Monday, September 15, 2014

Make Values a Primary Filter for Performance Evaluations

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This post is part of a series in which I'm analyzing the efforts of my organization to define and embrace core values through the six rules for doing so defined by Francois Nader, CEO of NPS Pharmaceuticals. For the series introduction, go here. For my comments on the first rule, go here. For my comments on the second rule, go here. For my comments on the third rule, go here. For my comments on the fourth rule, go here.

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Here's Nader's fifth rule, along with what he says about it in his HBR blog post:

Make values a primary filter for performance evaluations. There is no stronger lever for promoting a culture than tying adherence to its values to individual compensation. At NPS, the values evaluation and rating has a direct and significant impact on salary increases and both short- and long-term incentives. While recruitment errors happen, the performance evaluation highlights those shortcomings and gives the manager and the employee a chance to correct the situation. If the improvement plan fails to generate results, swift separation from the company is necessary. Even individuals on NPS’s leadership team who didn’t embrace our values had to go.

Like last week's rule on using your values as a filter in your hiring process, this is another recommendation that I entirely agree with. It is also something that I have done inside my organization. Our evaluations measure performance in three areas--completion of job responsibilities, achievement of strategic program objectives, and demonstration of our values and their associated behaviors.

But that third piece on our values remains the most elusive of the three.

It's the newest, after all. Although we have clearly stated our values and provided explicit examples of behaviors that demonstrate them, everyone in the organization--myself included--is still in the process of figuring out how we can live them. The behaviors are there to aid in this process, but I have been careful not to position them as the only way the values can be demonstrated. People should not be rewarded, in my opinion, merely for aping behaviors that will bring them higher compensation. Acting in that fashion, in fact, would be contrary to our values.

So what I have done instead is try to engage people in dialogue about the values and their connection to them. Here's what they mean, and here are some ways that that can be demonstrated, but undoubtedly, they can be demonstrated in dozens of other ways. When you reflect on your performance and conduct within the office, where do you see yourself acting in accordance with the values and where do you see areas in which you could bring your actions into closer alignment?

As I have previously written, these conversations have not always gone as well as I would have hoped. And as I reflect on it now, I have to wonder if the process of linking them to our performance evaluations hasn't been part of the problem. Keeping score and holding people accountable is important, but putting people in that position also elicits a natural and predictable response from them. They will claim the highest possible success and put things in the best possible light. Of course I embody our values in everything I do. That's what you're paying me for, right?

So I have begun to take a different tack. Rather than scaling rewards to the sheer number of values and behaviors a person demonstrates, our most recent performance evaluation was focused on each staff person identifying an area of focus within our values structure, describing actions they planned to take in order to better represent it, and visibly manifesting those actions in our office and in their interactions with others.

I feel like we're making better progress with this approach, but it has been slow going. Our evaluation process is on an annual cycle, with three formal sit-downs between supervisor and employee over that time span. In the context of measuring performance on job responsibilities and achievement of strategic program objectives, that time scale is about right. But in the context of demonstrating our values--however it is that we agree that will occur--more frequent focus and discussion may be necessary.

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This post was written by Eric Lanke, an association executive, blogger and author. For more information, visit, follow him on Twitter @ericlanke or contact him at

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