Saturday, November 17, 2012

What to do with the performance review?

It's no secret that many people think the Performance Review is sick. After 23 years in industry, I've heard these reviews criticised far more often than they have been praised. Most people treat them like a bit of necessary, but useless, administrative overhead. This is a great shame, as most people crave feedback. What an ironic situation!

Atlassian have bumped up against this situation, and have overhauled their performance reviews. This involves two main things -
  1. Abolish an overall rating, and replace it with a two dimensional graph that focuses on the frequencey of "outstanding performance" and "stretching yourself".
  2. Abolish individual staff bonuses. People are top market dollar, and then share in a company-wide bonus if targets are met
Regarding point 1, they have really replaced one rating system with another. The crucial difference, to my mind, is that the new rating system focuses on "frequency" of the desired behaviours, rather than just a blank score. It is much easier for someone to agree that they "didn't stretch themselves often enough", than to agree that they are a "below average" performer. So this might feed into more honest discussions.

Regarding their new approach to remuneration, I also agree. Tying bonuses to company performance gives people a real stake in the bottom line. Of course, this is not really innovative, but I think they are moving toward best practice here. I suspect you will find that people get different bonus shares as well, so perhaps it's not quite as progressive as it sounds!

Atlassian admit they are flying a bit blind with these changes. They put these changes in place nearly two years ago - I wonder if they have posted up a retrospective?


RodeoClown said...

The article you linked is from January last year, so they are almost 2 years down the track ;)

They might have written more about this since then

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