The key factors impacting performance and productivity can be separated into three distinct categories or layers. Leaders must understand these layers and how each affects employees differently to develop and maintain a high-performing and high-producing culture. This article details these three layers.
The Performance and Culture Triad Overview
While all aspects of a company and its culture are interrelated and influence performance and productivity to some degree, certain factors affect performance and productivity more directly. The categories of performance and production (hereafter referred to as only performance) can be separated into three categories and viewed as a three-layer bullseye for analytical purposes. The outermost layer, the most distal, includes company-related factors. This layer contains factors beyond the individual and their immediate team or office. The elements within this layer affect individuals least directly and are therefore time-delayed in their impact. The middle layer includes job-related factors. The elements within this layer affect individuals more directly and quickly, as this layer relates to one's immediate job environment. Finally, the central layer (the bullseye) contains factors most proximal to individuals and impacts employees most directly and promptly. This layer also includes employee-related factors that impact the organization more directly, such as turnover, presenteeism, and absenteeism.
The Outer Layer: Company Factors
The outermost layer, or the Company Layer, includes the company strategy, leadership and leadership patterns, managerial and leadership support, policies and procedures, communication, organizational trust, hiring and training culture, reward and recognition culture, environmental dynamism (e.g., perceived instability), and the overall organizational climate. It also includes economic, social, and market trends or forces. While these forces push on each layer of the triad, it is ultimately up to the company and its leadership to implement the necessary changes caused by outside forces.
Overall Company Culture
Many company-related factors are determinants of performance, both directly and indirectly— even the most abstract elements of the company. For example, every company has a dominant type of culture. The culture could be more group-oriented (clan culture) or outside-oriented (market culture). A group-oriented culture focuses on teamwork and social relations and fosters a collaborative environment. In contrast, a market culture focuses on the outside environment or market, which creates a competitive environment. Studies have suggested that employees with a group-oriented culture are more willing to trust one another, share knowledge, and have increased tacit knowledge. On the other hand, a market culture is more aggressive and demands results. While employees might be more ambitious, it can create a toxic environment with higher levels of burnout.
Understanding what type of culture best suits your kind of company will help you learn the benefits and challenges you will face regarding performance. Company culture affects employee behavior and is even related to employees' motivation, an example of the Performance Triad dynamism. Ultimately, the organizational culture, climate, structure, and strategies affect all aspects of the company and will either inhibit or increase performance.
Rewards and Recognition
People need to receive recognition. It helps to provide extrinsic motivation and is a part of people's esteem needs.
In recent years, there has been an influx of recognition and reward system companies that cater to external esteem needs. Many companies have policies and procedures for rewards, and some even add recognition to their performance indicators.
A culture of affirmation recognizes that people need approval from others to help them feel valued. Affirmations are separated into two categories: intrinsic and managerial. Managerial affirmation refers to the degree to which an individual perceives they're an asset to a company based upon their supervisor's behavior. Intrinsic affirmation is the degree to which an individual perceives they're an asset to a company because their job positively and uniquely contributes to it. Additionally, a culture that promotes rewards and recognition for contributions and doing one's job well helps build internal and external esteem.
Recognition helps upholds company values, provides motivation, makes employees feel valued, and affirmation can improve performance. Recognition should be honest, authentic, and individualized. Recognition programs help organizational members recognize others for a job well done or for going above and beyond role requirements. Reward programs help to reinforce recognition and provide an economic incentive.
Managerial and Leadership Support
The company and its leaders set the stage for all aspects of the company. Employees look to leadership for support and guidance. According to social exchange theory, employees develop high-quality relationships with their leaders based on whom they interact with, how they interact, and the experiences within the interactions. Moreover, managers are role models for employee behavior, and through interaction with employees, leader-member exchange legitimizes behaviors. Ultimately, leadership positively and significantly impacts employee job satisfaction and performance.
