FINANCIAL performance is often at the forefront of management thinking, but the underlying factors contributing to long-term company success are less easily defined.

Discussion may focus on how best to maintain customer loyalty and control costs, or the potential benefit of improved systems. However, the harsh reality is that future success is often uncertain, not least because of the challenges created by new competitors, the impact of technology and the changing expectations of customers.

Organisations need to be responsive to changing conditions, quickly adapt to new demands and take steps to maximise the potential of employees. To create a positive work culture, effective leadership is required at all levels of the business, but this may well prompt the question: “How do we transform managers into leaders?”

Performance at work

The “start point” in building a results-focused work culture is clarity of purpose and effective performance management. The organisation’s vision must be clearly articulated and translated into meaningful objectives for business units, departments and individual team members.

However, setting objectives, by itself, is not sufficient to build capability; managers also need to understand the personal competencies, the approach and behaviour, which contribute to superior performance. This link between what we do and how we do it is central to effective performance management.

Traditional performance appraisals, completed once or twice a year, generally have a poor reputation with both employees and managers. People feel uncomfortable about the process, which often amounts to little more of a checklist of objectives that were met, partly achieved or “not to standard”. However, these reviews do little to increase employee motivation or commitment.

Gaining the involvement of staff in problem solving, and sharing with them a sense of the possibilities — of what can be achieved — is a key step in creating employee engagement.

The difficulty is that many managers have received little training in how to structure these conversations, or how to use KPIs (Key Performance Indicators) that can be integrated within a personal competency framework.

This is essential in helping to raise understanding of effective behaviour, encourage open discussion, and clarify the performance standards linked to successful outcomes.

Even if an organisation has excellent processes and systems in place, real “value add” is only achieved when employees are motivated and committed. Managers therefore need to be skilled in surfacing problems, confronting underlying issues and taking action to resolve areas of disagreement.

Building motivation

Motivation refers to discretionary effort, of choosing to “go the extra mile” — to put in the extra effort and initiative required to overcome a problem or achieve a result. Commitment comes when employees identify with the organisation and what it is trying to achieve.

An employee’s immediate manager plays a key role in building both motivation and commitment, but is also the primary reason why most employees leave.

A worrying picture emerges, which indicates that two-thirds of managers demonstrate significant shortcomings and 75 per cent are viewed by direct reports as the most stressful aspect of their job. (Hogan, J. & R., & Kaiser, R. B. 2010, APA Handbook of Industrial and Organizational Psychology, Vol. 3, pp. 555-575).

Managers can fail for a number of reasons, including a lack of conviction about what is required, a failure to deal with problems, a lack of trust in others and micro-managing. They lack the self-awareness, insight and capability to manage change or respond effectively to new work demands.

Future success is closely linked to managers being self-aware and able to develop talent at work. The next article in this series will look at leadership competencies — and particularly at how managers create the conditions for high performance at work.

Next week: Effective leadership and the 3H Model.

Article by David Sharpley, an international management consultant and chartered psychologist. He runs masterclass workshops on competency assessment, leadership development and employee engagement profiling, and provides online resources through Pario Innovations. For more information, e-mail david@pario-innovations.com