An Open Letter to Jack Dorsey on Block's Perfomance Reviews

Dear Jack Dorsey ,

I wanted to commend you on your initiative to overhaul the performance management at Block (I read about it in a Business Insider piece by Kali Hays today). Your reference to the current system as a "denial of service attack on managers" is a painfully apt description of the friction and waste that organizations have to deal with this time of year, every year.

The reforms you’ve recently announced, such as removing Performance Improvement Plans (PIPs), simplifying and making performance ratings transparent to recipients, might reduce some of the friction. But in my experience they’re unlikely to make a big difference, since they don’t address some of the key limitations of how performance is typically “managed.” Many of these have to do with how “accountability” for performance is defined. You rightly point out that accountability should reciprocal, but the changes you've outlined seem to be more about streamlining a traditional top-down, one-way, approach. To truly foster a culture of excellence, accountability for performance needs to extend well beyond the hierarchy.

Consider how W. L. Gore & Associates (makers of Gore-Text and hundreds of other innovative products) approaches performance management:

• Once a year, every associate is asked to compile a list of five to twenty colleagues who have firsthand knowledge of their work.
• These nominations are then used in a peer-rating process based on pairwise comparisons. People are assessed on a deceivingly simple question: who has contributed more to the Gore’s success over the preceding year? (no multiple KPIs, no complex HR competency grids).
• Tens of thousands of such comparisons are collected across the company and aggregated to create a contribution ranking for every associate.
• Armed with the rankings, local contribution committees review compensation data to ensure that an individual’s pay reflects his or her peer-derived rating and stays in sync with the pay of similarly rated peers.

Gore’s peer-based performance and compensation system pushes everyone to think about how they could add more value. The system also encourages collaboration. At Gore, associates understand they report to their peers, not a boss, and are thus more inclined to go the extra mile for colleagues.

In addition to peer-to-peer accountability for results, I recommend you consider ways to increase the accountability that managers have to "their" teams. Publishing your own performance review is a great step in this direction. I would suggest you encourage all managers at Block to follow your lead. You don't have to make this mandatory: those who remain silent will still be sending a telling signal to the organization.

To take it a step further, consider adopting a practice similar to what Vineet Nayar implemented as CEO of HCLTech 15 years ago: allow employees who feel impacted by a manager's leadership to contribute to their performance review, irrespective of tenure or reporting relationship.

At HCL, any associate could provide input on these aspects of a manager’s job:

• Does this manager help you enhance the value you are delivering to the customer?
• After discovering that you have a problem, does this manager help you define the problem and help you identify its solution?
• When you approach the manager with a problem, does they respond by offering solutions or resolving the issues involved?
• If you can’t reach the solutions on your own, does the manager enable you to reach out to other people in the organization who help you achieve the solutions?

I can already hear the howls from concerned managers. Vineet heard these to, yet he forged ahead. The results were great: associates took this added responsibility seriously and shared thoughtful feedback. Managers who were “natural leaders”—i.e., who empowered and supported their teams in doing amazing things for the customers—were recognized. Other managers with work to do on these capabilities got a clear message, and either committed to improving or left.

Throughout your extraordinary career, Jack, you've revolutionized how we communicate, transact, and engage with technology. You've helped reimagine systems that were centralized and hierarchical. I hope you'll be equally ambitious in reinventing performance management and other outdated organizational practices. I'm confident your colleagues will be grateful--as would the millions of employees who are annually subjected to processes that are dysfunctional and soul-sucking.