StandOut Next-Generation Performance Management
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StandOutNext-Generation Performance Management
by Marcus Buckingham
White Paper Series
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Table of Contents
Performance Management as the Pony Express 4
Ratings are Unreliable 4
The Wrong Practice: Streamlined 5
The Blueprint 6
StandOut 9
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Performance Managementas the Pony Express
In 1850, it took the average piece of mail ve
weeks to travel from St. Joseph, Missouri toSacramento. This was frustrating for many
reasons, not least because in 1848 gold had
been discovered in the California hills and the
wild rush west was on. America needed a more
efcient way to communicate with its land of
newfound riches.
The Pony Express was the answer. Four hundred
horses. A hundred and fty short, wiry riders. Two
hundred stations, and the innovation of lightweight,
leather cantinas to carry the mail itself. It was a
fantastically complicated arrangement, requiringcareful forethought, detailed planning, and not
inconsiderable daring. And, having woven together
this complicated system, the inventors managed to
streamline the process so well that, on its very rst
journey, what was once a ve-week trek turned
into a ten-day sprint from St. Joseph to Sacramento.
Speeches were made, reworks launched, a great
innovation celebrated.
And then, Baron Pavel Schilling destroyed it all.
He didnt do it deliberately, of course. But he didinvent the telegraph. And with that one invention,
he created a new worldview, one that rendered
obsolete the entire system that others had worked
so hard to streamline.
Our current performance management systems
are akin to the Pony Expresslabor-intensive,
complicated, and centralized systems straining to
add a little efciency to a difcult and cumbersome
process.
And the telegraph? In this paper we offer StandOut
as the telegraph.
The telegraph was actually an innovative
combination of a new technology
electromagnetic signal cables-and a new
languageMorse code. In the same way, StandOut
is the combination of a new technologyyour
smart phoneand a new languagethe language
of strengths. These combine to create the blueprint
for a lighter, faster, future-focused system. Our hope
is that, guided by this blueprint, you will be able
to implement a system for your company that trulyaccelerates performance.
Before we present this blueprint, we need to lay
bare the two reasons why our current systems can
neverno matter how much technology we infuse
them withdeliver any meaningful return
on all the time and money we spend on them.
They are built on ratings, andratings are unreliable.
All current Human Capital Management
systems are based on the notion that
a manager can be guided to become
a reliable rater of another persons
strengths and skills. The assumption is that, if we
give you just the right scale, and just the right words
to anchor that scale, and if we tell you to look for
certain behaviors, and to rate this person a 5 if
you see these behaviors frequently, and a 3 if you
see them less frequently, then, over time, you and
your fellow managers will become reliable raters of
other peoples performance.
Indeed, your ratings will come to have such high
inter-rater reliability (meaning that two managers
would give the same employees performance
the same rating) that the company will use your
ratings to pinpoint low performers, promote top
performers, and determine everyones pay.
Unfortunately there is scant evidence that this
happens. Instead, a large body of research reveals
that each of us is an unreliable rater of another
persons strengths and skills. It appears that,
when it comes to rating someone else, our ownstrengths, skills, and biases get in the way and we
end up rating the person not on some wonderfully
objective scale, but on our own scale. The result?
Our rating measures us, and not the person we
are rating.
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The most comprehensive research on what ratings
actually measure was conducted by professors
Mount, Scullen, and Goff. In their study, 4,492
individuals were rated on a number of different
performance dimensions by two bosses, two peersand two subordinates, who combined to produce
almost half a million ratings. The researchers then
analyzed these ratings and discovered that 54%
of the variance in the ratings could be accounted
for by idiosyncratic rater effectsnamely the
peculiarities of each individual raters perception.
Only 21% of the variance in ratings could be
explained by the ratees actual performance. All
of which led the researchers to the following
conclusion:
Although it is implicitly assumed that the ratingsmeasure the performance of the ratee, most
of what is being measured by the ratings is the
unique rating tendencies of the rater. Thus ratings
reveal more about the rater than they do about
the ratee.1
This means not only that one persons rating of
another is unreliable, but also that when we
combine many ratingsas in a 360 survey, for
examplewe make the data worse, not better. If
one rating is actually a rating of the rater, not the
ratee, then many ratings are simply a combination
of raters rating themselves, which only obscures
the ratee all the more. If one rating is bad data,
many ratings dont transform it into good data: they
simply make more bad data.
