Can the Future of Remote Performance Management be found in American Sports? A decade on it’s a Second Coming…

When I started my career in Information Technology or Data Processing as it was known in the 1980’s, the key performance metric for career progression was how much you could drink at lunch time and after work with the boss. It was the era of pub culture and if you didn’t drink you weren’t part of the gang. Most importantly if you were not seen to be with the right crowd you just weren’t visible and therefore remembered, with this having a direct correlation to one's progress up the corporate ladder. This was quite normal.

Studying high performing individuals has always fascinated me. I have often looked to the sporting world to understand the makeup of a Champion, especially the mindset that enables delivery excellence and success.

The very phrase human capital implies and screams financial value. My argument being that if we value people as much as we all say we do why doesn’t it find its way onto the balance sheet? (I’ll leave that thought to the Accountants out there). But what really is it? how do you identify it? and how do you measure it? The fundamental problem is that performance scoring an individual always involves a high degree of subjectivity.  This often leads to the well known phrase of “it’s not what you know, but who you know”.

With Civil Service reform back on HM Government agenda my interest has stirred once more. After all, are we not living in a world where data science rules? so surely we should be able to measure human performance consistently, fairly and accurately allowing for rational informed decision making.

This blog tells the story of an idea conceived over a decade ago that was ahead of its time with the lofty aim of introducing a consistent level playing field across the multitude of HM Government performance management systems, minimising subjectivity, removing subconscious bias whilst objectively demonstrating an individual's employee value to the organisation.

Back to the 1980’s – Fire Up the Quatro..

Such behaviours create and fuels subconscious bias, and this excludes factors such as race, religion and sexuality, which depending upon one's background and culture are always present to some degree. The workplace was very different back in the 1980’s. Watch “Ashes to Ashes” and you will get a realistic picture of what it was really like.

  

We have all witnessed individuals who deliver very little value but demonstrate incredible dexterity in understanding politics and leveraging power accelerating their career up the corporate hierarchy. That in itself is a remarkable skill and I have to admit something I have grown to appreciate over time. Just how valuable it is to the organisation itself I still question though?  

Equally, how many times have we seen the individual who works all hours, achieves incredible feats of delivery, but is by-passed and over-looked for promotion?

It can be argued the smart ones gamify the corporate system, but for those that don’t want to play and who look to the performance management system to argue their case can only come to the conclusion that it is fundamentally flawed when it falls short. 

In the post Covid-19 era, where remote digital working has had to become more widely accepted the perceived disparity for those that are often out of sight and out of mind is only going to increase.  

Flaws of Performance Management Systems

The internet is awash with articles citing the flaws of performance management systems with the list below being by no means exhaustive:

• Reviews are still seen as an annual or bi-annual event
• Outcomes are heavily influenced by subjectivity and perception of an individual
• Lack of consistency in approach throughout the organisation
• Measures too often not objective and quantitative in their nature
• Measures are not linked to the Organisations goals
• Absence of quantifiable quantitative data to support objective decision making  

What are we trying to achieve through performance management? In its simplest form we are trying to identify, justify and reward those individuals who add value to an Organisation. Equally, we are also trying to identify and justify those individuals who are not contributing and where corrective action is required. However, as people are involved we immediately introduce by default various degrees of subjectivity and bias. Consequently we have a lack of consistency and the playing field becomes uneven.

But what if you could minimise or even eliminate bias? thereby providing a level playing field for all, creating transparency for the employees, and rich operational insight for the Organisation. Sounds like utopia? Possibly, but in an era where data drives everything we are only a stone’s throw away from actually achieving this.

In-fact, some of us were here over a decade ago...  

American Professional Sport and Data Science 

The underlying thinking for such a solution is not new, in-fact its origins can be found in American professional sport whose use of statistics and measures has been around for what seems the dawn of time. 

Over a decade ago I was introduced to a book called “Competing on Analytics – The New Science of Winning” by Thomas H Davenport and Jeanne G Harris, published through Harvard School Press (2007). On first glance you might think this is a technical book, but buried on page 78 there are a couple of paragraphs on how Bill Belichick, Coach of the New England Patriots, outlined his approach to performance measurement and its influence on team recruitment policy. It also touches upon Michael Lewis book “Moneyball”, and how something similar is applied to Baseball. Whilst Moneyball, thanks to the film and Brad Pitt, is well known, Belichick’s approach is not so.

