Summary of Findings from the Research Report: Values-Based Management or The Performance-Values Matrix: Was Jack Welch Right?
Research shows organizations and human resource management processes should employ the Performance-Values Matrix as a way to evaluate employees and enhance organization performance.
Recent research completed by Bradley University studied two management models offered in literature as methodologies for increasing organization and managerial performance. The researchers’ empirical results revealed the Performance-Values Matrix model is a more accurate and effective approach to measuring manager and employee performance compared to a Values-Based Model. Data revealed values and performance are two independent constructs and thus must be evaluated separately, but equally considered. (1)
The Values-Based Management Model purports that organizational values placed into action should positively affect managerial performance. This, in turn, should lead to process effectiveness and therefore the desired organizational outcome. (Values should lead to performance).
Jack Welch, CEO of GE, championed the use of the Performance-Values Matrix for classifying managers instead. After years of experience and trial and error, he understood that the best managers not only “deliver on their commitments” but also do so in a way that is consistent with the organization’s values.
Bradley University examined the comparison between the Performance-Values Matrix Model (PVM) and the Values-Based Model (VBM) by studying 125 managers’ performance at a large manufacturing organization.
The researchers sought to determine if there was a meaningful correlation between behaviors and performance. In short, the researchers concluded there was NOT a strong enough correlation between behaviors and performance to confirm the effectiveness of the Values-Based Model–in fact, the two were determined to be completely separate constructs.
The data supported that a model such as the Performance-Values Matrix was a more effective tool to measure employee performance over the Values Only Based Model.
So, how did they come to these conclusions? Let’s first define the difference between the VBM and the PVM and then further examine how they tested these two models against each other.
Values-Based Model (VMB)
The Values-Based Model suggests the stronger the manager’s commitment to the organization’s values, the greater the manager’s performance.
This model is centered around the notion that there is a direct correlation between behaviors and performance. If managers display the right behaviors, then they will be high performers.
When using this model, it is recommended that organizations create formal value statements that are fundamental to the organization’s structure. Though these statements should remain stable, organizations may need to redefine them periodically to appeal to the current audience and language.
In summary, this model suggests that managerial decisions should not be made without a discussion around how values influence that decision.
The model below provides an example of how decisions are made based on values in the VBM.
The Performance Values Matrix
In the Performance-Values Matrix (PVM) model there are two independent dimensions; Core Values are plotted on the x-axis and Performance is plotted on the y-axis.
Performance is measured by the impact the employees’ performance has on the company. The Core Values are measured by how employees’ behaviors align with an organization’s core values.
The key difference in this model compared to the VBM is that performance and core values are measured as two separate areas of leadership focus.
It is important to delineate values enactment vs. values match to further understand what the VBM and PVM are measuring. Values enactment refers to outward behaviors that are aligned to the organization’s values. A values match refers to producing results consistent with a belief in the core values of the company. While the VBM model highlights values enactment, the PVM differs in that Core Values are seen as a values match—meaning, how closely an employee’s actions correlate with the organization’s core values.
The graphic below shows the four possible combinations of high or low performance and high or low values.
After looking at the PVM, it may seem obvious that Performance and Core Values being separately measured is the best way to view overall employee performance. After all, we should be able to distinguish between results and how those results were achieved. However, the researchers at Bradley University thought it necessary to test this model in a live study to determine if Performance and Core Values are truly separate constructs of managerial activity.
Which Model is valid? About the Research
The researchers posed the following question to hone in on the validity of these two assessment tools: “Which of these two models seems to align with empirical data on the relationship between the two constructs of organization values and managerial performance?” (1)
The researchers conducted their study at a large manufacturing firm consisting of 900 total employees—out of which they studied 125 managers.
The firm had recently gone through the process of identifying their organization’s core values. The values they decided on were Teamwork, Commitment, Customer Satisfaction, Integrity, and Mutual Respect. All managers then went through a series of training sessions about the true meaning of their organization’s core values.
How Core Values Were Measured
The HR department and the author of the research worked with each other to create a Core Values Assessment that focused on measuring values enactment.
They created a Behavioral Observation Scale (BOS) that consisted of 19 items measuring the 5 core values that were chosen.
360 Degree Feedback was then requested from the managers’ supervisor, direct reports, and 5 of their peers.
A 5-point scale was then used to measure the frequency in which the manager demonstrated these Core Values.
A breakdown of each score can be seen in the graphic below.
Definition of Scale: Percentage in which behaviors were demonstrated
Results were then obtained showing the average of each of the 19 items.
How Job Performance was Measured
To measure job performance, the researchers used the managers’ most recent annual performance review where they were evaluated on 17 different criteria that were deemed essential to their jobs.
Supervisors used the following 5-point scale below to rate each manager.
Analysis of Performance and Behaviors
Researchers were given both the managers’ most recent performance review as well as the results from the Core Values BOS assessment.
The fact that the performance reviews were completed by the manager’s supervisor and the core values were completed by a group of other individuals helped to minimize rater bias.
They then ran a statistical analysis that developed three separate correlation metrics.
- Core Values Assessment
- Annual Performance Review
- Comparison of the Core Values Assessment to the Performance Review
Key Findings supporting the PVM
When correlating the core values assessment with the performance review the researchers found that of the 323 possible correlations between core values enactment and performance, only 12 were significant. Given a 95% confidence interval, the 12 significant correlations very well could have happened by chance. In other words, there was not a direct correlation between value attainment and performance so the two must be evaluated independently. And an effective method to do this is with the PVM model.
A key takeaway from this research is that the VBM model may be an artifact of organization processes and not an accurate measurement of managerial performance. The results from the study provide conclusive evidence that the PVM model is both an accurate and effective tool; leadership should view Performance and Core Values as two distinct elements of enhancing organizational performance.
While this is just a summary of the research completed, it is encouraged that you review the full research report if you are interested in diving deeper into the research methods.
Performance Culture and the Performance Values Matrix
The research supports that using the PVM is an effective way for organizations to hold their teams accountable for both performance and values equally. However, to harness the full potential of the PVM model, organizations need a performance management system with which to support it.
The Performance Culture software is built around the PVM framework and takes into account both Core Values and Performance, but more importantly, focuses on how to help organizations operationalize their Core Values.
Managers and employees alike must “walk the talk” by displaying behaviors and beliefs aligned with their organizational values.
Performance Culture has helped hundreds of organizations develop a high-performance culture through the use of the PVM in the Performance Culture System. In addition to the software, Performance Culture offers services that help organizations operationalize their Core Values by working to establish key behaviors that align with organizational values.
To help you get started using the Performance Values Matrix, we have created a free Excel template you can start using with your team today. The template allows you to add in performance objectives and core values and use this framework as a way to evaluate the performance of your team. The formulas will then do all of the calculations for you and plot your team in the PVM.
You can download the Performance Values Matrix template here.
If you are serious about building a high-performance culture at your organization, request a software demo today and our expert team will be happy to answer your questions and take you on a product tour.
1 Buchko, A. A., & Buchko, K. J. (2012). Values-Based Management or The PerformanceValues Matrix: Was Jack Welch Right? [web log]. Retrieved from https://scholars.fhsu.edu/cgi/viewcontent.cgi?article=1183&context=jbl