Ratings reveal more aboutthe rater than they do aboutthe ratee.
Scour the literature and you will discover similarstudies all conrming our struggles with rating
the competencies and skills of others. Our ratings
1Scullen, S., Mount, M., & Goff, M. (2000).
Understanding the latent structure of job performance
ratings. J Appl Psychol., 85(6), 95670.
of others certainly look precise. They look like
objective data. But they arent. They are corrupted.
They offer precision, but it is a false precision. So
when we decide to promote someone based upon
a 4 rating, or when we say that a certain choiceassignment is open only to those employees who
scored an exceeds expectations rating, or when
we pay someone based on these ratings, or suggest
a particular training course based upon them, we
are making decisions based on corrupt data.
In a recent article in The Wall Street Journal,
Jack Welch advocated rating people on lists of
competencies so that you can, in his words, let
them know where they stand. This may be a
worthy sentiment, but ratings will never achieve
itgiven how poor we are as raters, ratings willonly ever serve to confuse people as to where they
stand. As they say in the data world: garbage in,
garbage out.
They streamline thewrong practice.
E
ven if we could somehow train our
managers to become objective raters, our
current performance management systems
would still be awed. Why? Because, asmany of us realize when we try to implement these
systems within our own teams, they are designed
to streamline a practice utterly unfamiliar to great
managers.
We know how great managers manage. They
dene very clearly the outcomes they want, and
then they get to know a person in as much detail
as possible to discover the best way to help this
person achieve the outcomes. Whether you call
this an individualized approach, a strengths-based
approach, or just common sense, its what greatmanagers do.
This is not what our current performance
management systems do. They ignore the real
person and instead tell the manager to rate the
person on disembodied competencies, and
then try to teach the person how to acquire
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the competencies she lacks. This is hard, and
not just the rating part. The teaching part is
alarmingly difcultafter all, what is the best
way to help someone learn how to be a better
strategic thinker or to display learning agility?In recognition of just how hard this is, current
performance management systems attempt to
streamline the process by supplying the manager
with writing tips on how to phrase feedback about
the persons competencies, or lack thereof, and
then by integrating the competency rating with
the companys Learning Management System so
that it spits out a training course to x a particular
competency gap.
The problem with all of this is not just the
lack of credible research proving that the bestperformers possess the entire list of competencies,
or the dearth of any research showing that if you
acquire competencies you didnt have before,
your performance improvesor even that, as we
described earlier, managers are woefully inaccurate
at rating the competencies of others. No, the chief
problem with all of this is that it is not what the best
managers actually do.
They dont look past the real person to a list of
abstract competencies. Instead, the person, with her
unique mix of strengths and skills, is their singular
focus. They know they cant ignore her. After all, the
persons messy uniqueness is the very raw material
they must mold and focus in order to create the
performance they want. Cloaking it with generic
competencies is inherently counter-productive.
What the best managers strive to do today is
understand and capitalize on the whole individual.
This is hard enough to do when you work with the
person every day. Its nigh on impossible when you
are expected to peer at her through the lter of a
competency formula.
The Blueprint
Obviously, we need a new system. What
do we know about this new system?
Well, the specics of your systemwill depend on your company, but
we do know that it must have the following six
characteristics, each of which follows logically from
the one preceding.
First, and most obviously, it must be a
real-time systemthat helps managers give in the
moment coaching and course-correcting. The
world we live in is unnervingly dynamic: where we
are on one team one week, another the next, goals
that were fresh and exciting at the beginning of Q1
are irrelevant by the third week of Q1, and wherethe necessary skills, relationships, even strategies
have to be constantly recalibrated. In this real-time
world, batched performance reviews delivered
once or twice a year are obsolete before weve
even sat down to write them. We need much more
frequent check-ins.
Luckily, we now live in a world where most of
us are armed with a device that knows exactly
who we are, and into which we can record pretty
much anything we want. This deviceyour smart
phonewill enable you, the employee, to inputwhat you are doing this week and what help you
need; and, because it knows you, it will be able to
serve up to your manager coaching tips, insights,
and prompts customized to your particular set of
strengths and skills.
