Aug 27, 2010

Atlassian overhauls the traditional performance review system

I have blogged earlier about Daniel Pink's thoughts on what motivates us - as well as the view by an expert that performance reviews should be scrapped. Now Australian software firm Atlassian, inspired by @danielpink is taking a public step to doing something about it. Check the announcement below:

Atlassian's Big Experiment with Performance Reviews
For years, Atlassian's performance review model was in line with 'HR Best Practice'. Twice a year, people would review themselves and their peers via 360-degree reviews. Managers would review their team members and determine their final performance rating on a simple 5-point scale that determined their bonus. I believe it's a similar model to that of many other tech companies like Google and Salesforce.

So, what was the problem? In short, twice a year the model did exactly the opposite to what we wanted to accomplish. Instead of an inspiring discussion about how to enhance people's performance, the reviews caused disruptions, anxiety and de-motivated team members and managers. Also, even though our model was extremely lean and simple, the time investment was significant.
The Trial
For 12 months, we will trial a new review methodology. We'll make iterative improvements along the way. What's more, we'll blog everything  here

Here are the outlines of the trial:

We'll replace the traditional performance review structure with a more lightweight, continuous model.

We'll incorporate the constructive aspects of reviews in the existing one-on-one meetings. Atlassian managers already have weekly one-on-ones with their team members. Now, every month, one of these meetings is dedicated to a discussion on how the person can enhance their own performance and play to their strengths.

We'll provide managers with a conversation guide to help them structure these one-on-ones.

We'll remove the distribution curve.

We'll stop paying individual performance bonuses. Instead, we'll give everyone a salary bump (similar to Netflix's approach, paying top market salaries rather than bonuses).

Every six months, managers and team members use a one-on-one catch up to discuss their performance and how often they have challenged themselves in the last six months. Unlike in traditional performance reviews, there will be no requirements to write lengthy written assessments in preparation for the catch up

At the beginning of each six month period, we'd like everyone to focus on some personal areas where they can challenge themselves either by capitalising on activities they already love or by improving a weakness.

The Impact

This will mean that employees will have more regular chats with their managers about how they'd like to work, not just about everyday tasks. Also, managers won't have to spend hours on thinking back and recording people's past performance during lengthy performance review cycles.

You can follow the process here. They will share their journey publicly.