Passion, People and Principles

Outcomes and Behaviors

post # 433 — September 17, 2007 — a Managing post

I have just listened to an interesting interview with David Morgan, CEO of Westpac – Australia’s oldest bank and oldest company. (I’m here in Sydney as part of a convention organized by the Australian Institute of Management. )

Among the interesting things he had to say was a description of how Westpac enforces its values. For each person, from the CEO on down to the lowest front-line person, each individual is evaluated according to two dimensions – what they accomplished (their outcomes) and HOW they accomplished them (their behaviors.) The behaviors evaluated include “doing the right thing”, integrity, apolitical behavior, thinking of the best interests of the bank rather than just the individual’s own operating unit, etc. According to David Morgan, the system which feeds directly into a person’s remuneration, is a key mechanism for ensuring that the values are lived.

I’ve heard that GE also has a similar system.

Has anyone out there experienced such sytems (ie lived within an organization which uses this approach)? How effective is it in ensuring compliance wit organizational values?

5 Comments

Krishna De said:

David – yes I was SVP HR for a business who integrated this approach for ALL our employees. It was part of our OD strategy so that each person could connect their personal role to the strategy of the business.

We implemented a very transparent performance management system as part of an overall culture change programme – all employees understood where they were in relation to performance and potential ratings as part of our management development review. The what and how of performance management were also a critical element.

In fact that is what I would advocate for all performance management programmes. Delivering on the WHAT but mortgaging future sales and relationships inside and outside the business because of not delivering against the HOW can be a short term way to drive performance but does not build long term value and sustainability.

posted on September 17, 2007

Stuart Cross said:

David – I worked with this performance appraisal approach in my last corporate role. Like any other appraisal/review process it is as good as the objectives that are set. Understanding clearly what behaviours are required and what will not be tolerated is critical to the system’s credibility.

In my case, the approach worked OK-ish but would have been improved by a more clearly articulated and consistent set of measurement criteria.

posted on September 18, 2007

Michael Haberman. SPHR said:

This sounds alot like the old MBO/BARS approach. I tried to introduce that once and the feedback I got was that it took long enough to determine objectives. No one was willing to then spend the time to then describe the behaviors that were also necessary and appropriate. I think you may find that you get the same reaction today.

posted on September 18, 2007

Rob Withecombe said:

In relation to Michael Haberman’s comment whereby he found that “no one was willing to spend the time to the describe the behaviors that were also necessary and appropriate”, are we not in an era whereby we (professional services organisations) can typically describe the values that we seek to exhibit and at the same time, invest time and money in full 360 feedback? Is not 360 at least part of the answer as to how you measure bahaviours as against values?

Certainly my firm has established values and increasingly embraced 360, albeit without perhaps taking the extra step of utilising it to allow measurement of the value based behaviours. On reflection, the additional step may be worth making.

posted on September 18, 2007

Wally Bock said:

Another company that does something similar is Koch Industries.

posted on September 19, 2007