The Model Corporation: Managing Total Performance Properly

Part Five of Six Part Series

We have been following so far in this series of six articles the building of a model corporation; one that is a small lowerarchy; is owned, governed and led responsibly; and has an uplifting culture. In this fifth article a final feature is added. In the model corporation and in a real corporation if it is to be a great one, total performance must be managed and managed properly.

The Meaning of Total Performance

Recall in Part One that corporate greatness was described by this outcome side of an equation (the left, input side being an interaction between situations and people):

Consistently Positive Behavior + Consistently Positive Results

Notice that it has two components, not one. Total performance is not total if any treatment of it, whether simply in thinking about it or in doing something about it, does not include behavior and the results or consequences of the behavior.

Recall also in Part One the list of incidents of corporations that pundits had anointed as great ones because of their sustained financial success. The incidents depicted undesirable, unethical corporate actions. The corporations and the pundits neglected one of the components. The unconventional bottom line of behavior can’t be neglected anymore than can be the conventional bottom line of results.

The Meaning of Managing Performance

Recall in Part Two that one of the bad premises of a hierarchically structured organization is that the primary meaning given to “managing” is its source, a manager occupying a managerial position. In a hierarchy managers manage their own careers and subordinates. In a lowerarchy managing is a process, not a person; everyone is a performer, not a manager or subordinate; what are managed are not subordinates but performance; everyone manages performance; and much of the process is simultaneously both individual and team self performance management.

The Five Necessary Features of Total Performance Management

For total performance to be managed properly the process must have five features. Each are described briefly next. The first, total accountability, is the most important and the other four flows from it.

1. Total Accountability

A minimum level of accountability is absolutely necessary for any business, or any society for that matter, to function. Corporate greatness requires the maximum level, that of total accountability. It is the overriding principle for properly managing total performance.

For there to be total accountability both behavior and results must be managed diligently throughout each performance period or accountability cycle. It must apply to every corporate member, no double standards allowed (in hierarchies CEOs get away with the most and worst wrongdoing). Each cycle must start with great expectations about performance because they are the standard against which actual performance is to be compared. During the cycle performance and its situations must be monitored neither too much nor too little. At the close of the cycle performance must be validly appraised and where appropriate or necessary, responsively and responsibly rewarded or penalized (penalties, of course, must be imposed in a timely and just fashion independently from the cycle’s schedule).

Because the immediate result of a decision or action may, and is often intended to, trigger a series of further actions by others, the question arises as to when the initial actor’s accountability stops. “The buck stops here” was President Truman’s famous declaration. In general, the more influence a person has over a decision and/or subsequent action or chain of actions that lead to more distant consequences, the more that person should be held accountable for them (a lowerarchy, of course, without a leader perched umpteen layers above most everyone else has a shorter chain of consequences linked to the original decision maker/actor).

In a model corporation of cross-functional teams, accountability for results is shared but accountability for behavior ordinarily is not. If a team, for example, fails to meet one or more team objectives, the whole team is accountable for the shortfall. But a team cannot behave. Behavior is an action of an individual. Individuals are accountable for their actions as individuals. However, in cases where any consequential behavior cannot be readily associated with any particular person, the whole team may need to be held accountable for the behavior (e.g., in the classical school room case where no one will tattle on the troublemaker).

2. Setting Great Expectations.

With apologies to Charles Dickens, behind every great performance is likely to have been a great expectation. Great expectations, especially when self-owned so to speak, motivate and guide people toward desired ends and not by using unacceptable means as would be the case with ignoble expectations (e.g., setting unreasonably high goals that knowingly can be met only unscrupulously). Setting great expectations is critical, because a poor start usually ends poorly.

Great expectations proscribe negative behavior and prescribe positive results (recall their definitions in the introductory article). Proscribing rather than prescribing behavior may seem an odd corollary principle, but it is not. It says be flexible about positive behavior and inflexible about negative (i.e., incompetent, unmotivated, and/or unethical) behavior. As for results, positive ones can often be met through a variety of positive means, each of which would be acceptable assuming there were no differences among them in terms of their cost and other considerations. Incompetent, unmotivated, and unethical means, on the other hand, should never be tolerated.

But the principle does not preclude being less flexible or more structured about positive behavior when the nature of the work requires it. Obviously, there will be times when precise behavior, as in precision work, for instance, is critical and needs to be expected and to happen.

3. Flexible Monitoring

Monitoring performance keeps it on track and allows adjustments to be made when problems arise. Three variables are tracked: the situation, behavior, and progress toward achieving the prescribed results.

Looking out for situational changes that could affect performance requires diligence. Bad changes overlooked or ignored can torpedo performance. Good ones missed are a lost opportunity. An issue arises when monitoring the competition. Just how far should the model corporation go? My answer is that it can go as far as possible as long as in doing so it does not fall below the bottom line of ethics.

Monitoring is flexible, with more of it when problems are anticipated or happening. The monitoring of behavior is between too much and too little. Every person is responsible and irresponsible for countless behavior in their lifetime. Around 30,000 behavioral acts I have guesstimated occur each day on the job. Even heavy-handed watching of a fraction of action-inaction would amount to no productive work from the watchers. Monitoring behavior, therefore, is guided by the simple notion of guarded trust; that is, the guard is raised when the wrong behavior is anticipated or happening.

