Performance Evaluations

What do performance evaluations have to do with agile & lean software? As a core component of an organization's culture, they have a huge impact on the way individuals, teams and the whole company operates. I found a great blog post on this topic entitled Performance Evaluations, Business Strategy, and Agile Methodologies. It discusses both the proponents (e.g. Jack Welch) and opponents (e.g. Deming) of the "rank and yank" evaluation process.

In an accompanying discussion on LinkedIn (Agile Alliance group), the blog author Henrik Martensson writes:

Two things to consider are that for rewards to be effective, the feedback loop must be short, and the rewards must be linked to behavior, not results. This is basic behavioral science, but most corporate reward systems miss it. Lean is an exception. Lean companies explicitly use Management By Means (MBM) instead of Management By Results (MBR). MBR practically guarantees dysfunctional behavior, regardless of the reward system used.

No doubt the controversy will continue, but I hope the discussion will cause leaders to challenge their assumptions about performance appraisals and develop better ways for improving the system used to deliver value to customers.