The problem with performance management - and how to fix it


Foundations of high performance

Imagine that you're driving a car down a narrow, winding road. On both sides loom deep ditches and ravines. If you were to accidentally drive off the road, it would be game over. How fast would you drive?

Now imagine that you're only allowed to adjust the steering wheel once every 10 minutes. How fast would you drive? Probably very slowly. Maybe you'd rather get out and push.

In this scenario, the car's velocity is a function of the frequency and quality of its feedback loops - i.e., how often you can touch the steering wheel. If feedback is too infrequent or not trustworthy, then you have to move slowly.

If the road was straight and predictable, then there would be no issue here. You could just set the steering wheel once, hit the gas, and go. But when you introduce a curving road, weather, other drivers, slippery sections of road, obstructions, or any other form of variance, adaptability is required.

The general form of this principle is called the Law of Requisite Variety. It suggests that a machine must have as much "variety" as its inputs do in order to perform well. This is a fundamental machine design principle taught in the elite engineering programs. It should be taught in every business school as well, as it applies equally to an engine, a car, a team of people, or even a whole company.

For example, imagine that your team is attempting to improve its performance. This team is, in essence, navigating a winding road. Now imagine that this team's feedback loops are low-quality or infrequent. The team will move slowly. It will waste too much time sticking with ineffective ideas and wait too long to try newer, better ideas. It will end up zig-zagging with infrequent, large changes or limping down the road.

Given the Winding Road Principle, ask yourself: how often does your average frontline team get high-quality feedback?

A large tech company needed to drive a performance turnaround. When we started to work with them and implement the Factor platform, we learned that they once had a quarterly business review cycle, but they reduced it to every six months. Why would they make their feedback loop less frequent?  It turns out, it's because the feedback loop was demotivating - i.e., low-tomo - and thus low-quality. During the business review cycle, colleagues felt like it was time to look good or get blamed. As a result, in the weeks leading up to these meetings, they were spending most of their time writing memos, conducting pre-meeting "alignment" meetings, and figuring out how to deflect blame while looking like a team player. These interactions often took up more than a month to prep. And once the meetings happened, colleagues would not receive high-quality feedback, because the other stakeholders didn't have enough context to provide any meaningful insight. 

So of course, employees said that this meeting should be less frequent, not more frequent. In this same organization, I asked the Chief People Officer a simple question: how often do you think teams get high-quality coaching and feedback? She looked to the side and furrowed her brow in thought. After a few moments, she turned her head back and said, "On average, never."

I asked this same question to the Chief Financial Officer of one of the largest retail banks in the world, and she said:

"Because my calendar is so packed, I'll see a team that is working on something important only once every four or five months. By that point, the team has shown up with a 50-page deck, which must have taken them months to produce. A few minutes into the meeting, I'm realizing the team is on the wrong path. I feel bad that I have to tell them this because I know how much work was just wasted."

Unfortunately, these incidents are all too common. Too often, performance management is failing to drive performance - mainly due to infrequent, low-quality feedback loops.

The vicious cycle of performance (mis)management

In too many companies, too many people are stuck in a vicious cycle of endless meetings - to the point that in order to get any work done, they have to multi-task, paying little attention in most meetings. As a result of split attention, it becomes hard to get anything done in meetings, which typically spawns yet more meetings to pick up the slack. This burden is worse for a company's most skilled people, who tend to be pulled into every issue. Not only does this burn them out; it also means they have little time to develop their colleagues' skills. This dynamic is the direct result of the most common performance management systems.

The typical "system" of performance management sounds reasonable on paper:

  1. Goals (i.e., OKRs)
  2. Business reviews (e.g., QBRs and HBRs)
  3. Annual ratings (i.e., exceeds expectations, meets expectations)

While these seem like simple and possibly effective solutions, in practice they are deeply flawed. In reality, this system focuses colleagues on a bureaucracy more concerned with documentation, sandbagging, and blame avoidance than problem-solving, strategy, and motivation.

Consider the case of Beth, a product manager at a prestigious tech company. 

