Culture & Performance Management

Our previous post focused on building a high performing culture, and it noted that doing so is nearly impossible without significant contributions of time and energy from senior leaders. It was noted that a well-defined performance management process is a pre-requisite as well.

Performance Management is all about how leaders orient their organizations around working on the right things in the right way.

When we asked our Partners In Improvement to define Performance Management and to discuss how it impacts an organization’s culture, we heard a range of perspectives. Generally, everyone agreed that performance management a key driver of organizational culture because a well-defined and executed performance management process promotes effective prioritization, accountability, and engagement. However, definitions were more varied, and included:

  • the strategic orientation of the organization
  • process performance management
  • setting of goals and objectives
  • individual performance appraisals
  • daily direction and feedback to reinforce desired behaviors
  • providing tools and coaching to help people be successful
  • rewards and recognition

From the strategic perspective, performance management begins with the identification of what’s vital to the organization, the Partners said. If these priorities are not clear and it is not clear what role everyone plays in the priorities, the rest is unlikely to mean much.

Several of the Partners pointed out that performance management refers to both process management as well as people management. While there are clearly a wide range of views about how to manage the performance of both people and processes, several excellent best practices were generated during our discussions:

For example, everyone agreed that frequent observation and feedback is more helpful to people than formal annual reviews. Frequent communication about what an organization needs and wants greatly increases the odds that the organization will get what they need and want.

In addition, most reported that group rewards encourage teamwork, while individual rewards encourage an individual to optimize his or her own goals even if it may sub-optimize the organization as a whole.

Everyone agreed that tying money directly to performance appraisals can be a two-edged sword – raising stress and reducing the intrinsic rewards and personal satisfaction from doing a good job for the team.

Everyone also agreed it was important to avoid what was described as “managing through rear view mirror.” In other words, avoid “Monday morning quarterbacking.” Instead, leaders should be involved in a systematic performance management process that is ongoing and timely so that outcomes can be influenced rather than discussed after-the-fact.

Here is a simple infographic that depicts one approach: