The Forgotten Key to Improving Performance: Culture Change
There is a deeply rooted contradiction in the traditional management of public employees and the current adoption of performance and reform initiatives. Looking back over the past two or three decades, the trend that stands out is the emphasis on setting performance goals, and the importance of metrics and empirical evidence in budgeting and management decisions.
At the federal level, the “performance framework rests on a few proven management practices”:
- Engaging senior managers,
- Defining success through strategic planning and priority goal setting,
- Focusing on a limited number of priority goals,
- Regular, data-driven performance reviews
- Strengthening agency management capabilities, collaboration, coordination, and knowledge.
States and cities have also committed to goal setting and evidence-based decision making. The website, Results for America, summarizes the initiatives in several states. Employees are never mentioned.
The argument for goal-based management is well founded. A survey found goal setting ranked #1 in importance among 73 management theories. It’s based on a decades old argument, first discussed in the book, Goal Setting: A Motivational Technique That Works!, by Gary Latham and Edwin Locke.
But something is missing. It’s 20 years later and the performance problems continue.
“Culture Eats Strategy for Breakfast”
That phrase was attributed to the prominent management consultant, Peter Drucker, and gained attention about the same time as Locke’s argument for goal setting. Its meaning is clear – a performance plan cannot be fully successful if its not compatible with the culture. In government, that happens all too frequently when newly elected leaders are from an opposing party.
Business writers generally focus on improving performance and how in highly successful companies, employees are motivated to produce business results. Unlike the common performance metrics, culture cannot be measured – or as a psychological construct even defined – but it’s an issue in every workplace.
It’s significant here that the HR communities in the public and private sectors are effectively separate. Each has its own association, publications, conferences, etc. In late 2024 the private sector HR group, Society for Human Resource Management (SHRM), issued a report – The State of Global Workforce Culture of 2024 – that “explains the profound impact of workplace culture” on employee performance.
“A positive organizational culture is a competitive advantage. When employees feel that their company values them, respects them, and provides them with meaningful work, the results are clear: higher loyalty, better productivity, and lower turnover.”
Poor work cultures have both a financial and a human cost. The human costs include higher turnover, difficulty recruiting, and the family problems triggered by stressful work experience. The history of labor-management relations has endless stories of disruptions related to poor work cultures.
According to the SHRM report, “Workers in positive organizational cultures are almost four times more likely to stay with their current employer. For workers who rate their organizational culture highly, they are often strong promoters of their company. Over 8 in 10 employees at organizations with a positive culture say they’re likely to recommend their organization to people looking for a job. Conversely, for employees at organizations with unfavorable cultures, only 4% say they are likely to recommend their organization to people looking for a job.”
Among employees working in poor or terrible cultures, the top reasons cited for leaving a job are:
- ineffective managers
- unfair treatment
- inadequate pay
- lack of empathetic leadership
- insufficient regard for employee well-being.
To highlight the obvious, culture is about the way employees feel about their manager, leaders, their pay, etc. They perform better when they feel good about their work experience – and the difference results in better performance. As their efforts show better results, their commitment and the culture grows stronger.
There are no reports of comparable research in government agencies. A search failed to find reports of culture studies in government. Books on improving government’s performance are silent on the subject. There are a few columns advocating the improvement of the work culture. If the website discussion of the federal performance framework (cited earlier) is indicative of what ‘matters’, employees are not seen as important in improving government performance.
The most prominent reason is that few elected officials have had recent experience working in larger organizations where culture was an issue. When improved government performance surfaces in an election, its often seen as a “system” or an accountability problem; the work culture is rarely mentioned. Promises to reduce the cost of government focus on downsizing, not ideas to improve worker productivity.
Steps to Address the Culture Problem
Gallup’s research on employee engagement shows that employees are capable of performing at significantly higher levels. The Great Places to Work website also highlights organizations that attribute their success to an “exceptional workplace culture”. That idea prompted numerous professional and local media groups across the country to develop similar lists of the best local employers. Best ‘places’ lists are now posted for states and cities and virtually every industry, including hospitals and colleges.
One company best illustrates why this is important. Wegmans is a family owned, regional supermarket chain that started as a produce cart in upstate New York. Today it operates over 100 stores and is consistently in Fortune magazine’s top places to work (#6 in 2024) and also on the lists of the best supermarkets. Newsweek ranked Wegmans as the 3rd best grocery chain in the country. Shoppers at Wegmans find employees always take that extra step to help shoppers.
The potential to create high performance workplaces in government was demonstrated in the Clinton/Gore years of ‘reinventing government’. It’s also been observed endless times in response to crises. Winning sport teams do that every season. A common thread is employees will support and promote planned changes when they anticipate it’s going to be a win-win for them and their organization.
The goal is creating a high performance culture although defining what that is varies across the very different operations that comprise government. The first step is reaching agreement that better results are needed. The focus is naturally on ways to better organize and manage what needs to happen.
Change is always necessary for progress but it can upset the status quo and potentially trigger a conflict. That’s less common in business because there is a shared understanding that profitability is the key goal. To avoid problems, the experience in the private sector shows following an 8-step change model developed by Harvard’s John Kotter has the best chance for success. It’s discussed in his book, Leading Change.
