Source | The Mission : By David Hassell
For decades, business leaders believed that simply focusing on performance management was the key to building a successful company. If they just had the right vision and strategy, clear objectives, people with the skill sets to achieve those objectives, and alignment toward their goals throughout the entire organization, they’d achieve high performance and success, and live happily ever after.
In the late 1980s, however, company culture emerged as another core element and predictor of organizational performance and success, and has since risen to one of the most talked about keys to building a successful organization in today’s zeitgeist. There have now been numerous studies showing the correlation between great culture and high performance, with one example showing that since 1998, Fortune’s 100 Best Companies To Work For (a decent proxy for companies with a strong culture) have outperformed the S&P 500 by 2 to 1.
Then a decade later, Gallup began discussing the impact that employee engagement was having on business outcomes, further informing us of the abysmal statistic that barely more than 30% of today’s workforce is engaged in their work.
Even though it’s now clear that both company culture and employee engagement are key factors, in addition to performance management, to creating successful outcomes, there’s still a lot of confusion about how they relate with one another, and what leaders can do to positively influence all three.
Let’s start by looking at performance management, which today is the still the most understood of the three. The typical formula looks like this:
- Company leaders set the mission, vision, and long/medium/short term objectives for the company.
- Managers hire for a specific skill set and specific roles.
- Managers set objectives and key results (MBOs/OKRs) as well as determine which key performance indicators (KPIs) they will track that align individual employees and teams around the company mission, vision, and objectives. These objectives roll up and support growth and results simultaneously at the employee, team, and company levels.
- Managers communicate and check-in with employees regularly on KPIs and OKRs. They diagnose and address roadblocks and keep employees on track.
- Managers hold a yearly performance review with each employee to evaluate 12 months of work and set goals and expectations for the next 12 months.
The commonplace belief is that if that process is executed flawlessly, success should be guaranteed. However it’s now become apparent that if that’s all that leaders do, they are setting themselves up for failure