Agile Team Performance Management Arlen Bankston and Sanjiv Augustine @ abankston @ saugustine June 14, 2010

1. Agile Team Performance Management Arlen Bankston and Sanjiv Augustine @abankston @saugustine June 14, 2010 Realizing the Human Potential of Teams

2. Agenda Performance Management • Current Issues • Emerging Trends AnAgile Performance Management System • Goals • Intrinsic Motivation • Extrinsic Motivation • A Holistic Process Q&A

3. Performance Management Current Issues & Emerging Trends

4. What’s Wrong with Performance Management Today? Current performance management schemes are often ineffective. • Formal evaluations are typically demotivating: • Focus on weaknesses rather than strengths • Are done quite infrequently and don’t provide timely, relevant feedback • Rooted in “management 1.0” industrial age techniques • Overemphasize the role of the manager • Deemphasize the role of the individual

5. What’s Wrong with Performance Management Today? (Cont’d) Attempts to simplify the process for managers can backfire: • Traditional reviews “bundle” • Feedback • Compensation & Merit pay • Legal cover • Attempt standardization across: • Few who are making outstanding contributions • Great majority who are performing successfully • Underperformers “In practice, annual ratings are a disease, annihilating long-term planning, demobilizing teamwork, nourishing rivalry and politics, leaving people bitter, crushed, bruised, battered, desolate, despondent, unfit for work for weeks after receipt of rating, unable to comprehend why they are inferior…” W. Edwards Deming

6. Workforce Trends Some current and emerging trends: • Work anywhere initiatives have created a distributed workforce • Generation Y’ershave different ideas, values and attitudes towards career progression • Baby boomers are remaining in/reentering the workforce in large numbers • Sustained outsourcing/offshoring continue to drive team geographical distribution • New management ideas are gaining traction: Results Oriented Work Environment (ROWE) via Dan Pink: autonomy, mastery and purpose • Agile methods have created empowered, self-managed teams • The Quality of Life Movement’s Hallmarks • Consumer Detox: conspicuous consumption giving way to more conscious buying; • Everyday Activism: citizens routinely expecting more upfront information on their brands and the values of the companies behind them; • Buying Out: cynicism, if not hostility, toward marketing in general; • Natural, Local, and Ethical: the rapid growth of farmers' markets, natural foods, and fair-trade awareness. • Finding Promise in Sustainability 2.0, Businessweek, September 3, 2009

7. An Agile Performance Management System

8. A Journey with Results Intrinsic Motivation Your Journey. What are we passionate about doing? How and when do we work? Extrinsic Motivation Your Results. What do we want to build? What have we achieved? How has the market judged us? Do our rewards match our results?

9. Different Strokes… Company Google“Whimsical Idea Factory” Intrinsic Motivation Do what you like with 20% of your time. Decide what products you build as a team, and how you’ll build them. Work when you like, how you like. Learn what you like from the best. Extrinsic Motivation If it succeeds, you get a big bonus. Teams divvy up the profits democratically. Your fate rests entirely on your results. Bottom 10% are fired. Semco“Extreme Democracy” Best Buy“Every Day is Saturday” General Electric“Ruthless Meritocracy” “Four Radically Different Cultural Models: Best Buy, Google, GE, Semco,” BNET, http://www.bnet.com/2403-13059_23-237201.html

10. APMS Goals An Agile Performance Management System (APMS) should: • Unbundle feedback, compensation and merit pay, and legal cover • Involve knowledge workers in determining own measurement criteria • Ensure holistic involvement from team members, customers, users and managers • Accommodate differing levels of performance & situational leadership • Collect feedback frequently and use it to improve both product & process continuously

11. Intrinsic Motivation

12. Autonomy • Knowledge workers need responsibility for their own productivity: • Knowledge drives productivity • Continuous innovation, learning and teaching need to be part of the job • Knowledge worker productivity is dependent on quality at least as much as quantity • Optimal quality is the path to high productivity • Knowledge workers must understand: • What is our business? • Who is our customer? • What does our customer consider valuable?

