MUMBAI: Whatever gets assessed gets done in the corporate world. So, upholding cultural values is now getting measured by organizations as part of their performance management framework. Leaders, who often drive the culture in an organization, are in particular being measured on how well they have walked the talk on cultural objectives. And, many organizations have transitioned to this practice over the last few years.
Starting last fiscal, IDFCBSE 0.50 % incorporated cultural alignment as a key metric in evaluating senior-level promotion decision and in selecting its partners. So, 10 per cent of the salary of all management committee members at IDFC, including the MD and CEO, is determined on the culture metric.
At RPG Group, improvement goals on developing and sustaining the group’s culture are up to 5 per cent over the previous year’s score for leaders and business heads. The Godrej group also has a leadership framework wherein cultural values are linked to performance. Deutsche Bank, on the other hand, equally stresses on the “how” aspect of performance delivery in addition to the “what” part of it.
Increasingly, companies are adopting this practice on the growing understanding that business strategy will not get implemented in the absence of an appropriate culture. Research has validated a deep link between strategy and culture as well.
“If an organization has a strategy to bring path-breaking products to market (like Google), then they will have a culture that fosters thinking out-ofthe-box, innovation and freedom of thought. Research has also established that culture is an outcome of what employees see their seniors doing,” said Gurprriet Siingh, managing consultant and head, YSC India, a boutique consulting firm that specializes in executive coaching, organization development and executive assessment.
So when a CEO of a company demonstrates a behaviour on cost consciousness and travels economy class, others follow his example. Such behaviour is now getting embedded in individual performance appraisals.
Over the years, organizations have realized that just measuring output — that is what an individual is delivering — is sub-optimal, since there are various “means” of achieving the ends.
At Deutsche Bank, performance appraisal is divided into two key components: one, what has been achieved, and two how the result was achieved. If an employee lower down the level does not fare well on the “how” part of the appraisal, he or she is counseled on the same. But for a leader, the norms are stricter.
“The leadership level has a greater responsibility because they are the disseminators of the values. In the last couple of years, the bank has been laying greater stress on improving the process and giving it a sharper focus. On an average, employees have to undergo a mandatory online compliance training programme that covers topics like risk culture, anti-money laundering and reputational risk. There is a test at the end of the training session which every one is required to pass,” said Makarand Khatavkar, head, HR, Deutsche BankIndia.
At RPG Group, culture forms a significant part of the people development goal in addition to six other goals leaders get evaluated on. The group has a standard process to evaluate every business unit and its business head on culture and every employee is required to respond to a set of questions.