Beyond Management by Objectives
The purpose of measuring performance is to determine if the person evaluated is suited to the role they are doing. Leaders often complicate this process by failing to isolate the individual capability from factors like the value of the role itself or external factors. This is exemplified by the idea of management by objectives, and its derivatives like OKRs and KPIs, where individual capability is equated with outcomes of the metrics they own. The sales person becomes their quota, the engineer becomes their story points, or whatever is popular that day.
The main problem with this approach is that it blocks our ability to address the root causes of underperformance or over-performance. A failure to achieve expected objectives could stem from system level issues such as flawed processes, cultural issues, or external factors completely outside the person’s control. Alternatively, failure could because the role is not the right role to solve the intended problem (e.g. sales can’t solve a product problem).
My view is that employees need to be evaluated based on their capabilities in the context of their role. This can be measured across five dimensions:
- Complexity & Independence: An individual’s ability to handle increasingly difficult and ambiguous tasks with progressively less supervision. It reflects their capacity to learn, adapt, and use feedback to develop the critical thinking and self-awareness required to navigate challenges independently.
- Context & Rationale: An individual’s ability to understand and articulate the purpose behind their work. It goes beyond completing tasks to grasping how their contributions connect to broader team goals, the company’s mission, and customer needs, ensuring their actions are aligned with a greater strategic purpose.
- Decision-Making & Justification: The quality and rigor of an individual’s decision-making process. It focuses on their ability to gather evidence, challenge assumptions, explore multiple alternatives, and collaborate with others to gain diverse perspectives. A key component is providing clear, well-reasoned justification for their choices.
- Scope & Influence: The breadth and impact of an individual’s contributions beyond their own assigned tasks. It tracks their growth from focusing on personal responsibilities to proactively mentoring others, improving team processes, and ultimately shaping broader organizational strategies.
- Results & Adoption: The tangible outcomes of an individual’s work and whether their ideas and solutions gain traction. It measures success not just by completion, but by the extent to which their contributions are adopted by teammates, integrated into processes, and deliver real value to customers and the organization.
Separating the inherent capabilities of the individual from the outcomes helps us distinguish between a personal performance issue and other factors unrelated to the person. This brings us to a foundational idea: organizational success requires the alignment of three elements: the Role, the Person performing that role, and the Environment in which they operate.
This alignment is critical, and any misalignment between these three dimensions becomes the primary source of performance issues. Instead of defaulting to the conclusion that underperformance is an individual failing, this framework provides a diagnostic lens. It forces us to ask more precise questions: Are we solving the right problem (Role)? Do we have the right person solving it (Person)? And is the system enabling or blocking them (Environment)? By treating these as independent variables, we can move beyond the simplistic ‘target vs. reality’ measurement and identify the true bottleneck to success.
Many great leaders navigate these complexities intuitively, arriving at the correct diagnosis through experience and keen observation. However, what is often lacking in organizational conversations is a clear, explicit framework and a deliberate performance management process designed to capture these crucial distinctions across the organization. Without a shared language to differentiate between a role problem, a person problem, or an environment problem, our ability to solve performance issues remains inconsistent and heavily dependent on the intuition of individual managers.
This structured approach reveals several common, yet frequently misdiagnosed, patterns. We often see the ‘Sabotaged Star’: a highly capable person in the correct role who is stifled by bureaucracy, or a lack of resources. This is not a personal failure; it is a leadership failure to fix the environment. Conversely, we might have a ‘Square Peg in a Round Hole,’ where the role and environment are perfect, but the individual simply lacks the capabilities required. This is a true performance gap, but its root cause is a hiring or placement error, not a lack of effort. By distinguishing between these scenarios, we can move from blaming individuals to taking the correct corrective action, whether it’s fixing the system, redefining the role, or coaching the person.