Singular Systems: Reinventing Its Performance Management SystemNov 2019
Singular Systems, which was founded in 2002 in Johannesburg, South Africa, is a bespoke software provider with a total staff today across its three sites of about 200. The company was started by Anthony Wilmot and the current CEO, Nicholas Kruiskamp, and has a family-business ethos.
Luckily, when the company embarked on reinventing its pre-existing performance management system in 2017, there was a fair degree of trust already within its culture. “Any process you could think of would have zero impact if it didn’t have trust,” says Dave Elliott, an executive of Singular Systems.
Another essential was that care and growth of employees as a value had to be accepted by the top leadership.
The performance management project was embarked upon simultaneously with a Legitimate Leadership transformation project, led by Ian Munro (see Reinventing Performance Management Workshop). Following the reinvention, Singular Systems Cape Town achieved increased revenue growth year-on-year due, among other things, to focus on growing staff and driving individual contribution.
Singular Systems applied principles from Legitimate Leadership in designing its new system. Thereafter Singular Systems evolved its own system in its three separate offices (in Cape Town, Johannesburg and London).
Divisional goals are aligned to achieving the company-defined goals; thereafter, the process of performance management is consistent across the geographies. However, the specific goals, values, principles and cultures that are defined in each are specific to the geographies.
Elliott says the family culture of the business was both a blessing and a curse. A curse because a new entrant would not clearly know it’s values, which were unstated between original “family” members – and this could result in a plunge in quality when a family member was not involved in a project.
“In a business which is scaling up, when there is a results focus rather than a contribution focus, this becomes a challenge,” he says.
In reviewing Singular Systems’ pre-existing performance management system, it was observed that support/mentorship was hindered by two issues.
- The company was not able to define what excellence looked like and also could not articulate the means that were needed to execute a task efficiently (for example, the expectation was that middle management would organically grow the skills needed to lead people). “Language is important in any framework. We had not, for instance, defined what ‘excellence’ looked like. We used to use wording like ‘keep up good delivery on client X’. But it was left to that person’s interpretation of what ‘good delivery’ looked like rather than the concept having been defined in terms of process, quality and principles. This has now changed.”
- When the quality was not good enough on project-based work, the senior team would swoop in to save the day rather than holding people accountable and using the opportunity to grow individuals involved or have tough discussions. Thus the opportunity to grow in a difficult situation/period was taken away.
The company’s pre-existing, conventional performance management system was very financially orientated, with goals and budgets defined annually and assessed every six months.
“Every six months management sat with each employee and examined his performance and from that decided on salary increases and bonuses. The question asked of the employee then was not related to the values and goals of the organisation and was usually a generalised ‘how did the past six months go?’”
Also, many people were putting in a lot of very hard work. The question arose as to why they were working so hard. Perhaps it was because quality was not the best and there were too many reworks of software. If that was the pattern, then according to the Legitimate Leadership Model, bonuses based on working really hard but not actually adding significant value were not justified.
There was, apparently, much potential for streamlining and greater efficiency.
WHAT CHANGED – FEATURES OF THE NEW SYSTEM
- From the start, in line with Legitimate Leadership principles, it was stated that the overall purpose of the reinvented system would be to grow people and enable their contribution. In the previous system, every year the company’s financial goals were set for the year ahead and these were cascaded down to each division. Now these goals include some non-financial goals as well. Progress against all goals is communicated to all staff on a monthly basis. “Financial goals and budgets are very much part of the process, but the difference is that both financial and non-financial goals have been articulated. For instance, non-financial goals included one on hiring – a goal of better understanding talent acquisition (because the costs of recruiters was too high, the company had to do its own recruitment).”
- Whereas previously the review process had two main elements – retro and goals – in formulating the new system, huge initial work was done on first understanding the company’s Values and Standards – that is, Values and Standards for “each other” and Values and Standards for “clients”. Once the Values and Standards were defined as precisely as possible (clichés were avoided), it was clear what people would be required to “stand up” for.
“What time we spend on something is a reflection of our focus. Our focus changed from the results to empowering people. This required an initial massive time investment. They need to feel the care!”
The session to define site Values and Standards is repeated every year and this exercise now takes a few hours.
“This is because there is now a thread through the organisation, in its fabric, and through all individuals. This means that subsequent changes are mere tweaks to reflect changes in the environment or in perceptions. Some of our Values – for instance, gratitude – will always need to be there; others will change. For instance, work-life balance may change for individuals. A bachelor joining the company might want to work harder than a new father, which is perfectly acceptable.
“Most empowering is that whereas we normally think that formulating performance management systems is a top-down process, this process – because it is transparent – is not. A junior can challenge a senior, saying that a particular behaviour is not in line with a particular value. Formulating and broadcasting the values and principles causes immediate bonding within the company.”
- Job roles were revisited to ensure that the unique value-add of each role in terms of Purpose and Key Accountabilities was appropriate. Articulation of skills and what is required from each job role, and training required, is done across a number of facets. This is also done from the client perspective for each job role.
- Each staff member within the organization was assigned a Project Lead and Career Manager. The Project Lead of a project team is responsible for the care and growth of those on the project. A Career Manager’s focus is on longer term career development in line with the individual’s aspirations as long as he is with the company. This was seen as a particularly important addition in this project-based company to provide continuous focus on an individual’s development as he might move from one project team to another.
