III The Right Culture for Agile Performance

A New Psychological Contract for Managing Agile Performance

Maryanne, a new employee, was being inducted into the company and trained by Marco, a long-time member of a customer service team. As the new member of the team, Maryanne appreciated Marco’s experience and knowledge. She quickly gained a reasonable level of confidence in her new role. One thing she also rapidly learned was that a key performance measure was how quickly visitors were processed, not how well their inquiries were handled

“It feels like churn and burn, ” Maryanne told Marco. “Lots of these people are coming back again and again with the same issue and they’re upset at us for not giving them the right information. It seems like we should be spending more time finding out what the real issue is when they first come in. ” “Not our problem, ” fired back Marco. “That’s the manager’s problem. They just don’t want to see lines of people.

Although Maryanne wasn’t content with this response, she persevered with things until she took complete ownership of the role and then started engaging with customers to try to prevent repeated visits and provide better service.

The most profound influence on culture and its traits, is the relationship between the owners of the business and their agents—management—and employees of the business.

© The Author(s) 2017

T. Baker, Performance Management for Agile Organizations, DOI 10.1007/978-3-319-40153-9_12

“You’re taking too long with the customers, ” Maryanne was told by Tom, her manager. Explaining her rationale and commitment to deliver better service was to no avail. “That’s not your concern, ” Maryanne was told.

Where do I begin? might be a question you’re asking yourself at this stage. What’s myfirst step in managing the performance of the agile enterprise? Good question. I’ve thrown a lot at you in Performance Management for Agile Organizations.

We’ve traversed the evolving methods of the way performance in organizations has been evaluated for the past 100 years. The only method of evaluating performance pre-1950s was via profit margins. Enterprise agility is now the key indicator of performance. We then covered the common characteristics of an agile organization. From here, we explored the dimensions of agility. Although I define seven distinct dimensions, each dimension is interconnected to other dimensions in the model, to some degree. With a comprehensive understanding of agile performance, we then explored the main barriers to agility in Part II. These obstacles are eight management myths about performance. I offer some practical solutions to overcome these roadblocks. These management myths were fortified by the scientific management movement, beginning in the early part of the last century. A serious rethink of performance management is in order after 100 years of indoctrination.

Part III contains one chapter—this one. Its intention is to tie the many threads together into a coherent framework. Furthermore, the framework serves to pinpoint the necessary changes required to remove these antiquated management ideas about performance. The framework illustrates the kind of workplace culture conducive for agility to flourish. The pivotal feature of this culture is a new psychological contract between employer and employee.

A culture of agility—based on eight shared values between employer and employee—is diametrically opposite to the traditional psychological contract, based on the principles of scientific management. The culture suited to scientific management is one that safeguards the consistency and efficiency of production lines. But the management beliefs and their supporting practices impede the creativity and flexibility necessary to survive and thrive in the changing world of work.

These scientific management principles and practices—once the solution for high performance—are deeply entrenched in our thinking. Today, we still operate on these beliefs, even though our understanding of performance is drastically different. Instead of helping, these practices are now thwarting performance, principally agile performance. The eight management myths we covered in Part II, instinctively embedded in the psyche of management and employees, go unchallenged for the most part. Scientific management principles are still unquestioningly practiced, even though knowledge work needs to be managed entirely differently. The framework in Part III juxtaposes the old and new cultures and their performance management practices.

Let me be clear about this: This shift from the old to the new isn’t merely about implementing a few new performance management tools. The new tools I covered in Part II aren’t sustainable—unless the workplace culture changes to accommodate them.

When I refer to culture, what do I mean? Workplace culture in my opinion hinges on the prevailing generic psychological contract between employer and employee. Without changing the contract, behaviors and practices will, before too long, revert to the old ways. People’s actions ultimately will be consistent with the working relationship underpinned by the traditional contract. This longstanding psychological contract is the foundation for a simple, clear, and stable working environment. In this contract, the demarcation of managerial and worker responsibilities is apparent. But we need a culture that’s befitting a complex, ambiguous, and ever-changing working environment. This calls for a fundamentally different kind of working relationship between manager and employee.

So the missing piece of the cake—and it is a large slice—is a new model of the manager/employee working relationship; the cornerstone of an agile workplace culture. The alternative performance management tools we’ve discussed, need to be introduced in a culture receptive of agility and its dimensions. This new ethos must be initiated by management. But its success very much depends on a cooperative partnership between employer and employee.

There are myriad definitions of workplace culture. Perhaps the most down-to-earth way to describe workplace culture is the way things are done in a workplace. The way things are done covers everything from the uniform people wear to subtler cues, such as the way people contribute (or don’t) in meetings. People are immersed in the culture. It usually takes an “outsider”—someone who isn’t part of the culture, or a new employee—to pick up the understated cultural cues.

So where does culture come from? I think it comes from many inputs, both within and without the organization. But I think the most profound influence on culture and its traits, is the relationship between the owners of the business and their agents—management—and employees of the business. It’s the interaction patterns between organizational leaders and organizational members that shape the way things are done more than anything else.

For example, if there’s a fairly distant and formal working relationship—based on hierarchy—between management and workforce, then this permeates the artefacts, beliefs, and practices of the culture. Uniforms will visibly reflect rank. Managers will be addressed formally and distinctively. And meetings are probably characterized as reporting mechanisms, devoid of collaborative dialogue, stringently adhering to a rigid written agenda.

At the other end of the spectrum, an organization without a high power differential will function completely differently. In this laissez faire environment, it’s going to be more difficult to distinguish leaders from team members. The leaders, for instance, may not have offices. Everyone is probably on first name basis, including the CEO; sometimes people’s nicknames are used. The meetings are more casual and decisions arrived at more collaboratively.

So workplace culture is very much a by-product of the employment relationship. And this employment relationship is shaped by a dominant psychological contract. What’s a psychological contract? Psychological means that it is in the mind rather than written down. Contract means it’s an agreement between two or more entities, in this case two. Put simply, a psychological contract is the unwritten expectation both entities have of each other in the employment relationship.

Figure 12.1 is a simple illustration of the psychological contract.

Even though they’re not documented, the two sets of expectations (employee and management) shown in Fig. 12.1, are just as compelling—if not more so—as any written document. For instance, at its most basic level, managers expect employees to turn up to work punctually and do a solid day’s work. And for this, employees expect that they’ll be treated fairly and paid on time for the work they do. There are many collective expectations such as this that make up a psychological contract.

A psychological contract—like all contracts—can be broken. If an employee habitually turns up late to work, for instance, this behavior violates a management expectation. Or if an employee is underpaid, paid late, or not paid at all, this will undermine an employee expectation of the employer’s obligation. Once the contract is broken, it negatively impacts the working relationship. Trust is eroded.

These psychological contracts can be strengthened too. When employees are meeting basic management expectations by consistently turning up to work on time and putting in a decent effort, their behavior reinforces in the minds of managers that employees are fulfilling their obligations. This builds trust; matching expectations buttress the contract; in this case, in the manager’s mind. When expectations are met, or not met, in the minds of both parties, it strengthens or weakens the main psychological contract.

Psychological contract

Fig. 12.1 Psychological contract

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