Second, it must be a system with a light touch. If
we expect our employees to share their weekly
focus, and if we expect our managers to react to
and adjust this focus as needed, then there can be
no complicated forms to complete, no narrative
sections requiring writing wizards to supply the
right words, no conversation guides, no input
required from a requisite number of peers. None
of that. For this performance system to be as agile
as it needs to be, it must be wonderfully simple. A
couple of questions answered by the employee
What am I going to get done this week, and what
help do I need from my manager?and a chance
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for the manager to speak into these answers.
Counter-intuitively, the simpler the form, the richer
the coaching.
This start with mepositioning is the least wewill expect.
Third, it must feel to the individual employee that it
is a system about me, for me.Even if it is light-
touch, managers will reject any real-time system
that they have to initiate. Instead, the employee has
to drive it. And the only way to achieve this is to
make its starting point and ongoing focus me, mystrengths, where I am at my best, and how I can get
better.
At present, we dont do this very well at all. We talk
about it a great dealwere all familiar with the
mantra that you have to be responsible for your
own developmentbut we struggle to execute. For
example, most companies employee prole pages
are clearly a company tool, not a me tool, and as
such are updated infrequently and inauthentically,
and wind up reading like a computer-generated
resume. With a little creativity, there is every reasonto believe that we can design for each employee
an online space to positively present her strengths,
her skills, her accomplishments and her aspirations.
Although current proles are clinical, supercial,
and out of date, it is entirely in the companys
interest that they not stay this way.
And besides, given that we live in a world where
we expect all content, from our news to our
entertainment to our healthcare, to be aware of our
individual needs and desires, this start with me
positioning is the least we will expect.
Fourth, and centrally, it must be a
strengths-basedsystem. Current systems are
explicitly remedial, built on the belief that to help
people get better you must measure them against
a series of competency bars, point out where they
fall short, and then challenge them to jump higher.
While this feels practical, and rigorous, even
tough, it is also depressingly inefcient. Although
we label weaknesses areas of opportunity, brain
science reveals that we do not learn and grow the
most in our areas of weakness. In fact the oppositeis true: we grow the most new synapses in those
areas of our brain where we have the most pre-
existing synapses. Our strengths, therefore, are our
true areas of opportunity for growth.
More to the point, if we want each employee to
take responsibility for her own performance and
development, what better place to start than with
her particular strengths? The new performance
system must help each employee pinpoint her
strengths in detail, and then nd myriad ways to
challenge her to contribute her strengths moreintelligently over time. (To be clear, this does not
mean ignoring her weaknesses. It simply means
acknowledging that her weaknesses are actually her
areas of least opportunity for growth.)
Fifth, it must be a system focused on the
near-term future. Our current systems are xated
on feedback about the past. You are asked to write
a review on yourself, your manager writes her
review, often she will be required to sit with her
peers to calibrate your review with others at your
level, sometimes even your peers will be called
upon to share their insights about your personality
and performance, and then your manager will be
trained on how to deliver this feedback to you so
that you will see it as developmental rather than
overly critical.
The new performance system will dispense with all
of this, on one level simply because these feedback
systems are plagued by a terrible signal-to-noise
ratio: managers are, and will always be, highly
subjective providers of feedback; peer feedback
when private is just gossip, when public is
sugarcoated; your own self-ratings are more than
likely generously distorted; and calibration sessions
merely turn up the volume on the noise.
On another level, though, we will dispense with
it because future-focused coaching about my
work is a better use of time than past-focused
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feedback about my personality. To accelerate my
performance tomorrow, dont try to grade my
personality with feedback from all sidesit will
always be hard to give and hard to receive, and it
will net a disproportionately small performancereturn. Instead, coach me on the few specic work-
related activities that I could usefully add to my
strengths repertoire tomorrow. Or tell me what skills
I should go acquire next week. Or advise me which
specic contacts I should seek out next month.
None of these will necessarily be easy for me to do,
but at least they will be something that I cando
because they are in the near-term future. In the new
performance system, this is where most of our time
and creativity will be focused.
The new performancemanagement system mustcapture local intelligenceand then aggregate it up.