- Monthly Contribution Sessions have been instituted, attended by the individual employee, the Career Manager and the Project Lead. The individual brings her proposed contributions for the month ahead that need to align from a complexity perspective with what is defined against her job role. Each contribution begins with “I will commit to …” (in contrast to the previous common statement “I will continue to …”). The individual also brings her assessment of her contribution overall in the past month (Superstar, Solid Citizen, Growable/Coachable, Disconnect). The Career Manager and Project Lead share their perceptions of the individual’s past contributions as well as acting as coaches on the proposed contributions for the month ahead. The employee owns her contributions and understands that this is what she is accountable for. In the staff of 40, there are 5-8 career managers who may look after one individual or more. And there are about 10 Project Leads because the division typically has 10-14 clients.
- Every 6 months a bonus is paid (depending of course on company performance – if there is poor financial performance there is no bonus). Notably, doing the job to the required expectations is not worthy of a bonus – that is what the salary addresses. The bonus is paid out on what over-and-above contributions the individual has made – project-related, business-related, in relation to clients, behaviours and attitude. Over-and-above contributions may be acts not agreed in the monthly contributions and deliverables – for instance a person who brings a good attitude and contributes to the broader team’s happiness day-to-day is unlikely to have been defined previously in Values and Behaviours, but is considered to add value. During the performance appraisal, a discussion is held and a 1–10 score is agreed. The 6 months of contribution discussions are obviously an input in these discussions. Elliott recognizes that the rating thus arrived at is subjective but he says that there is generally alignment of the score between the parties involved if the contribution sessions and process have been well adopted and adhered to because they minimise the discrepancy in people’s perceptions of their performances and those held by their managers. “Our initial assumption was that people would be upset when their bonus was small, but that is generally not the case.” Variance in bonus payments has increased – people who have ‘shot the lights out’ in the past 6 months now get significantly more than those merely contributing at the level that their job role prescribes. Previously, under the family business culture, there was less disparity between bonus percentages of a monthly salary as everyone was seen to be driving the financial success of the business. This created two challenges: it disincentivised the members of staff that were contributing significantly over and above what was expected of them, bringing them back down to a mean; and it validated poorer performance from members of staff who had merely performed at the minimum required level.
After the new performance management system and its philosophy had been formulated, Elliott organised a breakaway morning for the 40-person Cape Town team in which the new principles were explained. Elliott has been the champion of the process – but other staffers have been brought on board and there is now wide-spread support for it.
- Singular Systems Cape Town has been able to shift the emphasis and culture of the site from financial to people development so that its excellent financial growth recently has been a byproduct of people development rather than the reverse. Management has also realised that it is not asking for more time and effort but rather for a defined contribution.
- Employees increasingly realise that it’s not for the Project Manager to come up with tasks for them; it is for them to define their contributions and, for instance, say “could you please give me more projects to align me with X or Y”.
- There is increased alignment between day-to-day work and impact on company and department goals.
- Everyone holds others to account.
- Only once people are performing at the next level is a promotion offered. And the person concerned is first asked whether he wants to take on more responsibility. Not everyone does – just as not everybody wants to lead. Previously a technical person often just grew into a manager’s position. “We had extremely competent technical people who weren’t necessarily good managers.” But whatever they decide, everyone is still developed!
- Deadweight people – victims – have left the company. Previously they did enough to check all the boxes and management couldn’t articulate what they were doing wrong. This bred a culture of mediocrity and discouraged new entrants.
- Elliott’s Cape Town team numbers about 40; he believes that the system is scalable. A team of 900, for instance, should be divided up into groups according to geography, skills or other criteria. Singular Systems is a project-oriented company. In a more “continuous work” company the principles are the same, he says: look for the different components. “For instance, a farm needs preparation of the ground; preparation of the seed; planting; and harvesting. Hold people to account for each element.”
- Of course there are external factors. In farming, for instance, even with the best intent you might be let down by the weather. If you don’t recognise this, it’s demotivating. You can only be held accountable to what is in your control.
- “We work in an industry where there is a huge demand and competition for good people. In order to develop staff effectively, there is a significant time and cost associated with this – investment that leads to value creation but requires up front commitment and consistency. As a result, companies may be concerned that the investment is lost when people leave for other businesses. Our view is in line with the adage, ‘what happens if we train our staff and they leave?’ We say, ‘what happens if we don’t and they stay?’ We have accepted that there will be an attrition rate, but attrition rates have fallen in our division.”
- “Many of the meetings with the Career Manager occur over a meal or coffee. Initially we asked the staff to select career managers. Later, with new recruits coming in we have had great people looking for opportunities to be Career Managers. They are also thereby steeped in the Legitimate Leadership Model.”
- People define their own career path and Career Managers facilitate this. “There is a myth that if a company cares about people it has to give up caring about the money. But the two are not in opposition. They are actually aligned – and we communicate this to shareholders.”
- Consistency is more effective than intensity. In other words, do consistent education, not big-bang. Education takes time and effort. “Going to the dentist doesn’t look after your teeth; brushing your teeth does.”
- It’s not the mechanism of the performance management system, it’s the spirit, that matters.