  • In October, Beth spent the better part of her month drafting OKRs for the following year.  
  • She then spent most of November editing them in preparation for a November review with senior leaders.
  • By the end of January, she believed that these original OKRs were no longer relevant, given changing needs of the business and her customers.
  • In February, she had to prepare for her organization's quarterly business review (i.e., QBR). This required another month of deck-making and "alignment meetings", all meant to make sure this QBR "went well." 
  • The QBR offered little substantive feedback. But in all fairness, how could it, when an executive is asked to be brilliant in a three-hour meeting after reading a document for the first time? That's too little context for even the most skilled executives to deliver insight.
  • By March, the thinking that went into the QBR prep was already obsolete.
  • This pattern continued until the end of the year, when a new wrinkle was thrown in — Beth's performance review. As her performance review window approached, Beth was coached by mentors to get 1:1 "coffee chat" time.  She needed them to hear her story of the year so that they would represent her well in her reviews. All this effort to avoid the dreaded "meets expectations" rating.

When all is said and done, Beth is forced to spend a significant amount of time every year on paperwork that doesn't result in high-quality or high-frequency performance feedback. This pattern is pervasive and destructive. A former Google employee put it well:

Google has 175,000+ capable and well-compensated employees who get very little done quarter over quarter, year over year. Like mice, they are trapped in a maze of approvals, launch processes, legal reviews, performance reviews, exec reviews, documents, meetings, bug reports, triage, OKRs, H1 plans followed by H2 plans, all-hands summits, and inevitable reorgs. The mice are regularly fed their “cheese” (promotions, bonuses, fancy food, fancier perks) and despite many wanting to experience personal satisfaction and impact from their work, the system trains them to quell these inappropriate desires and learn what it actually means to be “Googley” — just don’t rock the boat. As Deepak Malhotra put it in his excellent business fable, at some point the problem is no longer that the mouse is in a maze. The problem is that “the maze is in the mouse”.

These sorts of systems result in poor strategy and poor problem solving. Moreover, they create pressure and blame, causing colleagues to spend too much time "aligning stories" like criminals before the police arrive. With heightened pressure and poor prioritization, the whole organization will balloon headcount, hoping that having more people will minimize personal risk to any one person. These organizations will fall into cycles of culturally destructive layoffs every five years or so.

Ask yourself—are your performance management cadence, rhythms, and systems managing growth well? Or is the typical experience of performance management at your organization like Beth's? Is the maze in the mouse?

This legacy system is now worse than ever

Despite performance management systems being the subject of scrutiny for decades, the problem is worse today than ever, because the typical organization's road is getting narrower and windier:

  • Economic and geopolitical volatility is increasing.
  • Competition is now global and intensifying.
  • Work styles are more dynamic as teams are increasingly remote, hybrid, or spread out around the globe.
  • Technology is changing rapidly.
  • Generative AI is not only changing the nature of work quickly, but is also challenging our notions around how to attribute credit and blame.
  • The problems that need to be solved are increasingly technical, and thus increasingly cross-functional and cross-silo.

Given these trends, the command-and-control mechanisms that defined the previous performance mental models are no longer effective.

Performance management should grow performance

If you're like me, you're in one of the 900,000 households that watch the show Ted Lasso. As head coach of a professional football (soccer) team, he introduces the viewers to a strategy called Total Football. In TF, adaptability on the field is key, with players continuously and fluidly switching positions as gameplay requires. Total Football is a system of adaptive performance.

In our research, published in the worldwide bestseller, Primed to Perform, we shared that there are two definitionally opposite forms of performance—tactical and adaptive.

  • Tactical performance is about convergence, or getting a lot of people to follow their plans, policies, and procedures. This is where economies of scale come from.
  • Adaptive performance is about divergence, or getting a lot of people to not follow their plans, policies, and procedures. This is where innovation comes from.

Both types of performance are critical, but they are definitional opposites. If an organization accidentally over-emphasizes one of them, it will destroy the other.  When tactical and adaptive performance are out of balance at the level of a whole organization, the whole organization is at risk.  

For example, imagine an organization that has neither high levels of tactical nor adaptive performance. These organizations tend to be reactive only. They are able to perform in fire drills, but without a crisis, very little would happen. They're like a bunch of boats blind at sea, crashing into each other.