Finally, it must be a local system. Current
performance management systems are not. Their
express purpose is to align all levels of the company
around dened strategies and values. This mayseem sensible, but on closer scrutiny it becomes
clear that a performance management system is
the wrong mechanism to achieve alignment. It is
too mechanistic, too infrequent, too cumbersome,
too retrospective, and above all too centralized.
True alignment is about creating a context within
which local teams use their discretion, and make
decisions based on the best local information
available. Education and communication are the
most effective ways to create it and reinforce it. In
contrast, when you try to align the organization
through a performance management systembycoercing leaders into putting their objectives into
one of the dened strategy or values buckets, and
then cascading these objectives down through the
ranksyou inevitably create a rigid organization
that is almost immediately out of date.
Furthermore, most of the companys best
intelligence about the future of its products,
people, and customers can be found in each local
team. If you want to know what is relevant to
your customers, what trends are happening in themarketplace, and which employees are truly most
valuable, you must look inside each local team. So
in place of cascading down, the new performance
system must be designed to capture this local
intelligence, and then aggregate it up. Priorities
should be set at the team level and aggregated up;
compensation should be allocated by local leaders
directly and then aggregated up; employee opinion
surveys should be triggered by the local team leader
and aggregated up. Only then will the company be
innovative enough to stay relevant.
So, that is a blueprint for a better systemlight,
agile, strengths-based, future-focused, and all of it
underpinned by reliable data, collected locally and
aggregated centrally.
In the next section we will go beyond a blueprint,
and present an actual system, built to possess these
six, vital characteristics.
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StandOut: What does anext-generation performancemanagement system actually
look like?The Foundation:Positive Self-Presentation
No performance management system can work
well unless each team member is invested in it. So
the foundation of this system is a toolcalled a
StandOut pagedesigned to allow each teammember to positively self-present to her teammates,
her team leader, and the entire organization.
This tool will begin with a credible strengths
assessment to pinpoint her strengths.
The results of this assessmenther strengths
algorithmwill deliver to her (and every team
member) a stream of content customized to her
strengths. Aided by this content, she will present
to the organization a detailed picture of her
strengths, her skills, how to work best with her, her
aspirations, and the values and concepts that, over
time, have most resonated with her.
From the moment she joins, the organization willemphasize that this tool was built for her to enable
her to describe and present the very best of herself
to her colleagues. If she wants to excel on a team,
if she wants to build a productive relationship
with each new team leader, and if she wants the
broader organization to know where she is at her
best, then it is entirely in her interest to use this
tool intelligently and purposefully. It becomes her
personal brand within the organization. Obviously,
this tool will replace existing company prole pages.
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With this tool as the foundation, the performance
management system will then perform three
separate but interlocking functions:
1. Accelerate performance
2. Evaluate performance
3. Reward performance
1) Accelerate performance:Both qualitative and
quantitative research into the practices of the best
team leaders reveals that there is one ritual they
share: weekly check-ins with each team member
about near-term work. These check-ins are where
the team leader sets expectations for the week,
but they are also where a team leader can offer a
comment about last weeks work, or a slight coursecorrection for the upcoming week, or coaching, or
an important new piece of information. All of this
wont happen in one check-in of course, but instead
little by little, over time.
Each check-in will be initiated by the team member,
using a simple tool to capture answers to the
following questions, two quantitative and
two qualitative:
This last week, I had a chance to use my
strengths every day. (On a 15 scale)
This last week, I added outstanding value.
(On a 15 scale)
These are my priorities for the week.
This is the help I need from you.
The team leader can then speak into these answers
in person, by phone, via e-mail, or within the tool
itself. Each check-in and subsequent conversation
should last 515 minutes.
These check-insare not in addition to the work ofa team leader. They are the work of a team leader.
They are what team leaders do to keep everyone
focused and engaged.
And the frequency is critical. They are once a week,
not once a month, or once a quarter. If a leader
checks in at a lower frequency than once a week,
then the conversation ceases to be about coaching
for near-term future work, and instead becomesmired in giving feedback about performance
long past.
