A Look at Self-Directed, Social Network-Leveraging Performance Management

What would performance management look like if it was bottom-up, employee directed and socially connected?  An intriguing case study comes our way from The Morning Star Company, a 40-year-old tomato processing company and one of the winners of the Management 2.0 Challenge, the first phase of the HBR/McKinsey M-Prize for Management Innovation.

Chris Rufer, founder of Morning Star, had his own ideas about organizations and built the company as a fully self-managed organization - one that, to this day, has never instituted a formal hierarchy.  And in his view, the strength of a self-managed organizations "depends on the degree to which each colleague clearly defines his commitments to his colleagues--and the degree to which he lives up to those commitments."  So, Chris created a document which he called the Colleague Letter of Understanding (or CLOU), which became the primary tool by which Morning Star colleagues coordinated and organized themselves.  Everyone within the enterprise has a CLOU, which they have personal responsibility for crafting in collaboration with their most important colleagues. 

The key elements of the CLOU include:

Personal Commercial Mission: each colleague within Morning Star is responsible for crafting a Mission that represents their fundamental purpose wtihin the enterprise.  This is intended to be their primary guiding light, the statement that should be the direction for all of their commercial activity within the enterprise.

Activities: the key activities that the colleague agrees to accomplish in pursuit of their Personal Commercial Mission.

Steppingstones: identifying the key measures (Morning Star lingo: "Steppingstones") by which the colleague gauges their performance in accomplishing those activities that they commit to, as well as the accomplishment of their mission. 

Time commitment: the amount of time the colleague agrees to commit to the accomplishment of their Mission.

CLOU Colleagues: those colleagues to whom you are making these commitments.  Your CLOU colleagues were to sign off on the CLOU indicating their agreement with all of the representations therein.

In the beginning, the CLOU was a paper document, updated and reviewed with CLOU colleagues on at least an annual basis.  As the company grew, the paper process became unwieldy, so in 2007 Morning Star rolled out a digital version of the CLOU, which enabled the document to be updated in real time.  It also allowed all colleagues easy access to each others' CLOUs, making it much easier to figure out who was responsible for what.

In his winning submission article on the CLOU, Morning Star's Paul Green Jr. relays a story that illustrates how it works at the company:

... a colleague recently was telling me about an email he received that, initially, made him a little angry.  It referred to problem the sender was having, and the sender was seeking his help in rectifying the particular problem.  His initial response was to write a terse email in response that basically said, "this is YOUR job; figure it out and stop trying to pass the buck."  But before he hit send, he decided to take a look at the senders CLOU; he was surprised to learn that the issue the sender had sent him wasn't any part of that colleague's Personal Mission.  In fact, the sender had taken initiative to try to recruit my colleague, who they felt had the requisite expertise, to take care of the issue--a pretty important customer issue.  My colleague spent some time looking through the CLOU system, and was able to identify someone whose mission the issue was somewhat related to; he approached them, outlined the issue and the needed change.  That colleague ended up modifying his CLOU to incorporate the necessary process change.

Morning Star is now in the process of moving from the current static system to a new vision for the CLOU, where colleague CLOU content is directly mapped to the company's web-based enterprise reporting system, providing a graphic view of enterprise performance and the colleague responsible for each area.  And, as Green notes:

...when a colleague takes responsibility for activities by selecting them into his CLOU (in the forthcoming version) the corresponding Steppingstone measures will come along with those activities--as well as the relevant reports.  This incorporates live (or close to real-time) reporting directly into the colleague's CLOU.  Our vision is that the "home page" of the CLOU will turn into a sort of scrolling "feed" of information.  Your home page will update to show updates to key Steppingstones, as well as a running feed of Steppingstone information for your CLOU Colleagues.

More information about the CLOU, including a sample CLOU and an interview with Morning Star's Paul Green, Jr. can be found here.

An interesting case study, is it not? 

Ann Bares is the Founder and Editor of the Compensation Café,  Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations.  She earned her M.B.A. at Northwestern University’s Kellogg School and is a bookhound and aspiring cook in her spare time.  Follow her on Twitter at @annbares.

Image courtesy of relenet.com

Comments

[Dan Walter]

Thanks Ann,
What a great concept, realized.

[Liz Copeland]

Maybe our government should adapt this process. It might allow them to work together better and reach some of those "steppingstones" they need to reach to get to the real mission.

[Ann Bares]

Thanks, Dan - great to see an idea like this brought to life, isn't it?

Liz: Interesting thought - thanks for sharing!