The New England Patriots were a failing American football team in the 90’s. They were in a very dark place when Belichick was named Head Coach in 2000. He had done his time, with 25 years in various coaching positions in the NFL, including 4 years as the Cleveland Browns as Head coach 1991-1995.

Back in 2000, Belichick’s application of data science created not only a team, but a dynasty that turned a failed franchise into several winning teams that spanned multiple eras, winning six Superbowl’s out of nine appearances over a 20-year period! (I guess it also helped that he had Tom Brady as the Quarterback, but let’s not stray off-piste here)

Belichick’s view was the perfect team was one that could deliver high performance consistently week-in week-out. To achieve this, constant performance measurement of the individuals that comprised the team would be required, but it needed to be a combination of both quantitative (objective) and qualitative data (subjective). It was only when both these elements were combined a common scoring system was created that allowed objective ranking and insight.

Innovation through the measurement of human performance

Belichick's insight as a Coach was that it wasn’t just how good an individual could throw, catch, block, or move; this was quantitative data that could easily be measured but of equal importance it was how an individual got on with their team-mates; how a player interacted socially; what they were prepared to do for the team; level of egotism; and their intelligence. This second dataset, or intangibles as Belichick refers to them, was devised by a number of coaches subjectively inputting their individual perspective on watching the interaction of an individual with others and attention to detail in terms of research of a players background. In doing so numerous opinions were collated and bias marginalised. No stone was left untouched. Ultimately a player gets one score that represents his value to the team. 

The Patriots armed with this new outlook began looking for new talent pools outside the annual college draft recruitment - the accepted route into the NFL. The Patriots would look at smaller less well known colleges; Freeagents - players who for various reasons were out of contract; had been over looked or considered to be past their sell-buy date; and finally the minor leagues like Canadian Football League (CFL), where teams might just possess an individual with the capabilities they were looking for. The added bonus being, that players identified from these new talent pools didn't cost as much as the primary college draft route. (that's the "Moneyball" dynamic).

Under Belichick the Patriots installed their "Draft Decision Support System" and applied it to everyone across every talent pool, through the draft and at the Patriots Summer Camp, where additional individuals are invited to participate to try and make the squad for the new season. Rigorous and constant application of the new system combining the new performance datasets determined who stayed and who was cut based upon their individual score and their value to the team.

Eureka! – The birth of EmpIndex 

So why couldn’t we apply Belichick’s Draft Decision Support System and evolve it one stage further and create a performance index, just like the Stock Exchange FTSE? In doing so we could objectively measure an employee's value and link it directly to an Organisation’s objectives, comparing individuals uniformly across the organisation by role.

Consequently, you could minimise subjectivity by creating an index that comprised of both elements – quantitative and qualitative, objective and subjective data. If everyone is scored with the same criteria by job role, assuming this is a true reflection of the work they do, you create a natural index. Whilst you couldn't refresh this on a daily basis, depending upon the criteria, you could measure on a monthly or quarterly basis, which for this area is virtually real time.

Fundamental Concept - An Individual can Create Value, but can also Destroy Value

A key principle of design is that as much as an individual can add value to an Organisation, they can also be destroyers of value. Negativity, poor attitude, poor performance, creates a negative score. This is absolutely critical in determining the overall score of an individual.

Each factor, regardless whether it is measured by quantitive or qualitative data, has to have an underlying scoring system where it was possible to receive a negative score as an outcome. Technically, behind every factor was a different graph, that allowed a score to be generated between +100 and -100. 

When all the factors are combined and weighted the final score is produced.

Subsequently, you could create not only a score for an individual, but for a team, a department, and ultimately for the Organisation as a whole. More importantly you could then track this.

2009 - UK Public Sector - An Idea was way ahead of its time 

Back in 2009/10 a group of us looked to push the idea of EmpIndex inside HM Central Government and we met with numerous MP’s who were working with Frances Maud at the time around Civil Service reform.

This was an era just before Enterprise Cloud SaaS applications and even thinking like the 9 box-grid didn’t really exist. The most novel thinking was from the 1990's the 360-degree review, which at this point been around for years but was still not widely adopted.