Not only does such feedback twist the organization
around until it is almost entirely backward facing,
but it is highly unpopular with both leaders and
team members. Feedback about performance
months old is, and always will be, fraught. Because
it comes so long after the actual work has been
done, the feedback inevitably descends into
abstractions about the persons personality, whether
she is innovative, say, or a good communicator,or customer focused. This kind of feedback is not
only hard to give and to receive; it is also not what
the best leaders do. Study effective leaders and you
do not see them writing and re-writing in-depth
performance appraisals. Instead, you see them
giving real-time coaching about the work that is just
about to happen. The distinction here is between
near-term coaching about the workin which the
best leaders actively want to engageand detailed
feedback about a persons personalityin which
they do not.
Collected each week, these check-ins become the
ongoing reference point for the team members
performance and state of mind. In combination
across the organization, they are the ritual through
which the organization can manage change,
communicate new strategies, and teach new skills.
They keep the organization agile.
2) Evaluate performance:For obvious reasons,
the organization will want to reveal the subjective
judgment of what each team leader thinks of each
team member. The inverse is important as well:
the organization will want to know what the team
members think of their team leader. However, as we
described earlier, measuring these is tricky because
team leaders and members, like all human beings,
are notoriously unreliable raters of other peoples
performance. So how can the organization capture
what the leader thinks about the team member, and
vice versa, without producing corrupt data?
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Essential Eval:How to reveal reliably what theleader thinks of each team member.
Counter-intuitively, the best way is not to ask the
leader about the past performance of the team
member; instead the best way is to ask the leader
about the future actions of the leader herself. Why?
Because though we may not be reliable raters of
other peoples performance, we are reliable raters
of our own feelings and intentions.
Therefore, to reveal the team members
performance, the leader should be asked the
following four questions once a quarter, each of
which addresses the intended future actions of the
leader:
From what I know of this persons performance,I would always rehire him/her for the
company(on a 15 scale). This question
measures the leaders view of the persons
overall performance and unique value to the
organization.
I would always want to have this person on my
team(on a 15 scale). This question measures
the leaders view of the persons ability to work
well with others.
If I could I would promote this person today
(Y/N). This question measures the leaders
current opinion of the persons potential.
This person has a performance problem that
needs to be addressed immediately(Y/N). This
question captures the low-performing outliers
who are in danger of causing harm to the
customer or the team.
The answers to these questions are kept
condentialin other words, they can be sharedwith the team member only in aggregate. Why,
in this increasingly transparent world, would we
keep them condential? Because the function of
these questions is not to let the team member know
where she standscheck-ins do this every week.
Instead their function is to provide an accurate
measure of each team members performance from
the person who is closest to that performance,
namely the team leader. By keeping this judgment
condential, we are much more likely to capture
the team leaders unltered opinionwe avoid
the sugarcoating that invariably happens when weknow someone will learn what we think of her. We
can then aggregate these opinions and use them for
succession planning and variable compensation.
The SL8 Survey:How to measure reliably whatthe team members think of the team leader.
Every organization wants to have a way to measure
leader effectiveness, and yet all of them struggle to
do so reliablythe most common practice is a 360
survey process, which, as we now know, always
produces bad data. The solution is actually quite
simple, and over time will come to replace 360 andemployee engagement tools: the SL8 survey.
This survey is elded a minimum of once a quarter
to the members of each team. The team leader sees
her data, shares the results with her team, and also
receives advice customized to her strengths on how
to address each of the items.
The items have been very carefully chosen and
worded based on decades of research into the
key drivers of leader effectiveness and team
engagement. None of the items asks the teammember to rate the leader. Instead, each of them
asks the team members to rate their own feelings
and experience. The team members ratings of
themselves can then be combined to give the leader
a reliable measure of the kind of team environment
shes created, from the perspective of the people in
it. They are not evaluating her.
Rather they are evaluating their own feelings: it
is up to the leader to judge for herself what these
feelings say about her as a leader.
The questions are broken into four pairs. The
rst pair addresses the team members need to
understand the purpose of the team and her unique
contribution to it.
I am really enthusiastic about the mission of my
company.
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At work, I clearly understand what is expected
of me.
The second pair speaks to the team members need
to understand how you dene excellence, for both
the team and for me.
In my team, I am surrounded by people who
share my values.
I have the chance to use my strengths every day
at work.
The third pair measures the team members
certainty that she will be valued and supported
along the way.