13. Mastery People are happy when their job allows them to do the things they excel at. • Shu: Following • Learning fundamentals • Concentrating on basic individual techniques • Ha: Detaching • Breaking with tradition • Finding new ways and techniques • Ri: Fluent • Complex, integrated knowledge and techniques Ri Ha Shu People are in the most happy when they’re in a state of flow. MihalyCsikszentmihalyi Adapted from Alistair Cockburn, http://alistair.cockburn.us/Shu+Ha+Ri

14. Purpose Long-Term Effectiveness Intrinsic Motivation “I want to master TDD to become a better, more confident developer and earn my peers’ respect.” Extrinsic Motivation “I want to increase my skills to get a raise and a promotion by meeting my objectives.” “The most deeply motivated people… hitch their desires to a cause larger than themselves.” Dan Pink Dan Pink, www.danpink.com

15. Aligning Work with Purpose Work should align and be proportionate with one’s inherent areas of Passion, personal Strengths, and overall Motives. Roles and job responsibilities are based upon strategic objectives. Boxes sized by time allocation link work to core job Roles. Turn the Job you Have into the Job you Want, Harvard Business Review, June 2010

16. Extrinsic Motivation

17. Money Does Matter While a learning organization will always trump one driven by short-term gains, money still matters. • Fair Base Salary – Core wages should be fair for the market; basic financial security provides personal safety and allows for productive risk-taking. • Fair Merit Pay – Extraordinary efforts and results should be rewarded in proportion to contribution, risk & returns.

18. Link Merit Pay to Business Results 10% Intrinsic motivation should be complemented with concrete Extrinsic goals, fair recognition and just rewards. Individual 20% Team Results 70% Base Pay Scrum Team Member “Help my team to build a successful game as judged by a score of 85 or above on Metacritic.” 20% Individual 40% Team Results 40% Base Pay 20% Individual Sales Rep “Optimize our sales channel as measured by a 20% increase in North American sales.” Team Results 30% Base Pay 50% Development Manager “Build a high performance team as measured by Customer Satisfaction scores of 9 or above.”

19. Example Business Results

20. A Holistic Process

21. Roles Individuals & Teams perform within and evolve the APMS. Team Customer Manager Output Individual Managers set up, maintain and nurture an APMS. Customers and Users provide requests and critical feedback on results. Users

22. Defining Objectives Requests Team Establish Objectives Customer Requests Establish Objectives Manager Individual Establish Reward Structures Users Rate Intrinsic Objectives Extrinsic Objectives Team Objectives Subjective Output Measures Individual Objectives Objective Output Measures

23. Feedback Cycle Rate Team Rate Deliver Customer Rate Rate Rate Manager Output Individual Users Rate Feedback on Intrinsic Measures Feedback on Extrinsic Measures Managerial Rating of Contributions Team Rating Customer Ratings of Team Interactions Self Rating User & Customer Rating of Output

24. Emerging Trends in Feedback Feedback can come through many different complementary forms, and at different levels. • Holistic, Iterative Discovery – Whole-team involvement in both product and process understanding & evolution. Group Product • Agile Maturity Assessments – Inspection of trends in structure, process and/or output quality within and across teams. Group Process • Micro feedback – Quick, Twitter-style observations & suggestions given in real-time. Individual Performance

25. Improving Agile Performance through Holistic Performance Management

26. Contact Us for Further Information Sanjiv Augustine President Sanjiv.Augustine@LitheSpeed.com Arlen Bankston Executive VP Arlen.Bankston@LitheSpeed.com On the Web: http://www.lithespeed.com http://www.sanjivaugustine.com

27. Overall Process

28. Sample Human Rating Objectives

29. What is Feedback? Feedback is simple observation of current events, facts and perceptions, offered and discussed without judgment or direct impact to compensation. • What were the major events of the year? • What have been the major accomplishments? • What new skills have you acquired? • What have been your struggles? • What contributed to those situations? • What insights do you have, looking back on the year? • What are you most proud of? • How does this inform us going into next year? • What do you want to do better? • Are there new areas you want to explore? • What skills or capabilities will you develop? • How can we build developing those capabilities into daily work? • How will we tell you’re making progress? Thanks to Esther Derby for these questions: http://www.estherderby.com/weblog/archive/2004_11_01_archive.html