Monitoring results, in contrast, requires every bit as much diligence as the monitoring of situations and involves keeping tabs on progress toward meeting objectives. Thus, progress indicators and reviews are used along the way to ensure that performance is on target.

4. Valid Appraisals

A valid appraisal of performance basically gives an unvarnished, truthful answer to two questions: Were the expected results gotten? Were they gotten in a positive manner? I have spent much of my career on the subject of performance appraisal and eventually its place in the broader context of performance management. Believe me I have seen more nonsense than sense written about the entire subject by both practitioners and academics who should know better.  ((My research and writing on the subject of performance appraisal and then more broadly on performance management began in 1970 and has never really stopped as this fifth article shows. Probably the most definitive of my earlier works were these: Toward a New Theory and System of Performance Evaluation: A Standardized MBO Approach. Public Personnel Management, 7, 205-211, 1978; Revisiting an Approach to Managing Behaviors and Results. Public Personnel Management, 10, 270-277, 1981; Some Ideas, Issues, and Predictions About Performance Management. Public Personnel Management, 17, 387-402, 1988; Tall Performance From Short Organizations Through We/Me Power. Bloomington, IN: 1stBooksLibrary,2002; Blending ‘We/Me’ in Performance Management. Team Performance Management: An International Journal, 9, (7/8), 167-173, 2003; and The Corpocracy and Megaliio’s Turn Up Strategy. Palm Coast, FL: Democracy Power Press (Kindle Edition), 2012. The present article is a distillation of this earlier work plus some new material.))

A model corporation would make sense of the matter. There are no rankings of people. Rankings not only rankles people, they don’t compare a performer’s performance against the expectations of that performance, and it is only such a comparison that constitutes a legitimate appraisal. Performance isn’t appraised with a rating scale. Ratings are easily fudged. Instead, a series of yes-no questions are asked about the performance where giving a dishonest answer requires making a bald-faced lie that is more easily uncovered. Team performance is appraised before the performance of each member is appraised. That the teams are self-managed means the appraisals are self appraisals, but under conditions of transparency and guarded trust, especially if performance bonuses are possible, and in such cases member appraisals are verified by other members and team appraisals are verified by other teams operating in the same core process such as manufacturing and also by bonus-review boards.

5. Responsive and Responsible Rewards and Penalties

When rewards and penalties are given they are given timely; are based on the appraised performance and not also on extraneous considerations; and are given in a way consistent with the different meanings of success and failure discussed in the introductory article and with the five conditions of organizational justice discussed in the fourth article. The most irresponsible rewards and penalties are ones that mock the Gold Standard by rewarding negative successes and penalizing positive failures.

The model corporation has a few policy guidelines, not poppycock rules, to help steer it in confronting the dozens of issues surrounding the giving of rewards and penalties. Some issues are relatively straightforward. Merit increases are an example. They should absolutely not be given because they are a continuous reward in the form of salary increments whereas the performance on which the increase is based is a time-limited occurrence. Giving performance bonuses to teams and their members, in contrast, is a thorny issue. For instance, if the corporation meets but does not surpass its year-end goals: Should performance bonuses be awarded at all even if funds are available? If bonuses are awarded, should they be distributed equally among all of the teams? Should any MVPs (most valuable performers) be designated and given larger bonuses than to their team members (this writer says “yes” or risk losing the MVPs)? The guidelines provide workable answers to these and all other seemingly endless questions I have ever confronted. A corporate-wide task force is established to create the guidelines. Performance review boards are also established for each business unit (where units produce different products) to administer the overall monetary reward fund, to allocate a total amount for each eligible team, and to oversee the entire process, including the giving of any penalties.

In Closing

We have come to the end of what would make any corporation or any organizational entity for that matter great, one that is shorter and smaller; is owned, governed and led responsibly; has an uplifting culture; and that properly manages total performance.

Left mostly unsaid explicitly and taken for granted are the matters of purpose and the specific products and/or services offered by the model corporation.

Purpose gives the corporation or any organization their identity and the reason why they exist in the first place. Should the purpose, for example, be solely to make money and maximize shareholder wealth? Maximizing profit, not making quality vehicles was the declared purpose a while back of the CEO of a large and often troubled corporation, General Motors. Or should the purpose be to benefit all stakeholders and to knowingly not cause harm to anyone or anything? Only a purpose like the second one is consistent with the Gold Standard of corporate greatness.

Purpose influences the choice of products and/or services to be made and offered, and there is probably an infinite variety of them possible. It is taken for granted here that a real corporation based on the model would pick the right product or service; find or create the markets for them; and use positive means to make and provide them.

Why should a model corporation really matter if great corporations will forever be fictional? But that question prejudges possibilities. Anything conceivable is possible. Drones, for example, were once conceived somewhere in the dark recesses of the military/industrial/political triumvirate and now they exist and are killing people. How infinitively much better would it be to make real a conceived model of a great corporation and, even grander, to make the entire corpocracy a bad memory? The sixth article will look into the possibilities.

•  Read Part 1, Part 2, Part 3Part 4 

Gary Brumback, PhD, is a retired psychologist and Fellow of both the American Psychological Association and the Association for Psychological Science. Read other articles by Gary.