CULTURE: A KEY TO HIGH PERFORMANCE

While all performance management processes follow similar high-level steps, the details of each vary significantly. Some of the issues faced by companies implementing performance management are seen in the box, Key Performance Management Questions.

It was difficult to discern what accounted for the significant fluctuation in the execution of the few key steps that make up a performance management process. Many companies said they even found widely varied processes within their own organizations – from business unit to business unit – as they began to migrate to a single enterprise-wide process. When Pfizer began implementing their global performance management process, that’s what they found. “We found highly sophisticated performance management processes in India and Canada and found other parts of the world with very weak processes,” said Robyn Davis-Mahoney, Director of Global Performance Management at the company. “To implement a single standard, we had to meet people in the middle and unfortunately, some locations actually had to give up some of the functionality in their existing processes.”

Key Performance Management Questions

• When does goal-setting take place?
• How many dialogues will managers have with employees throughout the performance period?
• What, how many and when are competencies assessed as part of the performance process?
• How many levels are included in a performance rating scale and what are the labels used to distinguish levels?
• What happens to final rating scores?
• How is compensation tied to performance if it is at all?
• What technologies and methods are employed to facilitate performance processes?
• How does the organization assist managers to improve their ability to provide honest, candid feedback?

Cultural Differences

Differences are certainly influenced by unique HR teams doing their best thinking about what constitutes a good performance management process. But survey participants said, and their attitudes supported the idea, that corporate culture significantly influences the way performance management plays out in each organization.

One aspect of cultural difference is seen in the reporting relationship of the performance management function. While a majority – 53 percent – said the person responsible for performance management reports to the HR function, a significant number – 21 percent – said the performance management leader reports to the Chairman, CEO, executive vice president or managing director of a business unit. That was the case at Pfizer, where it was the CEO that started the process discussed above.

Pfizer isn’t the only company finding differences across country boundaries. Other companies implementing a single process across the enterprise are still working to understand the degree to which regional, societal and even governmental influences impact the execution of their performance management processes. John Deere’s performance management team is looking specifically at global cultural factors that introduce nuances into their processes.

Culture influences how performance management is implemented and executed, and it also influences the intent of the process. In addition to managing the alignment of organizational objectives, the outputs of the performance process often feed other systems and processes, such as:

• Compensating employees
• Identifying and recognizing top performers
• Filling talent pools within a succession planning process
• Identifying and removing poor performers

Leaders Driving Culture

Organization culture is primarily established through the behaviors that leaders exhibit and demand of others. When leaders were forced to flatten hierarchies and cut costs in the late 1990s, they often used performance management as the mechanism for reducing headcount. Organizations that used performance management only for this purpose developed a fear-based culture where people were concerned they could fall into the bottom X percent for reasons other than poor performance, including manager biases, political wrangling and errors inherent in work systems and processes.

Now that downsizing trends have tapered off, leaders recognize the potential of performance management to enable the development of high-performance cultures. A critical success factor for creating a high-performance culture is linking compensation and rewards to performance outcomes. Business thought leader Ram Charan says linking rewards to performance is necessary to creating and sustaining a high-performing and execution-oriented culture but it’s not enough by itself. He says some leaders set tough performance standards and stand back to watch people sink or swim, and often, lots of people proceed to sink. Others design reward programs without providing the support people need to master new behaviors. “They don’t conduct the dialogues that surface realities, teach people how to think or bring issues to closure.” The cultural tone that underpins the performance management process – be it one of trust or fear, collaboration or isolation, inter-dependency or autonomy – impacts the way managers and employees interact within the process. A culture that is built on trust and support, and that rewards managers for coaching and developing their employees will succeed in building a high-performing company. Organizations that believe they get the most from performance management say managers and employees value the process to create an open, candid dialogue, support career growth and truly pursue improved personal and organizational performance.

For more Performance Management-related information, visit performance.corpu.com.