There is no art to getting Performance Management (PM) right, unfortunately. It’s too vast a topic to simply nail down, and yet it’s too important to not try. Performance Management is the process by which your best performers are given greater responsibility, laggards are identified and given the help they need, and ultimately how the organization helps all of its people grow together. It’s no joke.
Well, it certainly helps to learn what’s worked, to have a Master to guide the way, and we teamed up with the Indonesian tech giant, Tokopedia, to bring their learnings to you. After all, they’re doing it for more than 6,000 of their own employees, and doing it very well.
Tokopedia creates tech solutions to connect merchants and consumers, with a mission to democratize commerce through tech. The company aims to build a super-ecosystem where anyone can buy or sell anything, and to that end they’ve developed a number of business lines, including a marketplace, a Sharia market, fintech and payment solutions, and logistics and fulfilment. During the pandemic, they catered to 90% of Indonesia’s MSMEs and seller sales increased an average of 113%. Tokopedia helped contribute to 2% of the Indonesian GDP, and they are driving the adoption of digital payments.
We presented a Masterclass in Performance Management from Tokopedia, led by Maranu Toto Negoro, Sr. Lead of Organization Development for Tokopedia, and joined by Lukman Hakim, Implementation Lead at Darwinbox.
Here’s what we learned.
Setting Context about Performance Management at Tokopedia
Mas Toto explains that the goal of PM at Tokopedia, as with anywhere else, is to build a high performing org. In a lot of ways, Tokopedia has been ahead of the curve regarding PM. 360-degree feedback was implemented in 2013, OKR was adopted as the primary PM framework in 2017, and 2018 saw Tokopedia take on company-wide calibration and the early stages of digitization. However, Tokopedia were facing issues that arose due to the use of multiple systems to address various aspects of PM (ratings, calibration, and so on), so in 2020 they moved to a single solution that enabled real-time employee feedback—Darwinbox.
Tokopedia summarizes their values in a “3 DNA”:
- Focus on consumer—All efforts are dedicated to the end users.
- Growth mindset—There’s no calm water, always be improving.
- Make it happen, make it better—Mas Toto’s favorite of the three, it is a clarion call to take ownership.
This will be important later!
And finally, a high-level overview of the PM cycle at Tokopedia:
- OKR– Set the right expectation with the right goals
- 360-degree feedback—Getting input from self, line reportees/managers, and horizontally as well
- Performance review—Evaluation of performance as individual and part of team
- Calibration—Company-wide alignment
- Individual plan—Personalized development & intervention
Here are key insights into getting Performance Management right:
- OKR As the Anchor for Organizational Alignment
Tokopedia moved to an OKR PM framework because of its ability to align individual goals with org-level goals, cascade goals from the CEO down to the last rung, and the flexibility in setting goal plans—all very important in a fast-moving company like Tokopedia.
Very briefly, an OKR is different from a simple KPI. It consists of 2 parts: an ambitious Objective, which asks “Where do I want to go?”’; and each objective is associated with a set of (usually) 3-5 Key Results that are essentially SMART goals, and they ask “How do I get there?”.
So, for example:
- Objective: I want to be #1 e-commerce platform in Asia.
- Key Result: Gain 40% market share in local SMEs.
We have more in-depth information on what OKRs are and how they work in our blog, and we also have a comprehensive guide on how to set up OKRs in an org of any size with several downloadable templates.
In Tokopedia, cascading happens top-down from the Chief level down to team leaders, and the goal-setting takes place bottom-up.
First thing’s first: the company objective is decided, the overall Tokopedia OKR. This will connect strongly with the vision and mission of the company, being driven by its 3 DNA. This is important. Since this OKR will cascade downwards and influence the OKRs set by teams and individuals, they have to tie back into org-level goals and long-term vision. That’s where the power of OKR lies—its ability to align everyone’s efforts to a common cause.
The company OKR the cascades down to each of the business leaders who then hold a mini town hall for their department. Each leader is responsible for cascading their OKRs to the various teams.
Then each team member can start proposing how they will contribute to goals of the organization, that is, they set their individual OKRs, which are aligned with the team OKRs, which are aligned with department OKRs, all the way to the very top.
- Aligned View and Perception Through 360 Feedback
A holistic assessment of every employee is essential to a thorough and fair PM review. It’s not only the direct manager of an employee that needs to provide input, because the employee has worked with so many other people in the organization, in the team and across teams, and perhaps even with external parties.
A 360-degree feedback aims to capture all of these dimensions.
In Tokopedia, at this stage employees will nominate a number of peers and colleagues to provide feedback. This includes direct subordinates (if any), direct line manager, and other folks who worked on the same project.
Assessment is always done by each party based on core competencies and the 3 DNA as the guiding light.
The output of this exercise will support final decision of managers vis a vis the appraisal, and will help employee get sense of how they are doing and how their peers perceive them. It gives a solid direction in terms of where their strengths lie and where they can improve, paving the road for well-rounded development.
- Robust Performance Evaluation Framework
Then comes the task of translating all of that data into a rating and possibly promotion.
At Tokopedia, both individual performance (20%) and team performance (80%) are used in OKR calculation.
The supporting data collected through 360-degree feedback and conversations recorded throughout the PM cycle on Darwinbox in the form of notes or critical incidents are all used by every single manager in Tokopedia for their evaluation.
From this the manager will derive a standard rating that translates into bonus and ESOPs.
- Unlock the Capacity for Growth Through Calibration
The calibration is one of most complex process in Tokopedia, where a lot of time is invested.
The leaders all gather together and discuss the achievements and their proposal for their team members.
The discussion for each team member includes:
- Performance—did they meet expectations, or exceed expectations?
- Potential & promotion proposal—will they get promoted this cycle, and if not then when is there potential for promotion? Or do they need to be moved to another role more suitable for them?
- Career aspiration – this is captured in the Individual Development Plan which is stored on Darwinbox. It considers the individual’s personal aspirations. Do they want to grow in this vertical, or explore other departments? Where do they see themselves in 5 years?
- Flight risk and retention—are they likely to leave the org soon?
- Development plan—what opportunities will they be given to become the best contributor they can be?
This calibration is done at 3 levels. The first layer is at the team/department lead level. The second layer is the VP level. And the third and final layer is at Chief level, and it is he who ultimately signs of the whole PM cycle.
Now, with the leadership-aligned view of the employee’s performance, Tokopedia produces their Talent Profile & Succession Plan for each employee.
The Talent Profile provides a holistic view of career aspiration, 360-degree feedback, promotion potential, historical performance, leaders’ perspective of the employee, and a learning path that is personalized to the individual’s journey in Tokopedia. It renders into a single dashboard for every leader and employee, and will enable objective and development-centric discussions with clear actionable items for direct managers and their team members.
And that completes our look at how Tokopedia does Performance Management.
Now, while a lot of alignment happens offline, a large part of the reason why Tokopedia is nailing it is because their processes are bolstered by the configurable and powerful Darwinbox PM module.
But we’ve really only scratched the surface. For a more in-depth look at how PM is made easy on Darwinbox, and to hear some insights on trends and some great audience questions, please check out the entire Masterclass available on-demand. And if you want to know even more about how Darwinbox can transform your PM and your entire HR function, then please feel free to reach out to us.