In a world where people lose focus easily and companies quickly change strategies, building a performance culture is a monumental undertaking. Some companies such as Microsoft, Siemens, Accenture, Google, Reliance Industries, and IKEA are well known for their performance cultures while still being revered as among the best places to work.
When you look at company success long-term, the ability to outperform competitors can make the difference in growth and long-term viability. In the first article on performance culture, we looked at how to build a performance culture by establishing purpose, developing a shared identity, and creating alignment using strategy trees. In this article, we explore the people side of building a performance culture, for people leadership underpins the performance culture and makes it sustainable over time.
Famed management professor and consultant, Peter Drucker, claims that “performance is the ultimate test of management.” Indeed, good management should bear the fruit of good performance. While managing resources, a schedule, or a programme requires skill, managing people can be the most difficult and consuming responsibility of management. Let’s look at what can be done to drive performance through people? How can leaders work through their people to sustain a performance culture?
Establish Relationships: Model the performance and build trust for feedback
Building effective relationships is more than communication and caring. For a leader to build relationships that strengthen bonds yet also build a performance culture, the leader must first model the performance. Leaders need to achieve results, hold themselves accountable, and demonstrate competence before they can expect the same from others. When a leader has proven competence, then he or she is credible to have conversations around performance.
The relationship building is both on a professional and personal side as leaders need to care about the person and not just the performance to build trust and mutual respect. Once this is established, then leaders can have open and honest communication that leads to constructive feedback and two-way communication around performance.
Some questions to consider around building relationships to drive performance:
- Are our leaders competent? Do others respect their competence enough to listen to their feedback regarding performance?
- Do our leaders achieve results through others, not just themselves?
- Do our HR and KPI systems provide clear and timely data on performance so that leaders can provide feedback on employee progress and results?
- Do employees have mentors, colleagues, or coaches who are not in their reporting structure who can give them constructive feedback?
- How often do leaders meet face-to-face with their employees to discuss career and performance issues?
- Do our leaders and employees understand the importance of feedback, and do they know how to give effective feedback – both constructive feedback and praise?
- Do we model the right leadership and relationship behaviours top-down?
Build the Culture: Focus on product, service, and customers
Truly healthy organisations are ones that perform. Too often we focus on internal metrics to tell us about how healthy organisations are by asking employees what they think about their leaders, company policies, development and career opportunities, etc., but not enough is measured about how well the company delivers to its customers. Is a service organisation really a great company if they do not provide good service? Is a company with a mediocre product really a great company just because its employees like their amenities and feel appreciated? At the end of the day, companies are people working together through systems to provide a product or service.
There must be a clear purpose for the company… is it delivering a valuable product or service?
Essentially, leaders must help their people work effectively and efficiently in executing processes to deliver value to customers. Great business leaders care about their people, and this means the customers as well as employees. Building a strong performance culture flows from the outside – in. First understand what a great product or service means for the customer, and then build a company culture of norms, shared values, and processes that consistently deliver a great product or service.
Some questions to consider about how much your culture is driven by delivering the best performance for customers:
- Do we survey the organisation on how effective it is in meeting the needs of customers?
- Have we identified the capabilities we need to be first or second in our businesses?
- Are we measuring leaders on how well they improve the effectiveness of the business?
- Do employees regularly receive information on how well the company is performing and what perceived value the products or services bring to customers?
- How well do we communicate business results at all employee levels?
- Are people aligned to goals through strategy trees?
Review Performance: Cultivate Accountability
Performance reviews are an organised way of recording and managing performance and development data. Performance should be formally reviewed at least twice a year, with feedback and mini-reviews happening on a regular basis. Performance review processes should not be too cumbersome as to create a burden that does not yield much benefit.
The use of strategy trees, noted in the first article, can help leaders review performance by mapping how an employee is aligned to the goals and strategies of the company. Is their contribution to goals clear? Have the strategies been successful? Other questions include:
- Is the line-of-sight clear between each employee’s work and company strategies and goals?
- What criteria and performance scale do we use to rate individuals? Is the scale exact enough to differentiate effectively between top, middle, and lower level performers?
