Fukuko: You touched on this idea of complexity. I think many HR leaders and startups face this situation when they go through exponential growth.
This might be a larger question, but what were some examples of complexities that you encountered during this period? How would you describe how the complexities changed with the size?
Pras: Yes, I believe the complexity changes when an organisation grows, not just in terms of numbers, but also structure. When you have more layers, it becomes challenging to reach the lower levels of the organisation.
When it's still small, as an HR leader or someone in people management, it's easy to hear complaints and understand what's happening at the ground level. This understanding helps in formulating necessary policies and programs to balance and boost productivity.
However, as the organisation grows larger and more layered, it becomes more distant from the bottom or even the sides of the organisation.
You need to think differently. You cannot continue the same approach, like casually chatting with people randomly. If it's a group of 40 people, it's easy to do. By the end of a month or three, you'll know who the key opinion leaders are and who has significant influence. But when the group reaches 200, it's not feasible because you have many other responsibilities.
So, you have to consider building a system where you can still hear those complaints and concerns. I think using performance management tools is also very important to capture those voices.
Fukuko: Yes, absolutely. And thank you for addressing that. I believe performance management is an area where we need to ensure we're collecting feedback on how people are experiencing the process.
Before we delve into that topic, could you briefly discuss how you continued to gather feedback as the organisation grew? What structures did you establish to ensure you were still gaining insights and feedback to continually evolve and improve HR-related processes?
Pras: I believe there are. Over the years, I've tried many things. It's part of working through trial and error, experimenting with everything.
Fukuko: Absolutely.
Pras: Including in people management. I think it's important to take time to train leaders and managers throughout the organisation to conduct one-on-one meetings effectively. They should be the ones gathering and summarising information.
One crucial aspect is to have a structured channel for people to voice their concerns and questions. For instance, setting up an integrated channel. Performance management is one aspect of this. In our system, there's a self-assessment of performance and a section where you can voice your complaints and concerns.
We also conduct biannual employee engagement surveys and hold town hall meetings to gather feedback. We even use tools to record these one-on-one meetings. Everyone is mandated to record their one-on-one meetings and make reports about them. The minimum requirement is once per month, but they can do it once a week if they wish.
It's important to view all these channels holistically, gathering all the data and reviewing it to identify trends and connections. One flaw I see in other companies is that they rely too much on one method, like only focusing on employee engagement surveys.
They don't have multiple channels to gather feedback. Surveys and feedback can depend heavily on the context and timing. For example, if you conduct a survey after giving bonuses, the results will likely be positive.
So, I believe that for "ethical HR", you can control the narrative of the survey and everything. That's why it's important to have multiple channels, multiple data, multiple information. I think this is very important if you want to make a very impactful policy, a very impactful program that is beneficial to the productivity of your organisation. You have to be able to do that.
Fukuko: That's an important reminder about utilising multiple channels and taking a holistic approach. We must not let bias impact our major decisions.
I think we're often guilty of this. We might take one survey and assume, "Oh my goodness, this is exactly what the employees want." Then, after implementing it, we realise, "Wait a minute, this is not it, right?"
So, taking a holistic approach and spending time analysing data across the board is crucial. We might revisit this topic later. But for now, let's shift gears to discuss performance management, which you touched on and will be the focus of our conversation today.
Could you share a bit about Mapan's journey in terms of its performance management system? Where did it start, and where was it when you left the organisation?
Pras: Yes. What I find interesting is that before I worked at Mappan, I was employed at an oil company for five years. During two of those five years, I was assigned to lead the performance management system.
Working in a structured corporate environment with abundant resources for training gave me a perspective on performance management tools such as OKR, KPIs, balance scorecards, etc. The idea of a performance management system is to understand and categorize employees into three groups: those who are performing, those who are not, and those who are performing but can be pushed to do better. It's not just about identifying who is performing and who isn't, but also about differentiating between the two and finding ways to help the latter improve.
When I started at my company, we were only 40 people and we began with pen and paper. I remember using KPIs to set objectives and deliverables for roles, and setting KPIs for the next six months. After six months, we would review and set new KPIs for the next six months. I believe that a six-month review is the right time to do reviews. Three months is too fast and involves a lot of administrative processes, while one year is too long as focus and priorities can shift within that time. So, six months seems to be the sweet spot.
After performance reviews, it's also important to decide what to do with the employees. This could involve sending them to training, assigning them mentors, giving them a raise, issuing a warning letter if they did something wrong, or promoting them. It makes sense to do this every six months rather than every three months because you don't want to raise a person's salary every three months.
As the company grew, we experimented with two things: the tools and the format of the performance management system. We started using an HR system for performance management and changed the format from KPIs to OKRs. We also started incorporating soft skills and core values into the assessment.
When we started, we were using pen and paper. By the time I left, we were using an application that was used throughout the organisation. We had adopted the OKR system from Google. When the company was still small, after everyone was assessed by their managers, the HR team and I would analyse the results and have a meeting with the CEO and CFO to discuss the results. As the company grew, the committee discussing these results became larger.
