Benefits of a Performance Based Culture

The 8/22 WSJ had an excellent article about the positive impact on Kimberly-Clark’s financial success with a move from a parental oriented culture of above average salaries and no layoffs to a performance based culture. In the past culture even low performers rarely felt pressure. According to a retired sales director ?a lot of people could and would hide in the weeds?.

Armed with personalized goals for employees and large quantities of data, Kimberly-Clark said it expects employees to keep improving- or else. ?People can?t duck and hide in the same way they could in the past,? said Mr. Boston, who oversees talent management globally for the firm.

The changes that are happening at Kimberly-Clark mirror what is happening in other large companies. Effective performance management is being seen as a way of creating a high performing workforce which is a vital tool to generate revenue and profit. Recent changes have been made at companies like Accenture PLC, General Electric and others. Coca Cola recently implemented a new system which encourages managers to conduct monthly ?reflection? on every direct report answering five key performance related questions.

There is really nothing new here other than a demonstration of how long it can take large companies to recognize that their workforce is their most important asset and that their productivity is the key to their financial success and take appropriate action

The article goes on to say that executives use of phrases like ?performance culture? in conference calls with analysts and investors has doubled in the last five years, according to a review of transcripts in the Factiva news database. Firms that set goals and hold workers accountable ?clearly outperform,? said Nicolas Bloom, an economist at Stanford University and co-author of a recent paper that used Census data to examine more than 32,000 manufacturing plants. He said they have faster growth, higher profitability and are less likely to go bankrupt.

The financial gains at Kimberly-Clark have been impressive according to Liz Gottung the H.R Chief. She said ?If you look at when we started implementing the big pieces of the company?s people strategy, when you map that to our stock price and our business results, you can see a clear correlation.? The share price has more than doubled since 2008.

The data is and has been available for a long time to support the changes that are now being made. Gallup has been providing research on workforce engagement for over 15 years along with information about how engagement impacts performance metrics. There is no mystery about how to impact performance, the big question is why is it taking so long?

I believe we are back to where we started and that is, the workforce is the most important asset at any organization so why not accept that fact and take the obvious actions necessary to achieve the desired performance results?