How Do We Approach Performance Management?

The world today is changing faster than ever. And tomorrow it will change even faster. Solutions that best suit your organization can suddenly become useless and irrelevant. Therefore, at adesso, we have embraced "change" as part of our DNA, and we are always trying to find better ways to improve ourselves.

Using Objective and Key Results (OKR) and applying them in the relevant context is one of our ways of experimenting and learning on our journey to improve ourselves. In 2021, adesso Turkey started using OKR as a goal-setting and performance management tool throughout the organization (about 350 employees). However, in some teams, we started using OKR in 2020. We will share some details about our first steps on this journey.

But first, let's start with some basic definitions and explanations.

Goal Setting and Performance Management

Effective performance management is one of the fundamental issues of organizations. It helps organizations align their people to achieve their strategic goals. Still, in many companies, the performance management system is slow, shaky, or completely useless. At best, these organizations are not working as efficiently or effectively as possible. At worst, they are unable to respond to changes in technologies, markets, or competitive environments.

There are more than a handful of goal-setting approaches available; each has its own pros and cons and is suitable for specific company culture.

• Management by Objectives (MBO) was one of the first management models that linked strategy with implementation. The traditional leadership model in the 1950s was based on leaders brainstorming goals and ordering their subordinates how to deliver those goals, with predefined activities.

• The Balanced Scorecard was originally developed by Dr. Robert Kaplan of Harvard University and Dr. David Norton as a framework for measuring organizational performance using a more balanced set of performance measures. Traditionally, companies used only short-term financial performance as a measure of success. In some terms, it is similar to the MBO approach: Both models are objective-driven and involve the entire organization in the decision-making process.

• SMART is an acronym for five elements: Specific, measurable, achievable (or attainable), realistic, and timeliness. The SMART goal setting method aims at defining goals by the details to achieve better results and minimize confusion.

• Key performance indicators (KPIs) are the critical (key) indicators of progress toward an intended result. KPIs provide a focus for strategic and operational improvement, create an analytical basis for decision-making and help focus attention on what matters most.

• OKR was developed by Andy Gove, who introduced the concept to Intel during his time at the company. OKR then got carried over to Google by John Doerr in 1999. The company continues to use the method today. Besides Google, Spotify, Twitter, LinkedIn, Airbnb and even Target and ING Bank are businesses that adopt the OKR goal-setting technique.

What is OKR?

OKR is a collaborative goal-setting tool used by teams and individuals to set challenging, ambitious goals with measurable results. OKRs are how you track progress, create alignment, and encourage engagement around measurable goals.

A goal is neither more nor less, but just what has to be achieved. Goals are important, concrete, action-oriented and (ideally) inspiring and the key results compare and track how we achieved these goals. Key results can be measured on a 0-100% scale or in any numerical unit. Goals should also be supported by initiatives, which are plans and activities that help achieve the goal and advance key results.

There are several good reasons to use OKR as a goal-setting approach for organizations.

OKR helps teams articulate their goals

Once the team has defined its objective, it must articulate how the objective is going to be achieved.

OKR helps organizations to track and measure progress

As progress is monitored regularly, monthly, or ideally weekly, it provides the opportunity to make timely corrections, improvements and changes in actions related to key results.

OKR helps teams to reassess and stretch

OKRs are just a way or means for organizations to achieve better results for their customers, employees, shareholders and the whole society. Therefore, it is entirely good to re-evaluate and change the OKR as needed.

DevOps: Contribution of Software Delivery Metrics to Organization Performance

Many methodologies and frameworks are used to measure the software delivery performance of organizations. Especially in the last two decades, the number of these methodologies and frameworks has increased on different subjects. They have common characteristics such as focusing on business agility, and more “knowledge work” concepts rather than other (more mature) industries such as manufacturing.

DevOps movement is one of the most notable contributors to this story. As defined by Gene Kim, who is one of the most influential persons in this domain, "It's really about enacting technology practices and architecture that help organizations create a very fast—or even continuous—product flow, from dev through testing through operations, all the way to deployment, while often increasing reliability, stability, and security.”