One step we added to the performance review process was a calibration session. This involved discussing all the top performers from each department and calibrating whether they truly were top performers of the organisation. It was a tough but fun activity because it allowed us to understand others' points of view. In Mappan, the calibration process for the entire company took us a whole week. The last time we did it, we had 600 people.
Fukuko: When the organisation has 600 people, how many are part of the calibration committee?
Pras: It's all about the executive team. I think there were nine.
Fukuko: Okay, all nine people. This is interesting because, as you said, when people evaluate others, there are bound to be certain biases.
Our perspectives on how we measure success versus others differ, no matter how clear the KPIs or OKRs are. We all have our own biases.
Could you share more about the outcome you were aiming for from this calibration? What were the outcomes you were able to achieve through these calibration meetings?
Pras: So, I believe what's essential here is that at the end of every performance review, we have a map of our top talent and those who need attention. These are the two critical groups. While the rest of the organisation is important, these are the key areas of focus. It should be a collective effort from all executives to retain our top talent. The responsibility shouldn't rest solely with their direct managers.
We also need to observe a certain group of people closely. Is it time to let them go, or are they struggling because they're not in the right role? If more people are watching these individuals, we can make better decisions for them. This is a key reason why we have evaluations.
Secondly, we need a mutual understanding, especially among executives, about who our top talent is and why. This shouldn't be disputable as it will be reflected in promotions and salary increases.
For instance, an accountant might question why a salesperson, who joined the company at the same time as they did, is promoted and they are not. Every executive needs to have the same perspective on what constitutes top talent in the organisation.
Thirdly, we need to sit together and agree that the performance management review process is biased and subjective because we are human. If we are being subjective, we should at least be subjective as a group. I remember when we first did this with all the executives. I told my colleagues that we need to understand and agree on this point.
It's not just you being subjective to your team. I'm being subjective to my team. And, everyone is being subjective in a different way, right? Because companies have different core values and cultures. These things actually make the company subjective to what is considered talent and what is not. So, what we aim for is not objectivity, but group subjectivity.
It's not just you being subjective to your team. I'm being subjective to my team. And, everyone is being subjective in a different way, right? Because companies have different core values and cultures. These things actually make the company subjective to what is considered talent and what is not. So, what we aim for is not objectivity, but group subjectivity.
Fukuko: Yes, the point you make about leadership alignment is so important because it sets the company's culture. It's how leadership recognises top talent, not just one leader or the sales leader, but together.
The message you send to the rest of the organisation is what's really important. I appreciate you emphasising this idea of being subjectively together rather than individually subjective.
It's also fascinating because, with this calibration meeting, are there situations where there's a dispute? Some leaders might say, "Oh, okay, this is a top performer," and in that situation, what happens? Do they then get removed from the promotion list? What happens if there's disagreement across leaders or the executive team?
Pras: Yes, I believe that ultimately, the final decision rests with the CEO. However, there are three potential decisions: yes, no, or let's wait and review further. It's important to establish clear criteria to determine whether the answer should be yes or no.
Fukuko: Yes, understood. We've discussed several components of the performance review so far. From your experience, what was the easiest and hardest part of this process?
Especially in this journey of building from the ground up, from pen and paper to establishing a more structured process?
Pras: In fact, implementing the performance appraisal is the easiest part. It merely requires time and patience in communication, conducting clinics, or training leaders. The most challenging part is genuinely putting performance planning into practice.
You should be able to envision what this individual needs to accomplish in the next six months. We will review this person based on what we have planned, not on new KPIs or OKRs that are created at the time of appraisal.
Therefore, the crucial part is training managers to create performance plans for their employees.
Fukuko: Got it. Could you tell me a bit more about this part? So, by that, do you mean ensuring that managers set reasonable OKRs to start with? And matching the timing with the performance appraisal structure? All of these things.
But it also sounds like, how do you then determine the next steps for this person once they're evaluated? Is that what you mean by performance planning?
Pras: Yes, I believe that individual performance planning is fundamental. There are two things to consider. First, the company's direction and goals. This person needs to have KPIs that are directly or indirectly related to these.
If there is no relation, then why is this person in the company? Secondly, you need to ensure that this person has work to be done. This is a hygiene factor. It takes time and effort, which also needs to be appraised and monitored.
Having managers who can drill down from the company's OKR, company objectives, or company goals towards individual performance can be challenging. Especially for those who are indirectly related. For those who are directly related, it's easy. But for people in HR, finance, or supply chain, it's indirectly related, making it harder.
There are tasks that are hygienic and very important to do. If you do them right, nothing will happen. But if you don't, there will be a lot of disasters. How you incorporate that into the KPI is also a challenge.
At the same time, if someone has five objectives, it should be clear what the rank of the most important objective is from the first to the fifth. Creating a perfect performance target or performance plan for this person is really hard. Even for me, it's still hard. I can imagine for a sales manager, finance manager, or supply chain head that it's not something they do on a daily basis, but they have to do it.
Fukuko: Absolutely. And I have to ask, how did you educate the managers to be able to do this effectively? How did you set the target for each individual?
Could you walk me through the process that you went through to guide managers in setting these targets effectively?
