Embracing Continuous Feedback While Upgrading our Approach to Performance Management and Compensation

Until recently, the corporate world considered feedback to be a formal exercise, part of an employee’s yearly performance appraisal. And such process would then make performance management and financial compensation inextricably tied. Scality was no exception. We had an individual bonus system in place tied to quarterly objectives, based on the idea that we could establish a direct correlation between an individual’s impact on the business and what he/she earns. That’s how we managed performance and compensation back in 2013 when there were only 40 of us. We were following a Management by Objective (MBO) approach, a traditional method, which sometimes leads to employees negotiating with their manager directly and individually, so those able to negotiate better would have easier objectives set. When using an MBO approach feedback is once a quarter, or less frequently. Moreover, feedback was a one-way form of communication: from manager to employee.

Drop the yearly or quarterly appraisal

Four years later, we now count ourselves at nearly 250 employees, and we see things very differently. You could say we have evolved our approach. We have dissociated feedback and performance management on one hand, and financial compensation on the other hand, in order to fit our needs best. Scality’s bonus plan is now determined at a team level rather than at an individual one, with the sole exception of sales people. Our bonus plans are basically five, with 41 percent of our staff is on our Corporate Plan, and others distributed across Sales or Sales Engineers Plans, Technical Services Plan and Executive Plan.

All our compensation plans are tied to financial metrics, as top line is the ultimate definition of success at our growth stage, given our mission to disrupt the storage industry. The word “objectives” has been abandoned and we now focus on “priorities” defined at both the corporate and team levels. Performance and achievements vs. priorities are reviewed every four months to avoid having all attention solely focused on quarterly financial results. Periods of four months (trimesters, really) also allow adequate time for new initiatives to flourish in accordance with our priorities. We publish these priorities internally. It is public information for our team members who easily understand the focus areas of any other team on whom they depend and with whom they work side by side.

Corporate and team priorities as the cement of our alignment

Shared, or common priorities and goals allows for better company alignment and ensures that we are all in the same boat. We are comfortable with the fact that there is financial bonus potential for employees even if they may not have reached their individual goals. With our current approach, employees receive a bonus if the company and relevant regional objectives have been reached. This doesn’t mean that we don’t look at over- and under-performers. Such focus happens at least once a year during our annual review of salary and equity packages, and of course when we select employees to join Le Club, Scality’s recognition club for top-performing employees.

In 2016, all Scality employees thus received their annual bonus, 45 percent received a salary increase, a slightly lower percentage were granted additional stock options beyond those they received when joining the company, and 15 percent were invited to join Le Club. Moreover, we award exceptional bonuses on a discretionary basis. In 2016, a few dozen team members received these discretionary cash bonuses, above and beyond their contractual package.

Embracing continuous feedback

As we de-coupled feedback on individual performance from bonus schemes, we opted to implement a continuous feedback process. The modern—and certainly the younger—team members expect continuous feedback. They perform rapidly and need to hear from their manager in the same time frame. At Scality, we feel feedback is even more relevant and impactful when given right away. Our company is dynamic, and everything moves quickly by the day, week, and month. Therefore, if you want feedback to have an impact, it should be given regularly and in a timely manner. Forget the yearly or even the quarterly appraisal meeting. But, giving continuous feedback is easier said than done, so we train our team leaders. Indeed, we are happy to share our continuous feedback guide here.Continuous feedback performance management

Of course, this change wasn’t accomplished in a day. It took experimentation, appraisal of successes, and even mistakes to get here. For example, in 2015 we tried using an industry best practice, “The Objectives and Key Results” (OKR) method that was created by Intel and perfected by Google. OKR defines objectives at a team level and are shared throughout the entire company— elements we retained. The trick, however, is to set objectives that are by design very, very ambitious. As such we had to accept the fact that reaching 80 percent of our objectives was more than OK. It just didn’t work for us at Scality. We had a cultural blockage, not based on the fact that tangible objectives were public and set on a team level rather than an individual level, but rather because they were purposefully unreachable. It was just sickening for our team members, so we abandoned OKR and opted for our ‘priorities’ approach coupled with continuous feedback. And that doesn’t prevent us from being bold! At the end of the day, we were ranked leaders in our industry alongside legacy giants, including EMC and IBM in the Gartner Magic Quadrant. Disruptors we are!

Yes, we believe in continuous feedback, and that includes corrective feedback. It is indeed not easy to take corrective feedback as personal self-defense mechanisms unconsciously prevent us. To make it succeed in one organization, people need to learn how to take negative feedback and our managers must learn how to deliver constructive feedback in an emotionally intelligent way. Here at Scality, we encourage everyone to do both.

When asked what she looks for in someone who can scale with a company, Sheryl Sandberg, COO of Facebook, answered: “someone who can take feedback well. Because people who can take feedback well are people who can learn and grow quickly.” I fully agree with her. Every one of us at Scality is an entrepreneur. Everyone can experiment, succeed, or fail and in doing so, correct their course of action as needed. And that’s why continuous feedback is an integral part of our success.

Follow me on Twitter @ErwanBreizh

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