Leaders in today's world must be multi-faceted and supportive. Good company cultures create, and positive work environments provide, high levels of employee support. This requires supporting the whole person beyond their tasks in today's workplace. It includes support for mental and physical health, the flexibility of schedule for life events and unexpected circumstances, and better guidance and resolution for workplace issues. Responsiveness for support and guidance is another important factor. Highly supportive management takes time to listen and provides meaningful responses to requests and inquiries promptly. Furthermore, supportive management takes a collaborative and participative approach to issues, such as working with employees and getting their insight and feedback on issues.
Recently, more and more companies are promoting positive management and psychology practices. Especially since the Covid-19 pandemic, it's crucial for employees to feel that their workplace provides stability and that they can trust their organization. Individuals need to know what to expect from their work, trust that it brings positivity to their life in the grand scheme, and generally feel that their work doesn't create too many negative experiences. Positive management includes leadership that cultivates high-quality social exchanges, open communication, and information sharing. It promotes performance development and helps individuals along their career paths.
Research has also shown that ethical leadership (where leaders are believed to be good, moral people who are honest and trustworthy) facilitates high-quality leader-member exchange. Ethical leadership involves caring about the bigger picture and the greater good for the company and society. Moreover, the increased level of social relations and connectedness create stability, even in the face of workplace-specific issues (e.g., intense workload or demanding deadlines). Similarly, studies have found that organizational justice—the perception that the workplace is fair—plays a vital role in improving job satisfaction and performance.
Hiring and Training Culture
While hard skills are valuable and necessary for managerial positions and promotions, it's also important to value soft skills like emotional intelligence. Soft skills training is becoming increasingly important in the workplace for both managers and employees. Examples of soft skills include individuals' communication, interpersonal skills, critical thinking, problem-solving abilities, teamwork, learning, leadership, flexibility and adaptability, and ethics or moral skills. Emotional intelligence training involves education about self-awareness, empathy, and self-regulation.
When hiring, it's essential to consider employees' soft skills just as much as their hard skills. Individuals with higher levels of social intelligence are better equipped to deal with workplace issues and are more likely to find ways to get along better with others. This is especially important as workplaces become more diverse, as individuals will need social intelligence to understand and accept diverse perspectives. It is becoming increasingly important for leaders to understand team dynamics and foster environments that thrive on various perspectives.
In the workplace, managers will need to be more considerate in the post-Covid-19 environment. Training programs that help supervisors provide better psychosocial and mental support in the workplace will be helpful in the post-Covid-19 world. Furthermore, companies could consider building emotional intelligence, communication, and soft skills into their performance indicators. Many companies have also chosen to reevaluate their benefits, such as providing increased mental health benefits and more personal or sick days. These actions taken together help to create an empathetic and supportive culture.
And finally, a good training culture provides timely and ongoing coaching, feedback, and performance evaluations. This way, employees know how they're performing all year round, not just at the end of the year during performance assessments. Furthermore, continuous performance evaluations and training help individuals develop the skills needed to reach their career goals. This helps to increase internal promotions and decrease turnover.
The Middle Layer: Job Factors
The middle layer relates to one's immediate job environment. This layer includes team composition and dynamics, autonomy, job training, tools and technology, work environment, workload, job design, and job-related communication. This layer also involves direct environmental factors such as health and safety, temperature, noise, air quality, and lighting.
Team Composition and Dynamics
Concerning team dynamics, studies have revealed that teamwork strongly influences employee performance and productivity, with some even finding that teamwork increases problem-solving abilities. Having a good team helps with finding solutions more quickly and efficiently. In addition, great teamwork can help expand perspectives and stimulate more creative or innovative ideas. At the individual level, individuals must have a sound, friendly social system in the workplace, where people feel well-connected and supported—one where they feel confident in getting assistance without fear of retribution or humiliation.
Furthermore, a good manager assigns work to the group and utilizes the full extent of their team. Not only does this help with getting tasks completed more quickly and potentially higher in quality, but it can also bring satisfaction to individuals who enjoy using and demonstrating their skills.
