projects they create, how many peer assistance metrics they can count. The preliminary results indicate a whopping 40% increase in cross-team innovation.

AI Performance Management Statistics

     

But there is a more sinister aspect. Some organizations think AI systems should make every individual responsible for their own success, and so they make them work alone as they don't have any collaborative opportunities. Just as stated in Expectancy Theory, people do what they think will lead them to rewards, rewarding isolation is the only thing these AI systems will bring to the organizations.

The Future is Collaborative

The most thriving organizations see the illusion of the individual accountability paradox and move on. They are making what I label "collaborative performance ecosystems" with:

- Individual objectives that feed into the team then the team objectives help the department which drives the success of the organization. The customer wins, and everyone wins when the customer wins.

The famous "squad model" of Spotify proves this best. Individual developers are evaluated on the huge code and personal growth but the squads success or failure is together on product outcomes. Their innovations are among the most notable ones in the music streaming sector.

Spotify Squad Model Framework

Toyota kaizen continuous improvement culture workplace

Personal Reflection 

Being the director of a newly established 15-member BPO startup, the ideas on performance management challenges in big corporations sound unreal to me even though I feel they are connected to us after all. Although we are still far from the massive coordination problems of companies like GlobalTech or Netflix, I have already identified the watchings that traditional performance thinking is starting to derail our collaborative culture.

Team collaboration is teaming up naturally in our small handset; our operative sits beside the salesperson of our team, and thus when a customer request is complex, they simply turn around and problem-solve like a real team. But- on the other hand- the question that constantly lingers in my mind is that without a deliberate design of performance management this organic teamwork will never scale, especially while we are filled with ambition for growth. 

As of now, we keep track of individual metrics such as call resolution times and client satisfaction scores, but I have come to a realization that we are overlooking a critical aspect- the actual individual contribution to the collective value. Therefore, instead of waiting for a time when we have grown to 200 employees to discover that our performance systems are hindering collaboration, we have this unique chance to build a culture of collaborative performance DNA from the very beginning.

References 

Gardner, H. K., & Matviak, I. (2022). Performance management shouldn't kill collaboration. Harvard Business Review, 100(5), 78-85.

Hofstede, G. (2001). Culture's consequences: Comparing values, behaviors, institutions and organizations across nations (2nd ed.). Sage Publications.

Johnson, D. W., & Johnson, R. T. (2005). New developments in social interdependence theory. Genetic, Social, and General Psychology Monographs, 131(4), 285-358.

Locke, E. A., & Latham, G. P. (1990). A theory of goal setting and task performance. Prentice Hall.

Locke, E. A., & Latham, G. P. (2002). Building a practically useful theory of goal setting and task motivation: A 35-year odyssey. American Psychologist, 57(9), 705-717.

Netflix Inc. (2019). Netflix culture: Freedom and responsibility. Retrieved from https://jobs.netflix.com/culture 

Vroom, V. H. (1964). Work and motivation. Wiley.

Microsoft Corporation. (2023). Workplace analytics: Measuring collaboration in the modern workplace. Microsoft Research Publications.

Spotify Technology. (2020). The Spotify model: Scaling agile at Spotify. Engineering Culture Report.