My teammates have my back.
I know I will be recognized for excellent work.
And the nal pairing focuses on the leaders
responsibility to paint a vivid picture of a
better future.
I have great condence in my companys future.
In my work I am always challenged to grow.
At the team level, these items reveal to the leader
how engaged her team is right now, and whatactions she can take to build a stronger team. At
the organization level, each teams scores can be
aggregated to create a real-time view of the peaks
and valleys of the engagement levels across
all teams.
The one critical distinction to make here, though,
is that the leaders direct boss does not get to see
her data. The moment the leader realizes that her
boss is going to hold her data over her head is the
moment when the data stops being hers, and she
starts to gure out ways to bump up her scores. It isnot in the organizations interest that she bump up
her scoresthe organization may get higher scores
overall, but they wont mean anything in the real
world. Instead the organization is interested in her,
and every leader, building genuinely higher levels
of engagement within their teams. This will happen
only if the team leader sees the SL8 survey as a tool
designed explicitly to help her grow as a leader.
Thus, while the organization can aggregate her
data, she must own it.
3) Reward performance:Many organizations want
to be able to reward a team members performancein the form of either challenging job opportunities,
incentive compensation, or both. The performance
management system must accommodate this desire.
Workforce/Succession planning:The
StandOut page, the check-ins, and the team
leader evaluation questions all capture reliable
and relevant data on each team member.
During formal Quarterly Talent Reviews,
or during ad hoc workforce planning sessions,
the organization will be able to search for anddisplay particular individuals with dened
strengths, skills, and performance evaluations.
The purpose of these talent reviews is not to
justify or defend the ratings of a particular
team memberteam members are not given
ratings. Instead, relying on the information
inputted by the team member and the
team leader, their sole purpose is for the
organization to identify which actions it can
take to stretch and challenge its most valuable
team members.
Incentive compensation:Any incentive
compensation scheme depends on having the
most direct information possible to determine
how much a team member should be paid.
Obviously, the most direct information is
piece-worksome roles lend themselves to
counting the exact number of products a team
member produces, and paying them on that
amount. The next most direct information
is salessales roles are best measured andcompensated according to the salespersons
ability to inuence the behavior of the
customer, in the form of increased revenue
per customer.
But for many roles, counting piece-work
or sales increase is neither possible nor
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M
arcus Buckinghams groundbreaking
ideas about how to turn strengths
into performance have changed the
business world. Beginning with First, Break AllThe Rules, his books have sold more than four
million copies. His leadership development
rm, The Marcus Buckingham Company
(www.TMBC.com), works with organizations
worldwide to achieve a straightforward but
impactful mission: instill at scale the very few
practices shared by the worlds best leaders.
TMBCs strengths-based performance platform
StandOut reinvents performance management
by providing team leaders with a light-touch,
in-the-work tool to accelerate, evaluate, and
reward employee performance.
To nd out how to get StandOut for your organization, please contact Rosette Cataldo.
Email: Rosette.Cataldo@tmbc.com Phone: 323.218.0456
desirable. For such roles, by far the most
direct information on which to base variable
compensation is the team members
immediate leader. So, at years end, having
asked the four condential evaluationquestions of the team leader, and having
done so a minimum of four times a year,
the organization can then aggregate these
inputs and use them as the lter to determine
variable compensation. The rst question,
Would you always rehire this person for
the company? serves as the rst lter. If this
lter does not net the distribution required
by the organization, it can turn to the next
questionI would always want to have this
person on my teamas a second lter. If this
still doesnt produce the desired distribution,then the organization will rely on a higher
administrative level to make the necessary
judgment calls and so smooth the curve.
That is the new design.
Its foundation is the desire of each person to claim
and present the very best of herself to her team and
her organization.
Its framework is a combination of three distinct
systemsaccelerate, evaluate, rewardeach with
its own distinctive requirements.
Its focus steers away from feedback about the past
and toward coaching about the actual
near-term work.
Its purpose is performance.
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Notes
7/23/2019 StandOut Next-Generation Performance Management
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Copyright 2014 by the Marcus Buckingham Company, LLC
All rights reserved. Reproduction in any form without the express written consent of The Marcus Buckingham Company is prohibited.
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