Pras: Yes, when I was in Mappan, essentially. I handled the sea level and the VPs, and my team managed the lower levels like the heads, middle managers, supervisors, and so on. We had a program called 'three cycle assistance', which was included in the KPI of the HR personnel.
I remember in 2015, we hired a new TP for marketing who came from a large consumer goods company. However, things operate differently here. So, I assigned myself to guide him through three performance review cycles from planning. He needed to consult with me and get my approval for everything.
We had many discussions about why we do certain things here and what is left. After three cycles, we handed over the responsibilities to him.
Fukuko: So, that does require quite a bit of time and effort.
Pras: Yes, because, you know, if they can plan well, then the appraisal assessment is a piece of cake. Right? Because it's just a check. Is this a yes or no? Is this still relevant or not? Because there's a process.
If you set a criterion, and then after six months it's probably not relevant because there are changes, there's a process to change that and to replace it, but you have to be able to justify it. And it needs to be accepted by your team members when you change the objective or the KPI.
Fukuko: Yes. That makes sense, considering you also have a six-month process.
It takes time to set it up every six months, then to review, and then to reassess for the next six months. Just to clarify, are you also evaluating salaries every six months? Does this occur around the same time?
Pras: So, we know we assess salaries every year. However, there's a promotion, which we call a mid-year promotion. This is for the people that we are unsure about, and then we wait for another six months to promote this person. So, in the midst of the commotion.
Fukuko: Understood. So, these are unique circumstances in the case that someone didn't receive consideration, or they were being considered but are not yet certain, and then wait another six months. That's amazing.
I'm curious about this process that you've established. If you were to go back and do it again, which I hope you don't have to, what are some things that you would change? After the lessons you've learned, what might you do differently?
Pras: I think it's not about doing things differently, but about implementing what I know to be effective earlier. For example, conducting the calibration meeting doesn't have to wait until we have 500 people. We could start when we have around 200 or 300.
We could also begin with a smaller team; it doesn't have to involve all nine executives. Additionally, providing assistance for new managers or veterans could start earlier. After four years of working with Mapan, I realized this.
So, if I could do something differently, I would start these initiatives earlier. I shouldn't assume that everyone knows how to plan their focus well. There are many things that I would want to do differently, or rather, do earlier.
Fukuko: Yes, understood. With the new heads, was there a training program they had to go through, or was it just one-on-one conversations that you and your HR team had with them?
Pras: When we onboard a new member, we first explain the system we use, the tools, the process, and their responsibilities. However, sometimes they join at different stages, such as right after the appraisal process, the planning process, or two months before everything begins.
We equip them with knowledge first, and when it's time to perform, we add an extra step for this new manager. Unlike other managers who have completed the training program and can assess their employees independently, this manager must submit their assessments to HR first.
HR will review and have a discussion session with them for clarification. If everything is satisfactory, it then goes to the head.
Fukuko: Got it. So, it requires an additional step. Understood. One thing you mentioned earlier that I wanted to revisit is the balance between OKR, specific goals, core values, behaviour, and soft skills.
You mentioned that you started incorporating this a bit later on as growth happened. Could you share how you balanced behaviour versus performance?
Pras: Okay, so I believe it starts with defining the culture and identifying the core values of the organization. Then, it's important to evaluate these core values, and the best way to do this is as part of performance management.
What we decided at that time was to initially assign 10% weight to these values and 90% to the hard KPIs. Over the years, we adjusted this ratio based on our observations. The lowest we went was 80% KPI and 20% weighted core values for lower-level tasks. This ratio increases higher up in the organisation.
Fukuko: Okay. So, is it dependent on the hierarchy?
Pras: The hierarchy level is essentially reflective of our philosophy at the time. The higher your position, the lower your direct impact on the result, but the greater your need to exert influence. That's why core values are much more important. If you are strong in your core and leadership values, then you have the influence to significantly affect the result.
The hierarchy level is essentially reflective of our philosophy at the time. The higher your position, the lower your direct impact on the result, but the greater your need to exert influence. That's why core values are much more important. If you are strong in your core and leadership values, then you have the influence to significantly affect the result.
Fukuko: Yes, that's such a fascinating point. What's interesting is how leaders need to consider their influence on those carrying out the tasks. As leaders, we should be delegating day-to-day tasks rather than doing them ourselves.
So, the focus should be more on our behaviour rather than the actual targets. This is really intriguing because some people I've spoken with differentiate based on responsibilities, whether they're more commercial or non-commercial.
It seems like there are various approaches among different startups and how they handle it. The last question I have for you is this: if you were to give one piece of advice to someone building a performance management system for their organisation, particularly startups, what would that advice be?
Pras: I believe it's important to focus on the purpose and content, rather than the tools and system. Many people understand the purpose and content of performance management. However, when it comes to implementation, they focus more on whether to use OKR or KPIs, or this tool or that tool.
As a natural leader, this should not be your primary concern. Your concern should be ensuring the process is purposeful. You should consider what you can do with all the information gathered from this process and how it can help the company, rather than just focusing on the system and tools.
Fukuko: Taking a step back and really focusing on the "why."
Pras: Don't worry if it's small. Just use pen and paper. You don't have to install anything, because the essence is much more important.