2009 - Market Testing – SHRM & CIPD Perspective

We presented at the CIPD (Chartered Institute Personnel Development) Conference in Manchester and also locally at several branch events. Despite the idea being both revolutionary and innovative, British Companies, the UK Public Sector and some CIPD members were extremely negative, always highlighting the potential flaws of such a system include, but not limited to:

• Adoption, to make the index as accurate as possible, everyone needs to take part
• Accessibility to various datasets; quality of data would influence the scoring
• Would people accept the approach? or will it be seen as “I am just another number?”
• How do you stop gamification of such a system?

The points raised were valid, and no-one said we had all the answers as we were pioneering and constantly finding our way.

Our best piece of negative feedback was from a Finance Director of a large Public Sector body who emailed saying, “We cannot measure our people like this, we would have them walking out”. It is at this point you know you have a really good disruptive idea, but the market, especially Public Sector wasn't ready for it.

However our biggest breakthrough and interest was from a couple of American multi-national companies and SHRM (Society for Human Resource Management), the American equivalent to the CIPD. The Americans culturally simply “just got it” and more importantly saw value in it. SHRM even asked us to participate in developing their standards, but due to our bandwidth we were constrained. A real opportunity lost that I have always personally regretted.  

2020 - Elevating Performance Management in Post Covid19 Environment 

Now a decade later innovation in performance management systems I would argue is needed more than ever. Not a day goes past where we discussing in the news corporate racism; BAME agenda and lack of opportunities for advancement; unconscious bias; pay gap agenda; whilst we are all having to accept, adopt and adapt to new ways of working enforced upon us by the pandemic. In doing so we need performance management systems that allow us to: 

• performance manage a remote workforce fairly, determining an employee's value
• demonstrate the removal of unconscious bias
• be open and transparent about how we measure individuals
• ascertain and connect employees true value to the Organisation
• unlock employees “Value of Connection” to gain insight as to how things really work inside an organisation

Today in 2020 we are living in an environment where data is driving our everyday decision making. So why not use this for the good and level the playing field for all? Getting individual performance feedback closer to real-time and then leveraging this to keep checking the pulse of the Organisation can surely only be a positive.

A hard lesson in Entrepreneurship - How did it end?

At the time my other Company - Certus Solutions was just about to take off and I didn’t have the funds to push EmpIndex forward. It is a classic example of having a great idea but ahead of its time. Software development is a very capital intensive business. I made the call and wrote off my investment, and a great idea was put on the shelf for another day.

The lesson here is sometimes you can be just too far ahead of the curve. They say "the bankruptcy courts are full of good ideas". Market timing is everything, and always very difficult to call. But if you don’t test ideas out you never get there, hence why it is important to talk to as many people as possible, even your potential competition, to gauge your chances of success.

An Open Invitation to Pioneer...

EmpIndex was ahead of its time and the market wasn’t ready for this type of solution. However both technology and the market has now moved on at dramatic pace. The need to address the inequalities that we all know that exist and raise corporate capability through diversity and inclusion but based upon performance and the value an individual brings surely must be the new order. We are constantly talking about these topics, but I see very few pragmatic solutions being offered.

Has the time finally now arrived? Is the market now ready for something revolutionary, innovative and disruptive as EmpIndex? Could it be deployed and work effectively inside an Organisation, especially one that works remotely? Is it time to brush off the old prototype from a decade ago? Would the UK Public Sector be ready for something like this now, especially with No10's increasing appetite for data science?

Just imagine if you could apply artificial intelligence and machine learning algorithms to the data, we would take innovation in this area to a whole new level. What insights and discoveries would we make? This technology wasn't accessible to ourselves in 2009.

Please let me know what you think as I am genuinely interested to hear and to talk to those who are interested as I have a mountain of research on this subject. The real question for me is am I going to let this stay on the shelf gathering dust? 

As for No10 you know where I am. 

 

SaaS - The True Cost of the Race to the Bottom of the Rate Card

Recently a recurring theme appears to be emerging regarding Cloud Customers (regardless of platform selected) in not being able to realise the value promised from their Software as a Service (“SaaS”) ERP implementations. Whilst I might attentively raise an enquiring eyebrow, experience tells me that I probably already know the root cause of their problem – they bought an implementation on the cheap, struggled to embrace the change despite being told it was going to be transformational and they never had a plan beyond go-live.  So how did the Organisation get here? Well unfortunately it often, but not always, starts with the buying process.    