Autonomy
But while we are social creatures, balance is essential. People value autonomy, and it has also been found that job autonomy, or the ability for individuals to make their own decisions on how to perform their work, is positively associated with performance. Job autonomy has been linked to commitment and proactivity. Studies suggest that increased autonomy improves self-efficacy. Individuals with the freedom to make choices related to their work learn to think more strategically, becoming more confident and competent in the process. Additionally, trust in management or leadership generally increases when employees are trusted to make their own decisions and become more autonomous. This is due to reciprocity. When employees are trusted and supported to make their own decisions, they are more likely to support and trust their management.
Job-related Communication
Communication, and effective and timely communication, is a critical determinant of performance and production. A study by McKinsey determined that workers, on average, spend about 20% of their time gathering information or trying to find someone to help with specific tasks. It also revealed that improving team communication can increase employee productivity by up to 25%. Not having strong, clear communication can result in misunderstandings, misalignment, wasted time, and making assumptions that can lead to issues or errors.
It's vital for all individuals in the organization to thoroughly understand their tasks, what's expected of them, and when things are expected of them. It's also crucial for individuals to understand the company, its strategies, and its goals. When everyone understands their goals, individuals can find creative ways to reach them without micromanagement (an ineffective long-term management strategy).
When considering effective communication, ask yourself: is the message coherent, clear, complete, concise, concrete, correct, and courteous? Moreover, creating a communication policy can help increase efficiency and effective communication. This way, individuals know how they're expected to communicate and when they're expected to communicate. Finding ways to improve communication can also solve and prevent communication-related issues.
Tools and Technology
A work environment with the right tools and technology is essential to performance. For example, quality office furniture, such as ergonomic office chairs, helps prevent body aches and issues. This allows individuals to work for more extended periods with less stress, thus improving performance in the long run. In addition, up-to-date software and technology that runs appropriately and efficiently must be considered. Software systems should work together and allow employees to perform their job without interference. Technology (e.g., computers, telephones, printers) should work consistently.
Additionally, when there are technology issues, companies must consider how individuals will report this to the technology team and what the turnaround time will be. For example, suppose it takes a long time to report the issue, and the technology team requires a lot of screenshots or assistance from employees. In that case, time that could be better spent working on job-related tasks will be taken away.
As a leader, you must provide your employees with the best possible resources so that employees are empowered to do their best possible work. While it isn't your responsibility to provide an individual with every single resource, it's imperative that you put in your absolute best effort. Has the technology in the office annoyed you? It probably annoys your employees too. Have you noticed you don't feel empowered and productive in a particular workspace? Your employees might feel the same too. Consider offering different workspaces, such as standing desks, conference rooms, lounge areas, open spaces for teamwork and collaboration, and even quiet spaces to help with performance.
Work Environment
Individuals need access to a clean environment that provides the resources necessary to perform well and maintain homeostasis while working. For example, individuals who work in an office will need access to a break room, clean water, good quality air, an optimal ambient temperature, and good lighting.
Studies have linked better air quality and temperature to significantly better decision-making and performance. Research shows that offices with high levels of oxygen and ventilation improve individual comfort and performance, reduce absenteeism, and thus save companies money. Furthermore, increasing lighting levels, especially natural lighting, has been shown to strengthen comfortability, increase production, improve work quality, and reduce absenteeism. Some countries require a certain amount of outdoor light because of the natural circadian rhythm. Natural lighting can also reduce eye strain and headaches, improve mood, and help individuals sleep better.
Different workspaces allow individuals to move between spaces for various tasks or goals. For example, quiet spaces can help nurture analytical thinking and tasks requiring attention to detail, and lounge areas can help people refocus.
Moreover, the color of spaces is known to increase productivity. Colors have meaning, which can be biological and learned, affect behavior, and have been demonstrated to enhance attention. When designing office spaces, it's essential to contemplate the color palette, its hue and saturation, and how it might impact performance. Consider how spaces will be used, and be careful not to use too many colors.