Instead, imagine an organization that has high tactical performance, but low adaptive performance. These organizations can be efficient and can create a lot of momentum. However, like a giant ship, they can be difficult to turn when they need to adapt.

On the other hand, imagine the opposite—an organization with low tactical but high adaptive performance. Every person and team in these organizations is problem solving and anticipating, but they are all doing their own thing. These organizations are fragmented and seem to be constantly misaligned. Picture a bunch of yachts gathered for a festival at sea, each holding their own little party.

Now, imagine an organization that is the best of all words—with high tactical AND high adaptive performance. These organizations have the flexibility at every level to adapt, experiment, and innovate, and are also able to stay aligned to common standards and common strategy. These ships form a fleet ready for battle.

Legacy performance management systems turn companies into type 2, command-and-control organizations (overly tactical) or type 1, reactive organizations (chaotic).

If you want to learn more about how to balance tactical and adaptive performance, we encourage you to read Primed to Perform.

The building blocks of performance

Simply put: performance cadences should exist to grow performance.

That sentence might sound obvious, but in reality, few performance cadences actually pass that test. To manage performance well, we must first unpack the "why", the "what", and the "how" of performance.


In Primed to Perform and other published research, we've discussed in depth how motivation drives performance. It boils down to an intuitive yet surprisingly under-utilized principle: why you work determines how well you work. If a team's total motivation is high, then it will successfully balance the work needed to be both tactical and adaptive. That "why" should be based in play, purpose, and potential, not emotional pressure, economic pressure, or inertia.


  • The "what" of a team's tactical performance is its strategy. That is the direction set by the organization and its teams to keep all the boats aligned. 
  • The "what" of a team's adaptive performance comes from its problem solving. When a team needs to be adaptive, its direction doesn't come from a strategic plan. Its direction comes from the team solving problems.

The five steps of collaborative problem solving


  • The "how" of a team's tactical performance comes from its processes. Processes are like a recipe in a fancy restaurant: they ensure that the same steps are followed consistently.
  • The "how" of a team's adaptive performance comes from its skills. For example, fancy restaurants with perfect recipes still employ highly skilled chefs. Why? Because even in the most controlled kitchens, ingredients, cooking conditions, and customer needs are constantly changing. To perform through volatility, a chef uses their judgment, tastes their cooking, and adjusts. That requires skill.

A great performance management ecosystem should continuously improve of all five of these performance drivers on every team: Motivation, Strategy, Problem Solving, Process, and Skill.

Performance cadences should create high-quality, high-frequency feedback loops

Sadly, the word "feedback" has lost its original engineering meaning.  "Feedback" has mostly become synonymous with "going to the Principal's office for a scolding." Instead, leaders need to reclaim the original meaning of the term from an engineer's perspective. Proper feedback is when a system's outputs are also used as inputs so that the system can be self-correcting.

By this definition, "feedback" does not have to come from other colleagues or leaders. Sometimes good feedback comes from customers and often qualitatively - i.e., through conversations and stories, not just data.  Every team has to establish and maintain the habits of high-quality feedback loops on their own. (Note: you can take the total motivation survey to start managing your own team's feedback loops).

Once a team has its feedback loops set up, there are a few more things to consider:

  • Interpreting feedback insightful requires the proper skill and context.
  • Using feedback for effective prioritization also requires the proper skill and context.
  • Synthesizing feedback requires looking at the forest, not the trees, in a way that cannot be provided by customers. In other words, colleagues often shouldn't just react to the most recent customer complaint or suggestion; instead, they need to consider the whole constellation of customer feedback alongside other strategic plans and market conditions. Doing this well also requires the right skill and context.

Therefore, in addition to teams setting up their own feedback loops, organizations will often need their experts and more senior leaders to coach teams along the way.

For these feedback loops to be high-frequency and high-quality, there are a few critical concepts a leader must understand.

1) These feedback loops need to be motivating (i.e., high-tomo). They should create a sense of play, purpose, and potential.

  • If on the other hand they are demotivating (i.e., low-tomo), people will feel blamed. That feeling will cause defensiveness and resistance, ultimately worsening the frequency and quality of the feedback loop. In other words, leaders must create conditions of psychological safety.