DevOps Research and Assessment (DORA), a part of Google Cloud, has been studying this subject since 2013. DORA team conducted a six-year research program with which validated several technical, process, measurement, and cultural capabilities that drive higher software delivery and organizational performance. Data acquired by more than 31000 IT professionals have been used to model key factors of Software Delivery and Operational Performance.

When measuring software delivery performance, DORA team settled on four key metrics seen in high-performing technology organizations:

• delivery lead time

• deployment frequency

• mean time to restore service

• change fail rate

DORA Research shows that the industry standard of software development and distribution, the Four Key Metrics, promotes enterprise performance in technology transformations, and it is possible to optimize for stability without sacrificing speed.

As we stated in the beginning, change is inevitable for each organization in the market. Until recent time, digital transformation for growth was the key. Now, digital transformation for ESG (Environment, Social and Governance) sustainability is the new target. The common point is keeping the change initiatives in the organization in a manageable fashion. Each organization that uses technology as leverage to delivery value to its customers is a technology or a software company.

For these reasons, as for all other services, we can relate the delivery performance of software services to the organization’s performance and success directly. Amongst other OKRs can be given to the teams, if we keep focusing on this stream, we can see such relation based DORA’s research:

Using the same connection, now we can describe our objectives for DevOps teams as follows:

Objective 1 -For optimum throughput, enable fast flow delivery for the products/services.

Objective 2- For optimum stability, enable reliable releases for the products/services.

And we can define Key Results based on Key Metrics listed above:

Key Result 1.1 – Average Delivery Lead Time for Changes (From Code Committed to Done) is 1 week or less.

Key Result 1.2 Average deployment frequency is 1 week or less.

Key Result 2.1 Mean Time to Restore (MTTR) is 1 day or less.

Key Result 2.2 Change Failure Rate is %15 or less

Results

We together defined and used these OKRs for more than 10 colleagues (BE/FE developers, testers) in 2 different teams, for roughly 9 months period in 2020. The Objectives and Key Results were matched to the teams, not individuals.

We see big improvements in almost every Key Result when we can compare with the previous data of the same teams/products.

For example, one team’s delivery lead time reduced from 1 week to hours, even in minutes for some cases. The deployment frequency also dropped from 3 weeks per deployment to 1 week or less per deployment.

We also see that we managed to keep or improve stability (failure rate and MTTR) while we improved the throughput. We also applied the Kanban method at the team level and there are some shreds of evidence related to the effect of Kanban, but we will focus on this topic in another post.

Apart from the technical results, we can observe more important behavior: As the objectives and metrics are not related with individuals, or the technical details of the activity of the individuals but related to delivering value to the customer sooner and safer, the definition of “success” used in the daily discussions are changed in this way, from individual competition to collaboration in the team and with the customer.

As Eliyahu M. Goldratt said, “Tell me how you measure me, and I will tell you how I will behave.”

Resources:

1- https://www.mckinsey.com/business-functions/operations/our-insights/performance-management-why-keeping-score-is-so-important-and-so-hard

2- https://bscdesigner.com/mbo-and-bsc.htm

3- https://balancedscorecard.org/bsc-basics-overview/

4- https://kpi.org/KPI-Basics

5- Harris, Hilary; Brewster, Chris; Sparrow, Paul (2003). International Human Resource Management. CIPD Publishing. ISBN 9780852929834.

6- https://www.whatmatters.com/faqs/okr-meaning-definition-example/

7- https://www.whatmatters.com/faqs/do-i-need-okrs-goals/

8- Maasik, Alexander. Step by Step Guide to OKRs. Amazon Digital Services LLC

9- https://techbeacon.com/devops/gene-kim-benefits-devops

10- https://cloud.google.com/devops/state-of-devops

11- E.M. Goldratt (1990) The Haystack Syndrome: Sifting Information Out of the Data Ocean.. North River Press, Croton-on-Hudson, NY, 1990