By Stefano Maifreni
If you’re a CEO or senior executive, here’s a big question for you: Are your employees frozen by a fear of failing to meet specific goals? And if so, is there an alternative to the performance-based culture that’s so common across the corporate world?
What are you obsessing over?
I’ve been an avid reader of Harvard Business Review (HBR) ever since completing my Executive MBA at the London Business School. And I was intrigued by a recent article from a company president and CEO that suggested companies create a growth culture, not a performance-obsessed one.
HBR’s articles are always fascinating and very useful for my work. In fact, I have applied some of their theory to my clients’ businesses many times. What’s more, I think this particular article hits on a crucial business issue.
The article by Tony Schwartz of The Energy Project makes some compelling arguments: In a competitive, complex, and volatile business environment, companies need more from their employees than ever. But is a culture focused on performance the best, healthiest, or the most sustainable way to fuel results?
Schwartz encourages us to think about a growth culture that blends an environment where it feels safe to be vulnerable, with a focus on continuous learning, includes time-limited manageable experiments, and applies constant feedback to help individual growth.
Avoiding blind spots
The article makes some excellent points. But I think we need to reframe the issue. Rather than choosing between cultures based on performance or growth, I think we need something else.
To my mind, the most pressing need is for companies to avoid making objectives become the end and not the means. When this happens, organisations focus on tick boxes, adopt a short-term mindset and create blind spots for themselves. Artificial success/failure points can do considerable damage.
Instead, CEOs need to find a more balanced way of using objectives settings and performance evaluation that evolves with organisations and individuals over time — in ways that encourage them to be responsible, thoughtful and resourceful.
A real-life case study
I have introduced objectives settings and performance evaluation in a small family-owned manufacturing business in the South of Italy.
Here’s a quick summary of what happens in the business now:
- Company objectives are defined and tightly linked to the vision, mission and values of the company
- The vision, mission and values define the objectives of each staff member (from the production line and admin staff, through to strategists and even the CEO)
- The company values also define other personal objectives and evaluation (on issues such as ethics, client-centricity, change, effectiveness, teamwork and initiative)
But success isn’t determined solely by whether everyone hits their objectives.
Striking the right balance
In this model, meeting objectives accounts for 55% of someone’s final evaluation. But the remaining 45% is allocated on how they went about it. So, for instance, a ruthless achiever who doesn’t care about their colleagues does poorly within the company.
Goals sometimes relate to personal performance and completing specific business activities, but they can also extend more widely and adapt over time. For example:
- Staff members ‘own’ objectives and can serve as a reference point for a period of time
- Many objectives feed into agendas and meetings, so they are being discussed constantly
- Objectives may be split into two, dropped, or new ones added and/or priorities changed
In my experience, this approach delivers results. It’s not without pain: Some employees might leave because the way they attempt to achieve objectives clashes with the culture of the company.
But the model fosters a culture where each staff member is considered a mature professional, who owns their role and can use their initiative. They stay anchored in the vision/mission/values of the company while their objectives may adapt according to fast-changing business needs.
To me, this isn’t a performance-based or a growth-based culture … it’s just objective settings, and performance evaluation used properly. It works too.
What do you think?
If you’re a CEO or senior executive, then I’d love to hear your views on this topic. Please share your thoughts below.
Stefano Maifreni, pictured above, is Founder & Director of Eggcelerate, the business expansion advisors.