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 organizational performance. 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) Request Demo Research Overview The Values-Based Management Model purports that organizational values placed into action should positively affect managerial performance. Essentially, values in action should lead to performance. Jack Welch, the former 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. Therefore, the data supported that a model such as the Performance-Values Matrix was more effective for measuring employee performance than the Values-Based Model. So, how did they come to these conclusions? Let’s first define the difference between the VBM and the PVM, then further examine how they tested these two models against each other. Values-Based Model (VBM) The Values-Based Model suggests the stronger the manager’s commitment to the organization’s values, the greater the manager’s performance. If managers display the right behaviors, 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 or add to them periodically to appeal to the current audience and language. In summary, the VBM suggests that managerial decisions should not be made without a discussion about 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 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 employees’ impact on the company through performance objectives, goals, or sometimes both. Core values are measured by how employees’ behaviors align with the organization’s defined 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 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 a belief in the organization’s core values. The matrix below shows the four possible combinations of high or low performance and high or low values. The PVM shows how to distinguish between results and how those results were achieved. The researchers at Bradley University used this model to determine if performance and core values are truly separate constructs of managerial activity. Which Model Is Valid? The basis of the study hinged on one major question: “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. Prior to the research, all managers went through a series of training sessions about the true meaning of their organization’s core values. How Core Values Were Determined 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 with 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 performance reviews were completed by the managers’ supervisors and the core values were completed by a group of other individuals, which 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,
