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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.
Readers have left 2 comments. (1) Assoc of Company Colleges Uk
2007-08-28 18:19:57 Great article and very timely. If shareholders understood that culture is the most important factor in building a high-performing and enduring company they would ask a different set of questions when deciding the stock value of a company. (2) Oak Forest Hospital
2007-09-28 18:15:21 The presentation was well written and full of excellent ideas and advice. So many companies give lip service to this concept yet they continue to ignore its importance.
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