Is it time to rethink high-performance cultures?
I was chatting to someone the other day and we got onto the topic of high-performance cultures. It got me thinking about what we mean by a high-performance culture. I don’t think many people would disagree with what the output of a high-performance culture looks like. However, what is perhaps more interesting to unpick and explore, is how different people view the environment within which a high-performance culture can be achieved and sustained.
On the one hand, there is the school of thought which revolves around clearly defined KPIs, including performance metrics such as financial targets or billable hours’ targets, which if exceeded often result in individual performance bonuses. And, perhaps, most importantly this culture promotes the idea that failure to meet or sustain those targets will likely result in the perceived low performer being exited from the business. Let’s call this approach ‘old-school’.
On the other hand, there is the school of thought which also revolves around clearly defined KPIs, albeit those KPIs are perhaps less focused on financial targets and hours’ worked, and are instead more focused on client outcomes and the engagement and development of the individual employees. The other major difference is that, rather than using a carrot and stick approach to motivation, the culture has a high degree of empathy that supports and nurtures people, especially when they aren’t meeting their KPIs. Let’s call this approach ‘new-school’.
The old-school approach reminds me of the Wells Fargo’s of this world, who were fined several billion dollars as a result of its employees creating in excess of two million fake customer accounts, over a period of five years, in order to meet unrealistic sales targets in its ‘high-performance’ culture. A culture which left little room for failure (to meet those KPIs), often resulting in people being fired if they failed to meet targets or were brave enough to question the targets in the first place.
Cut-throat high-performance cultures which lack empathy and psychological safety are known to lead to unethical behaviours and higher levels of burnout and turnover. Yet, such cultures persist to this day. Perhaps because the allure that high performance can only be achieved by ruthlessly shedding ‘under’ performers, seems to make sense. Yet, if we pause for one moment to reflect on what fear tends to do to human beings, we would realise that it typically leads to self-centric behaviours that undermine active collaboration and innovation, and which actively undermine high performance. Margaret Heffernan’s TED talk on Super Chickens springs to mind, in which she describes William Muir’s experiments with high-performance cultures in chickens (*spoiler alert*, the ‘super’ chickens ended up pecking each other to death in order to be the best).
In the new school approach, people appreciate that performance isn’t linear. We understand that not everyone can be a high performer all of the time, nor should they be (they are a human being not a robot). We can’t measure someone’s ability, their loyalty, or indeed their contribution by financial metrics alone. Indeed, many organisations become obsessed with rewarding those people who achieve short-term financial targets, instead of valuing those people who selflessly devote part of their time and effort to nurturing the performance and development of more junior employees. Yet arguably, the latter is crucial for long-term sustainable success of an organisation.
People also understand that if we want people to deliver exceptional client service, the focus needs to be first and foremost on the service delivered to clients as opposed to internal financial metrics which distract from the client and risk producing unethical behaviours and self-serving behaviours, as seen at Wells Fargo and many other organisations.
The old school of thought counters this new school thinking by declaring that the purpose of an organisation is to make money and therefore a focus on financial metrics is imperative for the longevity of the organisation. Let’s pause for another moment. I don’t think anyone is arguing that money isn’t a pre-requisite for an organisation to sustain itself, but it was never intended to be its purpose. Profit is an outcome of a purposeful organisation with client service as its heart. The purpose of an organisation is to be of service to society not to itself. Yet somewhere along the line, shareholder supremacy took hold, and we lost our way.
Logically, if a client or customer is provided with excellent service which they find valuable, that should strengthen the relationship, build trust and improve the odds of repeat business in the future, thereby driving revenue. Yet, by incentivising people with carrots and sticks to meet self-serving financial metrics, it becomes difficult for them to focus on what is best for a client. Instead, they become interested in their own self-preservation and the anxiety that often entails, which is perhaps directly at odds with what is best for a client or customer.
There is an abundance of evidence demonstrating what makes an organisation successful, yet only a handful of organisations actually reap the benefits from heading the evidence. I suspect it is, in part, because financial metrics are easy metrics to measure, and they are also very alluring. However, for an organisation to truly reap the benefits of creating a high-performance culture, they may wish to revisit the environment within which they are expecting people to thrive, including the carrots and sticks they use to incentivise such performance.