Immediately I now find myself in dangerous territory walking along the tightrope that bridges the Buyer-Supplier divide. But with all my musings hopefully they are educational as it gives the reader a real glimpse of what really happens and where these types of implementations can fail right from the very outset.  For some it’s going to be controversial, but I promise to save some of my more outrageous experiences for my book (and yes to those that follow me it is still coming!). Smile.

Seriously though, what I am not trying to do is level any criticism but rather educate through insight by providing a heavy dose of reality of what goes on when a procurement for a Systems Integrator commences and the implications of a price driven competition.

However, if price is always going to be the overriding factor in an Organisation’s purchasing 

decision making, then no matter what I say here is not going to make any difference. So, before you stop reading, remember in this game you always get what you pay for. 

The Concept of Value?

It’s a term banded around like sweets in a sweetshop. In-fact we all subconsciously use it in our day-to-day decision making. The dictionary definition of value is simply “the importance, worth, or usefulness of something”.

I am often asked as to how we valued Certus Solutions before we sold it. Now valuing a company as a mathematical exercise can be determined by a number of methods including Discounted Cash Flows; P/E Ratio’s; EBITDA; Revenue Multipliers; Book Value (Asset); and Liquidation Value.  Each will come up with a different number. All of this is working to quantify objectively something that can be pretty intangible, especially in Professional Service Companies whose only real asset is goodwill.  I can tell you it is the most subjective of all exercises and I have personally spent many hours trying to explain this to people often without success.

However, the one single factor that is the most important which is not found on the balance sheet, the P&L or in a valuation method is simply how much a willing Acquirer is prepared to pay? and how much is the Owner prepared to sell it for?

It’s the same for buying a SaaS ERP and selecting an implementation partner. What is the Buyer prepared to pay against what they value? and what can a Supplier provide at a profitable price point that realises that value for the Buyer?

Where both sides reach an accord is the sweet spot of any deal, as both recognise the value generated as being beneficial to one another. To do so means eliminating subjectivity and trying to objectively crystalize value as a commercial transaction ensuring expectations on both sides of the equation are met.

Buy-Side – The Competition

A professional Buyer quite rightly wants to know they are purchasing the right product or service at the right price and that its going to deliver the benefits that they have identified. Consequently, they will want to test the market against their requirements.

Best practice is always for Buyers to engage the market informally and early to gain understanding of the “players” out there. Consequently, the Buyer can shape the “ask” accordingly, and also sensible conversations lead to Suppliers becoming interested in the opportunity.

A competitive procurement process is full of ironies.  After a Supplier has attended a procurement briefing which are usually held as a showcase for the Buyer to tempt and explain to the market as to why they should be participating, the well-crafted Invitation To Tender (ITT) or Request For Proposal (RFP) follows.

This is a document that has usually taken many months of significant effort to create, with the Buyer explaining in great detail what they are wanting to achieve in terms of outcomes, and with realms of questions they require the Supplier to justify why it should be them.

But then, regardless of what has been said, the scoring and weighting criteria for price is stacked on the high side. In a single stoke of a pen, the Buyer has completely contradicted themselves.

The Supplier also knows the first thing a Buyer does on receipt of a response is to turn to the commercial section to see what it is going to cost? and subsequently skip over the 30+ pages of a Supplier’s equally time consuming well-crafted answers proving they have the capability for delivery and what additional value they can bring to the party.

The rule of thumb is if its 40% or more weighted on price, the procurement, regardless of its size, total value, and what the Buyer says is important, is immediately labelled by the Supplier as a “race to the bottom of the rate card” and the qualification dance begins. 

Price is always going to be a factor and rightly so. However, to achieve value for money, it should be a factor alongside a number of other factors that collectively are all positively correlated to the value generated required. 

In my time I have seen some of the most complicated mathematical statistical equations for scoring a procurement which for the majority of us (myself included) need an Advanced Mathematics degree from Oxford or Cambridge to understand. However, this all counts for absolutely nothing if the “Supplier Fit” - the culture, their beliefs and values are not aligned with the Buyers Organisation. Because, when things get tough, and they will as they always do in an ERP implementation, it is the behaviours of both sides that will get you through.

