A Progressive Way To Measure Performance: The NPPS
A few years ago we stumbled upon a simple but powerful performance measuring tool that Dutch company bol.com used in their transformation to a progressive workplace. It is called the "Performance Promoter Score". (We wrote about it in our book). Academics now endorsed the effectiveness of this tool. It must be good!
Boring appraisal forms
We are all familiar with the problem this new tool set out to solve: boring, lengthy, time-consuming appraisal forms.
Traditional forms are usually more a burden to employees than they are useful. They can add extra useless work to other pressures.
This is especially true in times like the pandemic, when organizations might neglect performance measurement because it is difficult to do.
But surely that is the wrong response. In times of crisis performance is even more critical, even to survive.
The need for constructive feedback
In a recent paper "Measuring performance during crisis and beyond: The Performance Promoter Score", Herman Aguinis and Jing Burgi-Tian (professors at George Washington University) talk about the importance of measuring performance in times of crisis.
They argue that a key output of performance management is regular, timely and constructive feedback. Without that, people are stalled in their professional development.
It is important to keep doing it regularly, so teams and staff can give each other sound, meaningful feedback. This keeps improving their performance, and that of others.
Frequent, reliable information, helps to make critical decisions now, and hopefully the ability to thrive after the crisis is over.
Keep measuring performance in crisis
They argue the solution is not to stop measuring performance. "Abandoning performance measurement results in loss of valuable information at a moment when data are badly needed."
But the focus should be to upgrade measurements to the new reality. "Rather than abandoning performance management [...], a better solution is to adapt measurement to the new organizational and societal realities. What is needed is a measure of performance that is simple, relevant, informative, adaptable, comprehensive, and clear."
This raises two questions:
- How can we create performance tools that are simple, relevant, informative, adaptable, comprehensive, and clear?
- How can we make them easy to understand, and useful for everyone in the organization?
Performance Promoter Score
In answer to these questions, the researchers suggest the so-called Performance Promoter Score (PPS). This new way to measure performance is inspired by the Net Promoter Score (NPS).
They write: "PPS is a convenient, practical, relevant, and useful performance measure during a crisis such as the COVID-19 pandemic, but it is also an innovation that will be useful long after the pandemic is over."
This is how it works, and what they say about it.
What is it? How does it work?
The performance tool is strongly inspired by conventional NPS. For those who have not heard about NPS, it is popular, especially in marketing, for measuring customer loyalty to products, services, and brands.
Computing an NPS score takes three steps:
- You ask one simple but powerful question that can be answered on a scale from 1 (not at all likely) to 10 (extremely likely). The question goes something like: "How likely is it that you would recommend this product to a friend or colleague?"
- Next you categorize customers into three groups. Those who give a score of 9 or 10 are called "promotors" in NPS-speak. Those who give a 7 or 8 are considered "passively satisfied," and those with a 6 or below are called "detractors".
- You now calculate the NPS score by subtracting the percentage of those labelled as promoters from the percentage of detractors.
Via these steps the NPS score of any product, service or brand can range from -100 to +100. The higher the score, the better. To gain more insights, you can ask other questions like: “Why did you give the rating you did?”, or "What should we do to raise your rating?"
Net Performance Promoter Score (NPPS)
Computing an NPPS is similar. Instead of asking about a product, service or brand, these questions are about your work environment.
The researchers write: "Extrapolating and expanding upon NPS, measuring performance, using PPS involves...three questions:
- How likely is it that you would recommend working with [name of individual, workgroup, or unit] to a friend or a colleague?
- Why did you provide the rating that you provided?
- What would it take to raise the score just by one point?
Similar to the computation of a Net Promoter Score, it’s possible to use PPS scores to calculate a Net Performance Promoter Score (NPPS). NPPS is calculated by subtracting the percentage of detractors from the percentage of promoters.
Thus, an individual, work group, or unit’s NPPS ranges from -100% to +100%. Moreover, as with the NPS, it is possible to calculate the NPPS for a functional unit, department, or an entire firm."
There are at two important points to note when using such a peer-rating tool.
- There can only be a fair score if there is a diverse and all-inclusive list of raters who are sufficiently familiar with the workplace (or team) being assessed.
- It's key to understand the feedback behind the rating. Therefore, employees should be given time to process and absorb the feedback solicited from the tool. Discussing the feedback among peers is critically important.
Why is it good?
Once implemented, and correctly used, the tool offers several advantages, according to the researchers:
It is flexible: "Because PPS does not go into the narrow technical details of the job or specific key performance indicators (KPIs), it can be used in any circumstances and for any type of job."
It is simple: "PPS is a simple measurement: It does not take raters more than 15 seconds to provide a score and no more than 5 minutes to respond to the two open-ended questions."
It is practical: "PPS is standardized. Individuals from different functional units, departments, and geographic locations are evaluated on the same criteria, which makes cross-functional and cross level comparisons easier."
It is holistic: "PPS information can be collected from peers, direct reports, partners, vendors, and customers." As such it can provide a holistic view on the performance of a particular unit.
It is peer-driven: PPS gathers information from peers by peers. This "employee involvement enhances their acceptance of the results and minimizes defensiveness when results are not positive."
And, most important:
It is realistic: "Employees are in a good position to provide information on what would be needed for them to improve their performance: Is training needed? Resources? Supervisory support?" It can be used easily to identify the additional resources (e.g., training, improved IT) needed to improve performance.