The concept of performance management has evolved significantly over the last decade, transitioning from a mere evaluative practice to a comprehensive strategy that influences the very fabric of organisational culture.
Its impact on the work and performance environment, employee motivation and behaviour, and the overall success of an organisation cannot be overstated. This blog delves into the profound effects of performance management on organisational culture, arguing for a more holistic approach that encompasses both measurable outcomes and behavioural feedback. Additionally, it examines how bulky, bureaucratic performance management systems can foster silo thinking, ultimately undermining organisational cohesion and agility.
The Dual Facets of Performance Management
Traditionally, performance management has been outcome-oriented, focusing on what employees have achieved over a specific period. This approach, while straightforward, overlooks the intricacies of how these outcomes were achieved. It is akin to valuing the destination with little regard for the journey. However, the journey—characterised by the behaviours, strategies, and processes employed—is equally critical. This is because the means through which objectives are achieved can significantly impact team dynamics, employee morale, and the sustainability of success.
Incorporating behavioural feedback into performance management is essential for several reasons. Firstly, it acknowledges the complexity of work processes and the variety of skills and attitudes required to navigate them effectively. Behaviours such as teamwork, leadership, adaptability, and ethical conduct play a pivotal role in achieving outcomes and should be recognised and nurtured. Secondly, focusing on behaviours helps identify and mitigate practices that may be counterproductive in the long run, even if they yield short-term gains. Lastly, behavioural feedback supports a learning and development-oriented culture, encouraging continuous improvement and innovation.
The Impact on Organisational Culture
Organisational culture, the collective values, beliefs, and principles of organisational members, is significantly shaped by the practices and priorities of performance management. A system that values both outcomes and behaviours promotes a culture of integrity, collaboration, and growth. Employees are more likely to engage in positive risk-taking, share knowledge, and support one another, knowing that their contributions to the organisational ethos are valued alongside their tangible achievements.
Conversely, a purely outcome-focused performance management system can lead to a culture of short-termism, where the pressure to meet targets overshadows ethical considerations and long-term sustainability. Such an environment can stifle creativity and discourage teamwork, as individuals focus on personal achievement at the expense of collective success.
The Pitfalls of Bureaucratic Performance Management + Leadership Span
Bureaucratic performance management systems, characterised by rigid structures, exhaustive documentation, and a lack of flexibility, can further exacerbate the problems of an outcome-only focus. In such systems, the emphasis is often on adhering to set procedures and meeting predefined objectives, with little room for innovation or adaptation to changing circumstances.
This rigidity can lead to silo thinking, where departments or teams become insular, focusing narrowly on their objectives without regard for the broader organisational goals. Silo thinking undermines collaboration and cross-functional synergy, essential components of a dynamic and resilient organisation. Moreover, the bureaucratic approach can demotivate employees, as the focus on compliance and procedure over creativity and impact makes work feel less meaningful.
A wide leadership span can be a catalyst for the bureaucracy effect. When the leadership span becomes excessively wide, with managers supervising a high number of direct reports, the bureaucracy performance process is significantly burdened, exacerbating existing inefficiencies. This overextension can lead to a notable decrease in the quality of management, leadership, and supervision, as leaders find it increasingly challenging to provide adequate support, guidance, and feedback to each team member. Furthermore, the personal connection and understanding of individual employee needs, strengths, and contributions are diluted, reducing the effectiveness of personalised management strategies.
This situation not only affects employee morale and productivity negatively but also increases the administrative overhead, as the volume of reports, approvals, and procedural checks grows with the number of direct reports. The result is a sluggish, less responsive organisational structure, where decisions are delayed, innovation is stifled, and employee satisfaction plummets. Moreover, it perpetuates a cycle where accountability and responsibility are pushed upwards, creating bottlenecks at higher levels of management and diminishing the overall agility and performance of the organisation.
Moving Forward: Integrating Behaviour in Performance Management
To foster a culture that is high-performing, collaborative and healthy, organisations should integrate behavioural feedback into their performance management systems. This involves setting clear expectations for not only what is to be achieved but also how those achievements should be pursued. It requires managers to be skilled in observing and assessing behaviours, providing constructive feedback, and coaching employees towards better practices.
Furthermore, performance management should be a continuous, iterative, dialogic process, rather than a once-a-year event. Regular check-ins and feedback sessions can help keep employees aligned with organisational values and objectives, while also providing opportunities for growth and development. This approach encourages a more engaged and motivated workforce, capable of contributing to a positive and productive organisational culture.
The impact of performance management on organisational culture is profound and multifaceted. A well-designed performance management system, which includes both outcome and behavioural feedback, can promote a culture of integrity, collaboration, and continuous improvement. Conversely, a narrow focus on outcomes, especially within a bureaucratic framework, can foster silo thinking and undermine the organisational ethos. As organisations continue to navigate the complexities of the modern business environment, the integration of behavioural feedback in performance management emerges not just as a best practice, but as a necessity for building resilient, innovative, and cohesive cultures.
So key questions for reflection are:
How well does your performance system promote the organisational culture that you seek?
Is your feedback system promoting collaboration or a catalyst for silo thinking?
Is your performance system seen as an effective tool, or is it perceived by staff and managers as a “tick-the-box” exercise with little relevance?
Together with our business partners Ask Teach and Humanicity, we support our clients in analysing, designing and implementing performance systems that boost organisational performance and support individuals and teams to grow and further develop their team behaviour.
If this topic is close to your heart, talk to us. We look forward to the exchange.