Fukuko: What are some other priorities you have for the company this year? Obviously implementing the performance management system, but what else are you focusing on?
Andrei: Yes, performance management takes a significant role. If you want to dive in there, we can. Let me share what came up. We'll have quarterly reflections in June.
Previously, we used a system of quarterly reviews and biannual reviews, which changed almost every three months. Now, we only have quarterly actions, and we're moving away from that to quick bimonthly tech reflections, which we now call reflections, not tech reviews.
We've also changed from biannual reviews to biannual growth charts, which will occur twice a year. Then, annual compensation reviews will be in April, for example, for the bi-annual growth chart. There is a page outlining the steps and what questions can be expected.
We're trying to align with the company's current stage. We know we want to drive high performance like other companies, but we're also trying to foster a tech innovation culture. This is connected to our culture of challenging the tech status quo.
We're trying to align with the company's current stage. We know we want to drive high performance like other companies, but we're also trying to foster a tech innovation culture. This is connected to our culture of challenging the tech status quo. We realised that we got stuck with teams doing the same things they used to do.
That's why we wanted to shift to performance thinking and have it evaluated by both the KPIs and the projects. This encourages technicians to challenge some things and make some tech innovations. So, it leads to questions as well.
Fukuko: Maybe we can take a step back a bit. This is really insightful and helpful. So, the performance process takes into account KPIs which are mainly based on their specific role and then projects that they take on, which are more ad hoc, I'm assuming.
How are these projects decided?
Andrei: Every quarter.
Fukuko: Okay, got it. So, every quarter they jump onto different projects and then they're assessed by that as well.
Andrei: Yeah.
Fukuko: Okay, so actually they're not explicitly measured by the values, but it's more about how they engage with those projects and how they show the kind of value that you showed me earlier.
Andrei: Yeah, which challenges the status quo.
Fukuko: Exactly. Or is there another component around values specifically in the performance management process as well?
Andrei: So the project is actually going well. As a sample for the principles, we can also share one or two examples where it successfully embodied the way. But there's only a small amount of instances where you see improvements. So at least we can also see that.
But then, at this stage, we don't evaluate people on how explicit they are. From one to ten against each principle, we're not at that stage yet. We just need to build on the awareness part and through some indirect planting of ideas.
Because they see these projects and then they're like, "Hey, we challenge the status quo." We see here at this stage that we have wanted to drive a high-performance innovation culture, or innovation means projects. You know, like kind of making a psychological impact.
Fukuko: That's fascinating. And right now, in terms of the performance management process, is it evaluated by their manager, or is there a 360 process as well?
Andrei: We had 360 before, but this time, for the quarter reflection, it's going to be none. And for biannual growth charts, it's actually optional.
Fukuko: Okay, interesting. Could you share a little bit more about your thought process there in terms of why you decided to move away?
Andrei: At this stage, we need to move really fast. The 360 approach has slowed us down. Even before I joined at this stage, the request was, "Andrei, please help us simplify things because we don't want to go through some".
If you look at what was done, it's amazing work. But it's for a series B company, moving to series C, which is not what we actually need.
Fukuko: This is so interesting. I want to dive a bit deeper into this idea of simplifying things, because I think you're right. Many operations teams perhaps overshoot in terms of the maturity of processes we try to implement.
Could you share a bit about the thought process you went through to identify what we are going to keep and what we are going to eliminate when simplifying things? That, I feel, is often harder to do than adding things.
Andrei: That's true. To be honest, I wanted to create biannual growth charts and start monthly reflections from this year. However, after joining the operations team and understanding its workings, I realised it wouldn't be feasible. The team is in a state where they need to constantly adapt, so adding these tasks would be burdensome.
That's why we decided not to proceed. There was a plan to start monthly reflections from May, but it was postponed until November. Now, there's a thought to shift these quarterly reflections from June to July because it's crucial not to overwhelm the team. People are already overwhelmed.
In a way, I think many of us don't fully understand what that feels like. We might say, "Oh, yes - I get that you’re busy" and so on. But if you actually talk to people, you'll realise they're busy. When they say, "I'm busy," we might respond with, "I understand. Sorry to hear about this. I hope you feel better." But it's all just words.
Fukuko: Right, so it's not fully understanding what the situation is.
Andrei: But then I think, I do believe now actually if every one of us would actually do some kind of a temporary assignment in the operations team. Basically do a placement - even for maybe two weeks or one month, all teams actually.
Fukuko: A few questions come to mind, but how do you then balance. This idea of obviously measuring performance is really important versus the nature of it, people being busy. How have you been balancing this?
Andrei: Bingo. We have these KPI's where we wanted to dive in and see how performance gets measured. We wanted to dive into this through phases.
For example, if you are under one instance, your performance can range from 0% to 50%. If it's from two, it can range from 51% to 60% or so. The example we showed is simple. It involves KPI number one and three, and various projects.
We realised that it might be a bit too much. That's why we're giving more leeway to managers regarding ratings. They are quite flexible. We are providing this space to managers and it will gradually expand.
Fukuko: More granular, more specific. Exactly.
Andrei: Ideally, we move into this phase when we actually understand what we're doing at the tech store hub, which is amazing.