From his website, the steps are:
“01. Create A Sense of Urgency. Inspire people to act – with passion and purpose – to achieve a bold, aspirational opportunity. Build momentum that excites people to pursue a compelling (and clear) vision of the future… together.”
“02. Build A Guiding Coalition. A volunteer network needs a coalition of committed people – born of its own ranks – to guide it, coordinate it, and communicate its activities.
“03. Form A Strategic Vision. Clarify how the future will be different from the past and get buy-in for how you can make that future a reality through initiatives linked directly to the vision.”
“04. Enlist A Volunteer Army. Large-scale change can only occur when massive numbers of people rally around a common opportunity. At an individual level, they must want to actively contribute. Collectively, they must be unified in the pursuit of achieving the goal together.”
“05. Enable Action By Removing Barriers. Remove the obstacles that slow things down or create roadblocks to progress. Clear the way for people to innovate, work more nimbly across silos, and generate impact quickly.”
“06. Generate Short-Term Wins. Wins are the molecules of results. They must be recognized, collected, and communicated – early and often – to track progress and energize volunteers to persist.”
“07. Sustain Acceleration. Press harder after the first successes. Your increasing credibility can improve systems, structures and policies. Be relentless with initiating change after change until the vision is a reality.”
“08. Institute Change. Articulate the connections between new behaviors and organizational success, making sure they continue until they become strong enough to replace old habits. Evaluate systems and processes to ensure management practices reinforce the new behaviors, mindsets, and ways of working you invested in.”
Employees want to contribute to their organization’s success, but they need to believe their ideas and efforts are valued.
The Clinton/Gore Reinventing Government years (1993-2001) demonstrate the potential for employees to point out changes that pay off. Over Clinton’s eight years, federal employees proposed over 1,200 ideas to “serve customers better, relieve businesses of unneeded regulations, exploit technology to widen access to federal services and information, encourage plain English documents, improve coordination with state and local governments, cement community relationships, build new labor-management partnerships and empower front-line workers.”
The changes resulted in eliminating 426,200 employees. Over 75,000 managers lost their jobs, supporting worker empowerment. The first annual report in 1994 claimed that, pending Congressional action, likely savings would amount to about $12.2 billion, and by 2001 the estimated savings totaled $146 billion (or $285 billion today).
As so often happens, when George W Bush became President in 2001, his administration took a different direction, triggered in part by the 9/11 terrorist attacks, and the expanded role for workers was downplayed. Empowerment was a prominent principle in the reinventing government initiative but since then the idea is rarely found in discussions of government workforce management.
An example of a successful change strategy follows the steps (summarized in the exhibit) that enabled the National Geospatial-Intelligence Agency (NGA) to create a strong performance culture. Employees were involved at each step. The exhibit was extracted from a longer article I co-authored in 2009 with the manager of the NGA pay program. He was involved in the later years of NGA’s transformation. NGA won awards as a ‘best place to work.’
The strategy NGA followed is outlined in the exhibit that follows:
NGA’s Strategy to Build Support for New Workforce Management Framework
Overcoming the Workplace Contradiction
Government agencies are wasting a potential valuable resource – employee knowledge and urge to solve problems that could improve performance. Over the past decade in business, the argument that employees should be managed as assets has gained support. Since the COVID crisis, it’s been a frequent theme on business-related websites. The idea is that investing in employees and their work experience pays off with better results.
That argument is dominant in healthcare as well. ABC Evening News quoted a new nurse graduate, “I learned when I worked as a custodian that every employee working in a hospital is important to patient care.” Hospitals today often have prominent signs on walls promoting the importance of workers. The American Nurses Association recognizes Magnet hospitals for the excellence of their nursing program.
The argument is contrary to the ‘employees are a cost’ view promoted in the 1980s by GE’s Jack Welch and practiced for years by leaders of small businesses. It continues to be popular with conservatives.
But research from the McKinsey Global Institute found that:
. . . People + Performance Winners manage to create opportunities for their employees to build skills while consistently clearing a high bar for financial performance. . . . achieving these dual goals requires effective organizational capital—that is, the management practices, systems, and culture that make a workplace unique. When this organizational fabric works effectively, it creates a productive workplace that becomes a magnet and an incubator for talent.” Source: McKinsey, “Performance Through People”
The core problem is that transitioning to a performance culture takes time – this is behavior change. The changes have to be advocated by leaders and operationalized in day-to-day management. Managers often find it more difficult than employees to accept their redefined roles.
Employee teams played prominent roles at every stage of the NGA transformation. Their involvement assured the project had employee input and they kept co-workers aware of what was unfolding.
When newly elected Tennessee Governor Bill Haslam initiated civil service reform in 2011, the state invested more than two years in training and coaching for managers, along with feedback from employees, before switching to SMART goal management and pay for performance. Now Tennessee is listed as one of the best employers in the state. The state could be a model for transforming government.
When workers believe that cannot trust management, they withhold feedback and concerns. Worker silence does not signify agreement or worse disagreement or fear. Psychological safety – mutual trust – is a key to the open exchange of ideas. As with NGA, workers want to play a vital role in planning and carrying out change initiatives.
Workers in every function have valuable ideas for improving performance. The reinventing government years made that clear. Employees want to contribute to their organization’s success, but they need to believe their ideas and efforts are valued. The research is solid — It’s an investment that will pay off.
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