Rebooting Performance Starts with a Culture Change
By Margo Hoyt, Principal and Tara Veysey, Senior Consultant, Knightsbridge Human Capital Solutions
It was not a pretty picture.
This past April, Barclays Bank released a review of its corporate culture by former BBC chairman Anthony Salz. The review was commissioned in the wake of revelations of fraud and interest-rate manipulation at the 322-year-old financial institution.
Salz found that since the late 1990s, Barclays’ executives had enforced an “aggressive, short-termist” culture where financial performance eclipsed concerns about serving customers or clients. Early on, this culture did boost performance. Barclays became a global force. Shareholders saw remarkable returns, and executives were rewarded with equally remarkable bonuses; but according to Salz, this approach to business eventually backfired.
Salz found that the bank operated with a “culture of fear.” Executives made it clear they did not want to hear about problems or ethical transgressions. Good performance was rewarded handsomely; poor performance was met with speedy terminations. This, Salz concluded, subtly encouraged employees to bend or break rules to meet performance expectations.
In an effort to turn things around , new Barclays CEO Anthony Jenkins sent a letter to the bank’s 140,000 employees last January outlining a new “Purpose and Values” blueprint that would ensure that “performance assessment will be based not just on what we deliver but on how we deliver it.” Jenkins also immediately launched new values training for 1,000 of the banks senior leaders within weeks of his mission statement.
If past experiences at other organizations are any indication, Jenkins has his work cut out for him. However, there are reasons to believe he is on the right path.
Any effort to re-boot an organization’s performance culture must begin with a well-defined value statement. However, the job cannot end there. An organization must be prepared to demonstrate both a commitment to support employees as they try to embrace the new culture, and the courage to part ways with those who cannot or will not get on board.
Value statements delivered without a clear definition of performance expectations will only confuse and confound employees. Many well-meaning efforts to introduce new and improved performance standards have been scrapped because not enough advance work was done to build a foundation for change. Employees need to know up front what behaviors will be rewarded, how they will be measured, and what constitutes extraordinary performance, before they are told about the consequences of not measuring up.
There is no “one-size-fits-all” approach to introducing a culture of performance. Each organization needs to find an approach that best meets its needs based on the kind of business it is in, and its own long-term performance goals. Even so, organizations like Barclays that have undertaken a wholesale renovation of their performance culture do tend to adhere to some common principles such as:
Call to action. As was the case at Barclays, many organizations begin the culture re-boot with an honest, frank description of why change is needed and why things cannot continue as they are. The consequences of not changing should also be addressed with frank language. The call to action is meant to shake people up, and a strong emotional reaction is a good thing when profound change is needed.
Define. It will prove difficult to achieve better results unless you know exactly what optimum performance encompasses. It is also important, to issue a strong mission statement on values. You must be crystal clear when establishing that how one achieves results is just as important as the result itself.
Put performance on the agenda. In too many organizations, leaders and employees never have frank dialogue about performance. Usually this is because there are no clear expectations for what constitutes good performance. Once performance anchors are established, make sure every employee fully understands them. And then set a schedule for regular conversations about how they are measuring up to those expectations.
Leadership. You have leaders throughout your organization, but are they committed to the shift in leadership culture, and are they prepared to discuss performance with their employees? Leaders must not only endorse measurements, they must be prepared to initiate the difficult conversations about performance problems.
Courage. Not everyone is going to fit in to the newly defined culture. Many will thrive and take pride in working for an organization with high standards, while others will interpret the introduction of performance measures as an affront. And there will also be employees who simply cannot measure up to thea new standards. In these situations, it’s important to let dissidents or poor performers know that it is time to move on.
Although the fate of the cultural re-boot at Barclays is unknown, there are other examples of large organizations that followed many of these best practices and ended up with positive results.
When Yahoo hired Marissa Mayer as CEO just over a year ago, she was given a mission to restore the company’s performance. Yahoo had lost significant ground to its competitors and was suffering from dwindling visits and revenues.
Mayer started by focusing her attention on the culture at Yahoo. New performance measurements were introduced, and changes were made to hiring and employment policies.
In perhaps the most well publicized change, Mayer issued a memo to staff terminating the practice of working from home. Reaction from employees and industry pundits was swift and negative; telecommuting had become a staple of technology companies. Mayer was resolute, and to help soften the blow of this change, she improved office benefits including free food and longer family leave provisions.
Mayer acknowledged that while people were more productive working alone at home, they were more innovative and collaborative when working in a group. And those were the new performance expectations she was trying to introduce.
After an initial period of controversy, industry pundits have begun to focus less on the cultural changes Mayer made, and more on the fact Yahoo’s share price has doubled in her first year at the helm of the company.
It deserves to be said again that there is no one approach to re-booting performance culture. However, in every organization that has successfully instituted new measurements and expectations, there are some common threads.
This is a process that requires frankness, honesty and, ultimately, the courage to make tough decisions. A performance-based culture means alignment, clarity and commitment. Not just to business objectives, but also to values and behaviors. A culture like that produces both top and bottom line results.