Fukuko: Yeah, that's so interesting. So you've already set these phases and shared them with the manager so they know what's coming? It's not all of a sudden you're overcomplicating things. You're saying this is the goal that we want to reach and we're going to ease you into it.
Andrei: Exactly. And then my initial thought when I was having these talks with them, I showed them and we had a few pushbacks and said, hey, Andrei, can we actually do this?
For quite a number of teams, because our fiscal year started on April 1, they changed their KPI's so they won't see actual results until July. They can only see efforts or some actions that will lead to these goals. Achievement actually makes sense. So that just changes.
Fukuko: You showed me earlier in terms of the timeline. If we scroll up the timeline of the compensation assessment, which happens in now, April of the following year. How did you decide on the process of how the performance reviews tie into compensation?
Andrei: That's one thing I don't have any answer to. How we did this in the past was quite complex with formulas and everything. This year we made it way easier. And then how it's going to look like in April? We don't know.
We can maybe do the same thing we're actually doing. But we need to review it and it's in a plan to review it by August, but now it's just back.
Fukuko: So, one of the priorities this year is the compensation assessment, correct?
Andrei: Yes, we have a compensation philosophy, but it needs to be updated.
Fukuko: You touched on this just now about what was the hardest part of building the performance management system. But if you were to summarise, what was the easiest and the hardest part of developing this performance?
Andrei: The management system was both easier and harder. Initially, I didn't find it hard, but it took me some time to understand the importance of certain aspects.
For instance, having the title 'fiscal year 25 performance measurement framework' didn't seem significant to me at first. However, I eventually realised that it's important to others. As our CEO says, framing matters. We decided to change the name of the performance management framework to what matched the culture.
Fukuko: Absolutely. Was there a dialogue with the CEO and your boss about the language that would make people most receptive?
Andrei: Yes, mainly with my boss. We often discuss this. As for the easiest part...
Fukuko: If there were any.
Andrei: Let me think. It might sound odd, but aligning the company goals was the easiest part. We started with some guiding principles. Then, we realised we needed to establish OKRs first, then department KPIs, projects, and so on.
We have tabs for these, which I can't share, but the entire company can see them. Oddly enough, this was the easiest part.
Fukuko: Interesting. Why was it the easiest?
Andrei: I don't know. Personally, it was very clear to me.
Fukuko: Was it because these departmental KPI's were already set or was the setting process easy?
Andrei: We didn't have anything set.
Fukuko: Oh my goodness. Can you give us tips on how to make setting KPI's easy?
Andrei: We had some kind of reference. We realised what the main things we needed to achieve were.
There are principles and steps on how to come up with goals. You go to each team, talk to them, draft them, and then talk to people. The most important thing for every KPI we have, no matter the team, is a commission structure.
Even for the people ops team, we have a base and commissions for everyone depending on their achievements. We have OKRs, department KPI's, and individual KPI's. If a person achieves their KPI's, they get a certain amount. This approach does help.
Fukuko: Does the commission percentage change depending on the department?
Andrei: It's not the percentage, but the overall commission structure that changes.
Fukuko: I see. For example, a salesperson might have a higher range of commission?
Andrei: Yes.
Fukuko: Understood. How does the commission work for roles like people ops or finance? It seems those roles would be trickier in terms of determining variable compensation around commission. What determines the commission amount for those roles?
Andrei: Yes, it can be more complex. I do have a budget for the entire year. We have three to four main KPIs that influence this.
For example, for a people ops associate, it's payroll accuracy, compliance reports, project completion, and resolution feedback on tickets. For me, it's more focused on the retention side.
Fukuko: Hey, that's interesting. Have you seen this before? Is this new to virtual internships or did you also have this commission structure at Store Hub?
Andrei: We didn't have it at StoreHub. At Virtual Internships, some pieces were already in place before, so I just had to add it on for all teams.
Fukuko: Interesting. How has it been going so far with that structure?
Andrei: Quite good, actually. People know that they like it a lot.
Fukuko: The last question that I have, especially because you just went through this process of building this system, what is one piece of advise that you would give to someone who is going through the process of building a performance management system? Reevaluating it, simplifying it, what would be the advise that you would give them?
Andrei: That's actually a good point. A lot of thoughts in my mind. My advise would be to not think everything will work out right away. Because my mistake was that I jumped in and I thought that I would actually do everything well.
The realisation was no matter what culture or the performance measurements, the best thing comes when you go to talk to teams directly and then you open up the floor to take feedback as well because they are the ones who are going to put these kinds of things through.
Another piece of advise would be to not make it tough for people, because in HR sometimes it's easier to say that, you need to follow some steps a lot, but then you don't actually understand how it will affect people, how it will affect the company culture and all those kinds of things.
Fukuko: One piece of advise you mentioned was to perhaps experience what they're experiencing temporarily. Any other advise that you would have for HR to better understand what's happening on the ground?
Andrei: Talking to the teams themselves actually helps. Now we're trying to understand how to implement this process for everyone, because it does help.
We're trying to think about how every team can understand each other's pain points. This is the main point, to relate to the actual operations work or sales work.
We're trying to think about how every team can understand each other's pain points. This is the main point, to relate to the actual operations work or sales work.