2) These feedback loops must mostly happen outside of update meetings (i.e., asynchronously), because:

  • Most people process complex information better in writing than than they do out loud. Most work environments are biased toward out-loud processing, which makes it tougher for most people to engage.
  • Most people need time and solitude to do their "system 2"  thinking. This is when they will have the peace and distance to integrate many pieces of information, make new connections, and form strong conclusions.
  • Relying on meetings takes time away from deeper thinking and creates bottlenecks. If you all have to gather, then you are at the whim of your calendars. Asynchronous communication - i.e., communication that happens outside of meetings - eliminates bottlenecks and speeds things up.

3) Colleagues should communicate using medium-form writing.

  • Good coaching is not when a leader gives you a task or tells you when your work was not good.
  • Instead, good coaching is when coaches teach skills or explain first principles. 
  • Teaching first principles often requires a good amount of writing. Fortunately, once you've written out your explanation for a first principle, you should easily be able to reuse it to coach many people).
  • Teaching skills often requires colleagues being able to watch experts do their own work. 

4) These feedback loops should be complete across the five levers of performance management shared above:

  1. Motivation - is the team building a motivating environment within itself? Factor's Health Checks make this easy.
  2. Strategy - does the team have a good strategy? Is the team prioritizing the right ideas and deprioritizing ones that aren't relevant right now? Factor helps every team build and manage their strategy using AI.
  3. Problem solving - is the team adapting to new information with great problem solving? Factor boards make it easy for teams to manage and structure their problem solving.
  4. Process - is the team engineering processes for all their repetitive work? Factor boards make it easy to build, manage, and continuously improve team processes.
  5. Skills - is the team growing their skills effectively and quickly? Factor's Skills Checks make it easy to set skill goals and build plans to improve.

  Weekly Quarterly Yearly
  • Teams run weekly prioritization and problem-solving interactions.  
  • Prioritization is holistic of priorities across all five drivers of performance.
  • Teams use a strategy board to manage these priorities.
  • Teams conduct Health Checks to measure and improve team motivation and habits (February, May, August, November).
  • Executives review org-wide Health Check data and determine if org-wide interventions are needed.
  • Executive leadership teams conduct an offsite to ensure that priorities holistic across all five drivers of performance. 
  • The agenda includes:

    • What is the state of our organizational culture and colleague motivation? (Review of Health Check trends.)
    • What are our top-down strategic priorities? How might we ensure that they create enough room for bottoms-up priorities?
  • Review colleague skill development, identify skill gaps, and develop action plans to fill those gaps via colleague development.
  • For teams where there is a heightened degree of strategic uncertainty, conduct a quarterly strategy review. If the team has good weekly rhythms, this should require minimal preparation. It should feel more like a "pencils down" check-in moment than a "final exam."
  • Cross-functional leadership team reviews the team's strategy board and performance data together to determine if the team should pivot their strategy or stay on course.
  • This review should be holistic of bottoms-up continuous improvement and top-down strategic goals.
  • The only artifact required for this is the team's strategy board.
  • (March, June, September, December).
Problem solving
  • Leaders conduct Skill Check planning meetings with each of their direct reports (January, April, July, October).
  • Skill Endorsement panels meet to certify and acknowledge colleagues who have developed one or more skills to a new level of fluency.

Originally published at:

Neel Doshi

Neel is the co-founder of Vega Factor and co-author of bestselling book, Primed to Perform: How to Build the Highest Performing Cultures Through the Science of Total Motivation. Previously, Neel was a Partner at McKinsey & Company, CTO and founding member of an award-winning tech startup, and employee of several mega-institutions. He studied engineering at MIT and received his MBA from Wharton. In his spare time, he’s an avid yet mediocre woodworker and photographer.

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Lindsay McGregor

Lindsay is the co-founder of Vega Factor and co-author of bestselling book, Primed to Perform: How to Build the Highest Performing Cultures Through the Science of Total Motivation. Previously, Lindsay led projects at McKinsey & Company, working with large fortune 500 companies, nonprofits, universities and school systems. She received her B.A. from Princeton and an MBA from Harvard. In her spare time she loves investigating and sharing great stories.

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