Volvo Group motors beyond annual performance review with Cornerstone

Volvo Group is a Swedish multinational company that makes trucks and is headquartered in Gothenburg. It employs more than 100,000 people globally, about half of whom are blue-collar workers. So far, so traditional, but the organisation has broken with the annual performance review cycle that is a bureaucratic bore for untold companies and their workers.

Bahar Rasouli, director global people performance, leadership and assessment strategy at Volvo Group, joined the company two and a half years ago with a vision to move it from an “old-fashioned HR as a kind of police function to being more of a strategic partner to the business, walking alongside the managers”.

Part of this transformation is to shift from the traditional annual performance review cycle to a continuous model where employees set shorter-term goals – and more entrepreneurial ones, to boot.

The firm had already been using online learning technology from cloud-based talent management and learning software supplier Cornerstone, and decided to use the provider for performance management as well. Previously, the organisation had used a different platform, one inherited from the time when Volvo Group and Volvo Cars were under the same umbrella. The cars business was sold to Ford in 1999.

Rasouli says the previous way of working did not fit well with Volvo’s blue-collar workers. The company wanted to treat both kinds of employee equally, and have them all work within the same philosophy of setting short-term goals that are reviewed continually, linked to other people’s goals, and connected all the way up to the company’s top line strategy. “This approach is very inclusive,” she says.

“We are truly global. We have workers in the US, Japan, China, Australia, as well as Europe.”

Before she joined Volvo, Rasouli had worked, at an earlier point in her career, for strategy consultancy McKinsey. “I use thinking from there all the time for communication, problem-solving and change management,” she says. Rasouli has also been head of talent management, global services, at Ericsson and global head of talent management at Deutsche Bahn.

As well as the global nature of Volvo’s workforce, she highlights its inter-generational nature. “Young people want immediate dialogue about performance,” she says. “They can’t wait for three months for a quarterly conversation, or twice a year for a half-year review.

“Yearly goals are sleeping pills in big companies. You think you’ve got time till 31 December, you wait, time goes by. But, as an entrepreneur, you have short-term goals, you break your bigger goals down into two to three-month goals.”

“Yearly goals are sleeping pills in big companies”

Bahar Rasouli, Volvo Group

Rasouli says the company calculated that close to one million hours were being spent on performance reviews. “And what is the outcome? It is usually just ticking a box. It’s like using a fork to eat soup. What is important is the result you bring and the impact of it,” she says.

“Imagine it is your own company – you don’t wait months to give feedback.”

Rasouli says a major principle of the way Volvo has been changing performance management has been to make things as simple as possible. “And, believe me, in an engineering company, people are fantastic at making things complicated,” she says. “The full commitment of the executive board to go ahead has been critical.

“It is a method, not a process, that we have. We don’t have directives, we have principles. And it is not only a performance discussion, but about the health and wellbeing of people psychologically.

“We have neuroscience behind what we are doing, and we provide coaching. It has a greater good. It is important to have a psychologically safe environment in order to encourage people to speak up, and so stoke innovation and creativity.”

The feedback the firm is encouraging goes two ways – from managers to and from employees. “We tell people to remember there is good faith behind what we are doing, and don’t take feedback personally,” says Rasouli. “We train people to be ‘direct, but not mean’.”

Every culture is different, she says, and gives the example of the UK, “where you typically get sugar coating of feedback, very diplomatic and too indirect”. She adds: “It is OK when one British person is talking to another, but someone from another culture can emerge from a meeting wondering what exactly happened. So, we train people to ask more questions to get more clarity.

“It is a buffet of tools that we have, translated into all our languages. Each organisation can pick and choose what it wants to use. For instance, in Japan, hierarchy is very important, so employee feedback to managers requires subtlety.”

But change on such a global scale and with so large a workforce takes time, says Rasouli. The company started the programme in January 2019 and “we can already see that people are more intentional than before”, she says. “They are asking: ‘how are my goals connected to those of my peers and to company strategy?’ The trend is towards getting better every day, and to get more feedback and have more short-term goals.”

The Cornerstone performance management tool, which Volvo calls Navigator internally, is “good for encouraging collaboration”, says Rasouli.

Next up with Cornerstone is to deploy the tool on mobile phones. “Young people love to work with apps on their phones,” she says. “Things like cascading goals, making them visible and aligning them, sharing them, checking the percentage of delivery in real time – the younger generation will embrace this functionality.”