However, when the Buyer encourages the race to the bottom of the rate-card and gets two horses running they often leverage this by playing one off against the other driving the price lower in search of the better deal. At some point it becomes completely uneconomical for the Supplier to deliver the project. That sets both sides up for a future commercial conflict with the project never meeting the Buyer’s expectations in terms of benefits sort. 

Supply Side – The Qualification Dance

Every sales opportunity, big or small, always gets qualified. Competitions cost serious money and require significant effort to take part in. Nobody ever plays to lose, as you get nothing in this game for coming second. However, the Buyer sometimes is completely oblivious of the costs involved in playing the game, despite the usual legal wording in the document that the they will not be liable for any costs incurred from the Supplier taking part. 

What does qualification mean? Simply should the Supplier invest their time and money into even responding in the belief that they will be successful. If the Supplier believes that they cannot win or the procurement isn’t in the right shape; then it’s a no bid. In doing so the Supplier has just saved significant amounts of effort, cash and often goodwill amongst its staff for another day.

Selling on price is easy, it belongs to the “stack’em and pack’em” brigade. It’s a valid business model, and there are many Companies that work in the Systems Integration space that are extremely successful at doing this. So, if a procurement is weighted 40% or more on price, your definitely in the game if this is your business model.

Do I personally believe this is the right approach to maximise value from a SaaS implementation? Absolutely not! To do this properly you have to constantly generate value over the life of the contract. To achieve that you must have a long-term relationship with the Client and this requires constant two-way investment from both sides.

Selling on value is an art. It’s not easy. Your proposition has to be specifically crafted to hit all the Buyers values; and then some! To do that, you need to understand the Organisation and business your selling into, joining the dots as to how your proposition will enable them to overcome some of the market challenges they are facing. This takes research and serious amounts of effort on part of the Supplier before you go anywhere near a keyboard to write the proposal, often then weaving this into the specific questions the Buyer is asking.

So how does this play out? if the price weighting is 30% or less; and the procurement structured in such a way you are given the option to differentiate yourself from the competition, then it is worth looking at if you sell this way. The Buyer is saying “What can you bring to the party, because we are genuinely interested?” and indicating that price is not the only factor, and you have the opportunity to innovate, and therefore differentiate yourself.

The other key supply side qualification criteria is always around the competition and the relationships they have or you yourself have with the Client. What are they looking for? has the procurement been influenced or shaped by someone else in advance. I have talked about this before in more detail in my blog – https://www.linkedin.com/pulse/competing-winning-public-sector-dark-art-mark-sweeny/. If you are not working the inside channels of a client in advance I will absolutely guarantee that someone else already has or is. It creates subconscious influence and potential bias in people. That's why Suppliers do it.

Wider Market Impact – Price of Commoditisation

Anyone can sell on price alone and equally anyone can buy on price. That is not salesmanship or balancing the equation best practice procurement in a non-commoditised market. 

Dropping the price can be dangerous for a Company’s business operations. Deals become economically unviable and cannot be delivered. This has implications as it drains a company’s most critical asset – cash. Large Companies can ride a bad deal out, for SME’s it can be fatal. Buyers putting Suppliers out of business, regardless who signed the contract, never helps the Buyer in the long run. You can't recover costs from a Company that has gone out of business.

Even worse it can affect the wider market. A market driven purely by price, becomes commoditised. Two things then happen. Firstly, Suppliers stop competing, especially if known suppliers are constantly undercutting everyone else on price. Choice becomes limited, quality of service is impacted, Customer satisfaction and advocacy drops.

Secondly, with Suppliers unable to make a profit, and therefore not having the case to constantly invest in its delivery capability they start exiting the market. The market in-effect becomes constrained, as potential suppliers leave looking elsewhere for commercial profitable opportunities. 

Regardless of what Vendors sometimes say SaaS ERP systems don’t implement themselves. Cloud is transformational, it’s going to change how you operate. If you don’t possess the internal capability to manage such a transformation you are going to need external expertise. Remember, Cloud SaaS technology is not really a leading technology today, the technical risk is minimal, as thousands of successful implementations have been undertaken around the world. Projects fail not because of the technology; projects fail because the Client can’t manage programme complexity; the business change required isn’t delivered; or the Systems Integrator personnel don’t know the SaaS product.

