The article below was contributed by a writer named Lenny Prochnow and offers some insights about the concept of performance management, which is key to any company’s talent agenda. During my time at McKinsey, I did some performance management-related work for a public sector client and have had an interest in the topic ever since. Anyone who aspires to lead an organization should take the time to read this article as a starting point and then look for other resources to build his/her knowledge in this area because it is incredibly important to maximizing organizational effectiveness.

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3 tips to judge your performance management tactics

“Companies truly built on purpose, guided by values and permeated with trust, experience significant advantages of the competition.” This conclusion, found in a Dov Seidman article in Forbes, is the seemingly simple result that comes courtesy of an advanced study on the effects of performance management.

Studying more than 36,000 employees in 18 countries – from “the C-Suite to the junior ranks” – The HOW Report delivers “compelling data” from its “groundbreaking research.” Following some of the results of the study, it is clear that employee evaluation and other dynamics are vital to overall performance management. Here are a few tips to judge these tactics and strategies, and how managers can utilize these:

Does Your Organization Self-Govern?

There are three types of archetypal categories where all companies fit, in terms of performance management:

• Blind Obedience

• Informed Acquiescence

• Self-Government

Blind Obedience refers to more of the “traditional” style of performance management, where it relies on formal authority, leadership and policing. Essentially, the system is more of a militaristic style, where orders are given and obeyed.

Informed Acquiescence is more of a 20^th century style performance management approach, where there are set procedures and policies in the organization. Rewards and punishments are given based on an employee performance appraisal.

How is a company that utilizes self-government explained? In the words of Seidman, this group “consists of the most farsighted organizations, best positioned to thrive in an interdependent world. People at all levels of these companies are trusted to act on their own initiative and to collaboratively innovate; a shared purpose and common values guide employee and company behavior.”

On each of the 14 performance benchmarks, the organization with “self-governing” scored the highest in the study.

A manager’s duty is to be able to maximize performance regardless of which category the company fits into. However, it may be beneficial to know that the companies with the most employee autonomy performed higher than those whose employees had less freedom. Private meetings, feedback surveys, and simply asking employees for suggestions on ways to improve efficiency can all be useful tools in fostering a more autonomous culture.

High Trust, Values, and Universal Truth

As a manager, it is very important to gain the trust of employees, and establish good values that reflect the company’s views.

High-trust, value-driven organizations have been found to do better than other types of organizations, according to Seidman. The results prove this to be true. With more trust given to employees, they are more likely to take risks and want to contribute to the company, which can benefit the organization in the long run.

How do your employee evaluation practices mesh with counterparts across the country? According to the findings, whether you work in a multi-million dollar global corporation or a small, privately owned proprietorship, companies should not vary in their approach. According to Seidman, “The components of high-trust, value-driven cultures are universal.”

Managers can definitely take this to heart when trying to increase performance in an organization. The process can start by making suggestions to top-level management about establishing more trust and communication. If they aren’t receptive to the idea, then simply trying to establish a level of trust with employees is the next step. Employees may also have a lot of great ideas that can help the company that would otherwise never be discovered!

A New Set of Performance Metrics

Following Seidman and The HOW Report, one of the most impactful points made can be seen in what’s dubbed as “measurement anxiety.”

His argument is that there’s a fascination with “how much” measures – such as debt, resource, profit, market share, web page views, and further metrics. While these are still relevant, they have become “the hard currency of business.” However, business leaders aren’t paying enough attention to what really matters in business.

Rather, culture and leadership are prominent in a new set of metrics that must be targeted. Along with HOW metrics, such as values, inspiration, collaboration, and resiliency, these metrics are able to be measured – and, of course, they should, according to Seidman.

He says these organizations are integrating such metrics, allowing the company to become innovative, and still risk to benefit from different practices. They have the best financial performance.

According to Seidman, they make up three percent of CEOs: “They’re the ones winning, by every [HOW] measure.”

Business leaders might do well to take a look at The HOW Report to see how employee evaluation, leadership and other dynamics can come together for a strong performance management strategy. There certainly are some leading business concepts to follow, as Seidman makes clear.

The business world is changing, so management tactics should be changing as well. The more revolutionary an organization becomes, the greater chance it has to maximize employee performance and stay dedicated to the financial health of the company.

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Lennie Prochnow works for a small newspaper in Nevada and enjoys blogging about anything and everything related to automobiles.