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)
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, only 12 were significant. Given a 95% confidence interval, the 12 significant correlations likely happened by chance. In other words, there was not a direct correlation between value attainment and performance. Therefore, the two must be evaluated independently.
A key takeaway from this research is that the VBM model may be an artifact of organizational processes and not an accurate measurement of managerial performance. The results from the study also confirm that the PVM model is both an accurate and effective tool because it measures the two constructs in question, performance and core values, separately. To summarize, leadership should view employee performance and core values as two distinct elements of enhancing organizational performance.
While this article provides a succinct summary, we would encourage you to read the full research report if you are interested in diving deeper into the research methods.
WorkDove and the Performance-Values Matrix
To harness the full potential of the Performance-Values Matrix model, organizations need a performance management system with which to support it.
WorkDove was the leading firm that brought the Performance-Values Matrix to performance management. WorkDove’s performance management platform is built on a foundation of the PVM principles by highlighting organizational core values and performance objectives/metrics separately. Our coaching and training also highly encourage these two concepts to be measured equally. Our performance review software provides a holistic approach to performance and talent management through one-on-one Check-Ins, goal management, values-centered recognition, leadership succession planning, and coaching and development conversations that occur throughout the year, not just during performance review time to ensure employees remain engaged and informed.
To help you get started using the Performance- Values Matrix, we have created a free Excel template you can start using with your team! The template allows you to add in your own performance objectives and core values and use this framework as a way to evaluate your team. The formulas will then do all of the calculations for you and plot your team on the PVM.
By filling out the form below, set-up a short call with our team and get access to the Performance-Values Matrix.
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=jblW