True Cost of Price Driven Implementations

Price driven implementations are the equivalent of assembling a building and just switching the lights on. However, when you enter and look around nobody has fitted the building out, so its use is extremely limited. Characteristics of price driven SaaS implementations usually involve:

• getting the Supplier’s “B” team, with the “A” team players seen only during the procurement process, therefore poor implementation advice results
• getting the barest minimum, you have contracted for and no access to the real innovative functionality that exists. You didn't pay for value add, so don't expect it
• having a stressed-out delivery team, that ends up taking time off as they become ill and cannot deliver against the original contract 
• not realising the benefits over the life of the contract as your Organisation hasn’t accepted the change and adopted new ways of working
• negativity across the business in what they are being given to use, often results in new Spanish-practice and lack of adoption
• not in a position to take advantage of new innovation as and when it arrives as you don't have the foundations of the system in place
• getting a poor reputation in the marketplace. Buying Organisations forget it’s not just the Suppliers that can suffer from reputational damage; it works the other way Suppliers all have unofficial lists of organisations they won’t do business with – so when your looking for help, if you are known to be a pain and "cheap", then suppliers will politely avoid you

Consequently, low price overall has a negative correlation linked to the value realised.

Don’t Just Switch the Lights On - Maximising the value from SaaS

SaaS applications provide you with truly a wonderful opportunity to modernise the back office in many ways. So how do you maximise the value from the implementation?

• Accept the fact that implementations are only as good for the people who put them in, expertise costs money
• Stay true to the “Adopt, not Adapt” approach to SaaS, adopting out of the box functionality and standardised processes whilst adapting the back-office business
• Undertake a Cloud Readiness Assessment against the chosen SaaS platform up front; understand before you begin the functional fit, business process redesign and business change effort required – formulate your Future Operating Model based upon this; NOT the other way around; you will just incur cost, create rework, and confuse people with un-necessary change 
• Accept the implementation of SaaS Cloud is only the beginning of the journey and not the end; therefore, you need a long term plan which will require on-going investment to benefit from continuous improvement by sweating the asset
• Make the transformation stick. Business change activities need to be carried on post go-live; constant re-enforcement to ensure adoption rates remain high is often needed to drive the benefits through
• Understand the SaaS vendors product roadmap; looking for the innovation coming through and how look continuously for opportunities to use new functionality as it becomes available

Buy Cheap you Buy Twice

An old adage, but true. You buy cheap you will ultimately end up buying twice. I have lost count of how many rescue ERP implementation projects I have undertook over my career. Always extremely stressful for everyone involved, very expensive and most of all so annoyingly easily avoided.  

For those recovery projects that do make it live, you still have an unhappy Customer as their expectations haven’t been met and they are still upset over the cost. Recovery projects at a minimum get you live and that requires you to revive the Client from their initial cardiac arrest. Even then the building fit out is still required and that requires more investment. 

In the early days of Cloud, every software vendor was sighting just how easy and quick it was to implement their solutions. The truth is that Cloud SaaS technology in a business context was by far too transformational. Consequently, many implementations could not be delivered for the price contracted for, and Suppliers (as I well know) are only going to invest in buying market share for so long. On the Buyer side frustration builds, and the only way to defuse this is through constant education, enhancement and enablement to drive value. 

The market moves in cycles, and we are now definitely seeing those Clients that have bought their implementations cheaply are not reaping the benefits that the Cloud SaaS applications can generate. It’s all about expectation setting from the outset and this requires realignment. 

Why is this happening now? primarily we are in the first major 3 or 5 year renewal cycle for those having bought previously and they are now questioning what they have done. SaaS provides innovation, the functionality is there, but you have to invest to release it. Continuous improvement is the order of the day, but if you are not prepared to do this, then don’t complain you cannot get the value from Cloud, because you absolutely can.

The very best commercial deals are always the ones where collaboration between Buyer and Supplier both parties create value for one another. Those that understand this are the real winners. For this to work properly both sides have to take time to really get to know one another; then work at having an effective working relationship (it doesn’t always come naturally); and most importantly are prepared to share the risk and the rewards of any engagement. 

Alternatively, if you side with the opposite logic regardless which side of the fence you are on, that the best deal is where you win and the other side doesn’t, then you will see an appropriate set of behaviours that are frankly counter intuitive to generating not only long term lasting value but you will be lucky to get anything substantive in the near term.

Time to turn the lights on? Anyone know where the light switch is?