- Is our performance review system user-friendly? Does it allow for year-round data gathering?
- What are the on-time and final completion rates for performance reviews?
- What impact do performance reviews have on development planning, merit increases, career planning, high potential identification, and the succession planning processes?
Motivate People: The “why” and fit before the recognition and rewards
Simon Sinek’s popular book, “Start with Why”, makes a compelling point that “great companies don’t hire skilled people and motivate them; they hire already motivated people and inspire them.” The idea that leaders are fully responsible for motivating people is short-sighted.
Employees must decide to be motivated and find reasons to be motivated inside and not rely solely on rewards or recognition for successful outcomes. A performance culture begins with purpose, identity and alignment to help provide a framework to build a compelling “why” someone is working for a company. Do you personally believe in the value and importance of what your company provides to customers?
Believing in the company and having a clear “why” you want to work for them sets up the important question of “fit”. Is the employee in the right role to contribute his or her best and most to the company? As much as is possible, leaders need to ensure each team member is in a role that fits the skills and interests of the employee and that all employees feel like they belong and are accepted. There are a myriad of psychological factors behind motivation, but some of the most important ones are having a strong “why” and being in a role that fits well with your skills and interests.
Rewards and recognition also are critical to motivation because they go beyond measures by helping create a culture that recognises and esteems excellent performance. Rewarding and recognising top performers is a strong motivational tool if used properly. Proper use means first understanding what specific employees value, and rewarding and recognising them in a way that matters to them. Financial compensation in the form of merit increases, bonuses, and stock options are common reward methods.
Each leader should reflect on these questions:
- Do we hire motivated people who sincerely appreciate the purpose of the company?
- Does each employee on my team have the opportunity to use his or her strongest skills?
- How do we link the right rewards and incentives to key performance metrics?
- How are employees, teams, departments, and business units recognised for consistent superior performance?
- How can we strengthen the commitment of key contributors through tapping into what motivates them the most?
- Have we considered the impact of generation and culture differences on motivating employees?
- Are the criteria for receiving rewards and recognition clearly spelled out and communicated?
- Do we have a wide variety of awards for all levels of employees and for varying levels of contribution? How diverse are our reward and recognition tools?
Invest in People: Manage talent and develop people
Businesses invest in equipment to keep them running well, and they invest in product development to try to improve their product portfolio; yet, their most valuable investment should be in people. Investing in people to improve their skills, build capability, strengthen morale, and increase productivity can yield a high return on investment.
Talent management involves differentiating your talent and making sure that employees are ready for their next position by having the skills, experience, network, and leadership ability to perform well in the next role. Essentially, companies must know their talent extremely well… their career interests, experience, capabilities, leadership skills, and capacity to deal with increased complexity and perform in roles with greater scale and scope of responsibilities. The model of “ways to invest in people development” illustrates some of the major ways to grow your talent.
Some questions to consider regarding investing in people and managing talent:
- What variables beyond performance do we use to differentiate between our top, middle, and lower level performers? Are the variables more closely related to current performance or to potential?
- Is more time and attention given to high performers or low performers?
- For those who are solid performers but are not identified as high potential or ready-now for promotion, do we still provide adequate feedback and coaching to ensure continued high impact?
- Do we consider such factors as versatility of skills, potential for senior management, individual productivity, potential, capacity to deal with complexity, diverse experience, personality factors, and criticality of current role when determining who top talent are?
- Does our performance rating system lend itself to comparative rankings among peers?
- How do we pro-actively retain the top 25% of our employees?
- Do we know what motivates our top 25% the most or are we relying too much on the traditional motivators such as grade level and financial rewards?
- Do employees have ample opportunity to explore career options within our company?
- Do we encourage career broadening for those who have general management potential?
- How effectively do managers take action on those employees who are consistently not performing?
- Are the development initiatives and activities effective? Are managers deeply involved in both planning the development activities and following-up to ensure integration of the lessons- learned into the job?
- Are high potentials being given the right assignments to ensure their rapid development?
