For years I have been searching for the elusive formula of setting achievable, realistic performance measures requiring some stretch by employees within the organization. Companies could use these performance measures to build a culture of performance. But getting there is hard. Anyone telling you otherwise is not being straight with you.
By all accounts, achieving a top performance culture is an enviable goal. However, knowing that performance measures can vary from employee to employee, it becomes a bit of a beast to manage on an individual basis.
There is also the argument of whether a culture of performance should even be a goal because when people are hired, they are hired to perform. Performance, the argument goes, is implied in the job offer and therefore a culture based on performance is redundant; an employee’s performance leads to the organization’s success. But you can counter this argument by recognizing the difference between the financial success of an organization and the success of its culture.
This past summer I was visiting with my life-long friend, Jonathan, who appeared worn and exhausted. Through gentle probing and mild nudging I was able to ascertain his worry—work. In a senior position, he oversees the sales of an international company. The sales goal given to him the year prior was $360 million in contract sales. Not only did his department achieve the goal, but one contract slated for the following year came in early and he hit $432 million. His initial jubilation quickly diminished.
In the past he was comfortable with his annual performance measure being 10% above the sales projection of the year before. It was a stretch for his department, but manageable. Jonathan was expecting an increase to $396 million, which in a slowing economy was going to be tough to attain. However, he was given the new goal of $475 million, which was 10% greater than actual sales attained. Not only was he now short one sale that was slated for the current year, but he had to earn 32% more than his last year’s goal. He was worried.
Is inciting worry and excessive strain on corporate talent a desirable characteristic of a healthy performance culture? Jonathan, a loyal company man who likes his job, would be silent if I asked him, but I would argue that his performance measure is unreasonable.
So here we are, back at the beginning. Building a culture of performance based on individual performance standards is not easy—and in this case, not right.
In a leadership example, Alcoa, an aluminum company with sluggish performance, hired CEO Paul O’Neill, in 1987. His mandate was to boost revenue, but to the chagrin of investors, he chose instead to focus his energies on decreasing employee accidents. For years Alcoa had been plagued with internal strife, including strikes over working conditions that involved 15,000 workers. When O’Neill started his tenure, he stated that the number one priority was to reduce worker injuries.
His message was translated to mean that the company was going to start valuing every single employee—that every single person who works at Alcoa mattered. This position completely changed the dynamic between employees and management.
It was always O’Neill’s intention to improve the company’s performance and he chose safety as his road to get there. He knew that the way to improve safety was to do it right every single time.
O’Neill’s message to improve worker safety, thus making every factory more efficient and more productive, sidestepped a top down enforcement of high performance expectations. Everyone was willing to engage in his process and change unsafe work habits to safeguard employees. The cultural shift to employee safety as a priority lead to higher quality product and increased revenue, while creating the conditions for a top performance culture. When O’Neill retired in 2000, Alcoa’s net income had increased fivefold.
We need to turn the idea of performance measurement on its head. Performance is not a culture to aspire to, rather an outcome of a healthy culture that makes employee safety and well-being a priority.