Creating a performance culture

Published on February 28, 2023   20 min
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Welcome to this tenth talk on performance management. My name is Pietro Micheli. I'm a professor of business performance and innovation at Warwick Business School in the UK. The topic is creating a performance culture.
In this series of talks, we've looked at a number of issues from technical, how to gather good data, and how to create good performance indicators and appraisals and so on, to more behavioral ones. But very often, of course, there is a cultural element, that shapes and influences and is influenced by the ways in which we measure and manage performance. I'd like to share a quote with you from an interview that was done with the previous CEO of Ford Motor Company. In this presentation, I want to just cover one bit around the culture and what kind of issues the CEO, Alan Mulally, had to face when he joined Ford in the mid 2000s. Let me read this quote with you. "When I joined Ford, there was a good chance that the company would go out of business if we couldn't improve performance. That created tremendous urgency, but I also had to be patient. When we first started doing weekly business-plan-review meetings at Ford, we got 300 charts from the executives participating in the meeting - and all of them were..." Now if you look at this part of the quote, you see how the situation is critical. This new CEO is joining a large company, that is doing badly, and receives a lot of charts, performance information if you want, from older senior executives. Of course, you would imagine that they would be red, in the sense that they would show underachievement. In fact, the quote goes on, and they were green. The reason is that people were afraid to admit to problems, particularly if they didn't have solutions. This is a key point. If we work in an environment where people are afraid to admit to problems and there is a sense of blame whenever we don't achieve something, everybody wants to show greens ("inverted commas"), showing that there is good performance, then it's very difficult to improve. It's very difficult to use the performance information that we get through the systems that we've talked about in this series of talks, it's very difficult for that information to make a positive difference. A way to summarize this is to really think about that we want to move from a culture of proving something - showing that we're doing what we're supposed to do - to one that is more related to improving something. This cultural shift is very difficult. At Ford it took years, in many companies it takes a long time, but we need to do that. Otherwise, most of these systems, would be there to just show the things are fine, even though overall, clearly, they're not. You can think about this at different levels. You can think about this at the level of individuals, where individual performance seems to be very positive, but collectively, we see that the team is not working well. You can look at different functions or business units in an organisation. Then if everybody is showing greens, it doesn't mean that the overarching picture is green too, as in the case of Ford. You can look at this at the level of the economy. If you think about anything to do with environmental sustainability, you will know that things are going badly when you look at the so-called planetary boundaries, for example, in terms of biodiversity, and greenhouse gases, and so on, but then when you look at individual company reports, they all seem to be doing really well. You can call this greenwashing, but it's certainly one of the problems that we have, where pretty much every organisation is showing their green credentials, so to speak, but then when you look at this overall issue really doesn't look like a positive picture. One of the reasons for this, at whatever level where there is the organisational, individual or society level, is that we often tend to think about leadership and the use of these systems to measure managed performance in a way that doesn't necessarily lead to positive results. So let's look at what leadership is not in the context of performance management.