Workload
Employers must be mindful not to overwork their employees with too much workload. Otherwise, their employees may feel pressure and stress to complete their tasks even while not at work. To reduce workload, consider how long employees can be productive during a given day and be reasonable with requests. Employees should be given a healthy workload, where they can feel they're making real progress towards their tasks or projects and be given time throughout the day to recharge—no one can be productive 100% of their day. Companies can also provide better time management and planning solutions or software. Managers can regularly check in to support their employees with their workload—distributing or redistributing work or assignments as needed.
The Central Layer: Employee Factors
Many studies across different fields have analyzed the determinants of employee performance, and many have demonstrated how employee-related factors strongly impact individual performance. Employee-related factors pertain to the elements which involve individuals. This layer includes intrinsic and extrinsic motivation, declarative and procedural knowledge, skill level, flexibility, proactivity, adaptability, commitment, engagement, job satisfaction, self-esteem, and more. It also includes the employee-related factors that impact organizational performance, such as turnover, presenteeism, and absenteeism.
Intrinsic and Extrinsic Motivation
It is well-established in the literature that motivation and job satisfaction increase performance. The strategy of the company sets goals for which the individual must achieve to increase their level of performance, and motivation is the power that assists in acting towards the direction of that goal. Some believe motivation is the most important element in a company to attain achievement. Delaney and Huselid (1996) argued that company-level performance could be improved through individual-level performance. To do this, companies would need to strengthen employee motivation. Motivation can be separated into intrinsic factors, such as the desire for recognition, and extrinsic factors, or the factors outside oneself, such as the need for security and compensation. Understanding the intrinsic and extrinsic motivation of individuals will help to improve performance. Motivated employees are more engaged and self-driven, making them more involved in their work and more likely to assume responsibilities.
Job Satisfaction
Job satisfaction is a general attitude toward one's work, which can be both positive and negative. Ideally, individuals will have more positive attitudes than negative ones. Job satisfaction has been shown to have a positive and significant effect on performance, with some finding a strong correlation between the role of leadership on job satisfaction and performance. Employees who are more satisfied with their jobs are more likely to have higher levels of work performance. Increased job satisfaction has also been linked to lower turnover intention, thus increasing company performance and production. While job satisfaction impacts individual and company performance, the Global Human Capital Trends survey by Deloitte in 2019 found that only 49% of respondents were satisfied or very satisfied with their job design, and only 42% were satisfied or very satisfied with their daily work practices.
Employee Engagement
Another key determinant of performance is employee engagement, which is employees' mental and emotional connection to their work. Employee engagement can be separated into three dimensions: vigor, dedication, and absorption. All dimensions have been shown to significantly influences employee performance and thus impact the overall organizational performance and productivity.
Declarative and Procedural Knowledge
According to John Campbell, there are three main determinants of an individual's performance: declarative knowledge, procedural knowledge and skill, and motivation. Declarative knowledge is explicit knowledge and refers to information or facts stored in memory. It's the ideas or principles that guide a person to complete a task or do their job. Procedural knowledge and skill refer to how to perform job duties, often involving implicit learning. Motivation refers to the reasons why a person does something. People can go beyond task performance when they know how to do their job well. Additionally, they can contribute to the company's overall well-being and become more adaptive in the workplace.
Conclusion
The strength of the influence and whether the impact of the factors is direct or indirect is still debated. While the company, job, and employee layers are interrelated and dynamic, there is a logical order in which companies can tackle performance and production issues rather than using random selection or cherry-picking from perceived significant problems. This order also helps small and developing companies prepare for performance and production issues that will inevitably arise. Because company-level goals are ultimately achieved through the work of individuals, a bottom-up approach helps tackle many performance and production issues.
With a bottom-up approach, utilizing Maslow's Hierarchy of Needs helps understand what individuals need and the order in which needs must be fulfilled. Small and developing companies can use this order to plan their company culture, and larger companies can use this framework to understand their people's needs better. Use the Performance and Culture Triad with Maslow's Hierarchy of Needs to find a starting point to tackle performance and production issues or as a guide to create a better company culture.
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