6 Ways to Design Your Performance Management System Around Company Values

“….In other words, only 10 percent of organizations have be goals (what Andy Stanley means by a set of values that guide our decisions) effectively integrated in their daily practices. Mind you, many organizations write about their mission, vision and values in their annual report, but that’s only lip service unless those be goals are integrated into their recruiting, training, evaluating and promoting. How can an organization claim that its be goals are important when none of its leaders’ performance evaluations or pay is based on adhering to those values.”

I was recently in a meeting talking about performance management systems, when a colleague told our mutual client that the company she saw do this best was one of her former employers.  She said all people related practices and decisions were designed around the company’s core values.

She said, it was hard trying to explain to the unemployment office that someone was terminated for “a core values violation”, but they did it every single time because a core values violation was the only reason anyone was ever fired.

Yet as the quote above states, very few people design their performance management system and practices around values, even when we find that doing things this way, well, adds tremendous bottom line value (pun intended):

“The surprising thing is that it has been proven that companies with be goals (values) do better financially over time.  If you don’t believe me, read Built to Last by Jim Collins, in which he demonstrates empirically that companies with an unchanging set of core values and behaviors (be goals)- while still being open to changes in their day-to day practices (do goals)- outperform those that don’t have this attribute.”

So how do you integrate values into performance management? Here are some key ideas for doing so:

  • First, clearly define your set of values and the competences/behaviors that demonstrate living these values. You can use a case study approach we described in an earlier blog post to design values and tie behaviors easily to them.
  • Your employee handbook should be designed around values.  The values- be goals-  should be stated first and examples of how to live the values should be given.   Company policies should be linked back to values.   It should be more focused on we do this here or we behave this way here, instead of a running list of what not to do.
  • Take the handbook case further by designing videos that illustrate actual employees living the company values.  You can embed these videos into your handbook and/or use them on the first day of onboarding to facilitate a discussion about company values.
  • If you have a formal performance appraisal system, the dimensions should be your values.  Use a three-point scale- meets, does not meet, exceeds- and again give behavioral based examples or anchors to show what it would mean to meet, exceed or not meet expectations.
  • Design your rewards and recognition system around company values. One of our former clients does this through an annual all company values awards ceremony where peers nominate people for values awards.  At the event the winners are announced and given a gift that directly relates to the value the person demonstrates.  They become the values champion for that year and help others grow in living the company value they demonstrate so well.  Another client does this through quarterly values awards that are also peer nominated.  The company owner presents the winners with the award by giving them personalized gifts based on the winners “favorite things” that have been gathered when they are hired.  If you have another system- whether it is formal or informal, integrated through tech system or not- make sure it is structured around values.
  • If you think you need to fire someone or put them on a plan for performance improvement, consider how their poor performance relates to a violation of your core values.   When you talk with them about performance improvement or termination, describe the reason for doing so in terms of the value(s) that have been violated.  Designing any PIP forms or tools you may have around values can help facilitate this.

If it is hard to do any of these things around values, you most likely don’t have a comprehensive set of values in place and you may need to reconsider what is lacking as it relates to things that warrant rewards for great performance and the opposite for poor performance.

How do your company values help you be successful?


Like this post? You may also like:

What are Company Values and How do you Create Them?

A personal account of performance management that works… and doesn’t

Experiences Over Stuff: The Better Rewards and Recognition Strategy

The Changing World of Work: Is the Policy Going to Die?


Mary Ila Ward

Comments : ( 1 )

  1. Great article. Much to contemplate and much yet to do. Thank you for the insights.

Leave Comment :