New Performance Management System at TNO

Overhauling the old system was a major task. A project team was assembled, involving close collaboration between the HR Director, HR Innovation, Labor Affairs, and Finance. Beudeker had followed stories in the media for years about international companies like Accenture and Google abandoning traditional performance appraisals. “But they never said what to do instead. You still want to set goals and award raises—how do you do that sensibly?”

She explored alternative approaches, invited successful companies to share insights during a challenge session, conducted an internal survey among TNO employees, and organized internal brainstorming sessions to explore possibilities.

“We had to be careful not to impose a new system from HR—that could’ve created resistance,” says Beudeker. So they launched pilot programs: for a year, six teams were allowed to "reinvent the wheel" and design their own, most motivating performance management system. “They came up with some great ideas,” says Beudeker. “We could test them within those teams to see what it would take to make them work. For instance, how do we ensure employees give each other more feedback? Giving and receiving good feedback isn’t easy.”

Gradually, the ideas took shape and gained support. Empower was born.

So what does this new approach actually involve?

• Focus on development rather than evaluation.

• All employees receive the same raise, based on their position within a salary scale, not on performance ratings.

• The concept of a “performance review” is replaced by “appreciation.”

Of course, this requires a solid and competitive compensation package. Glaser: “Everyone working at TNO performs well, otherwise, they wouldn’t have been hired. If that appreciation ever shifts to ‘not good enough’ or ‘excellent’, that becomes a topic for discussion. But the starting point is: you are and remain good. That makes me happy as an employee.”

Employees know in advance what to expect, what salary step is coming. Exceptional performance is still rewarded, but with opportunities like leading complex projects or taking on new responsibilities.

As the Empower plan took clearer shape around the summer of last year, there was a need for a detailed elaboration of salary structures and various financial scenarios. This is where Highberg & Partners stepped in. Project leader Ernst-Jan Bergman took the lead on the financial aspects, while Lianne Hamstra was closely involved in refining the overall framework.

The collaboration was highly valued by Glaser and Beudeker. “Lianne is a decisive entrepreneur, warm in her approach, and exceptionally sharp in content, a powerful combination,” they noted. “Ernst-Jan not only made a significant substantive contribution to the financial design, but also managed the project with great efficiency. Thanks to his leadership, we achieved all milestones on schedule and ensured that stakeholders were thoroughly engaged throughout.”

During this phase, the Works Council (OR) and the sounding board group, which represented various parts of the organization, played a key role in shaping Empower. “Their involvement added tremendous value,” says Glaser.

In the months that followed, the focus shifted to informing the organization and initiating the approval process with the Works Council. Together with colleagues, the project team organized fifteen roadshows across TNO’s ten locations. The sessions began with managers and were later extended to the broader workforce, reaching approximately 3,500 employees in total. The Finance team played a key role, as many employees had questions about the financial implications of the proposed changes.

During these sessions, the project team worked closely with the Works Council. “Our Works Council is made up of smart, critical thinkers, and their expertise proved invaluable,” said Beudeker. “Just as importantly, employees could see firsthand that the Council supported the new approach. They were able to ask directly, ‘Should the Works Council approve this?’ and the answer was yes.”

The official decision came in early February. To mark the occasion, Lianne Hamstra brought in a celebratory cake, decorated with an image of an Excel spreadsheet. “That was a great moment,” said Glaser, “but it also signaled the start of the real work: implementation.”

A larger project team was formed, as the initiative could no longer rely on just a small group of early drivers. The original plan was to roll out a cascade of training sessions, starting with managers, who would then train their teams. However, the sudden outbreak of the coronavirus pandemic forced a rapid pivot to Plan B.

In response, the team swiftly developed e-learnings, blogs, vlogs, and videos featuring TNO employees with acting talents. A variety of toolkits were also assembled, including resources with scientific support for the new approach. “That’s something we truly value at TNO,” Beudeker added.

Continuous dialogue is central to the new way of valuing, but a fixed annual cycle is missing. All employees start with an Empower conversation, which they can schedule themselves this year in consultation with their manager. This forms the basis of cooperation. Besides development and work goals, it is also about how the employee prefers to shape further conversations. 'That can be a discussion with the supervisor every month or once a year. We don't prescribe that, it's customized," Beudeker said. There will also be check-in conversations. Those are short conversations, especially among colleagues, to get feedback or feed forward on your development and results. The project team is setting up an instructional toolbox for employees to get them started in the new way of working.

In addition, HR is facilitating “house for talent” sessions, where managers discuss among themselves what employees need to grow, plus sessions on developments in both the department and the outside world that affect work. 'And that's it,' says Glaser. 'We give as much freedom as possible. The employee is central; we want them to be at the helm of their career.'