The systems that an organization uses to set goals, select new talent, and appraise performance optimally should be designed and driven by its mission and desired culture. However, in practice, the systems that are put into place are often determined by other factors, such as cost, administrative expediency, or industry trends. Organizational systems, like structures, create the climate within which members work. Shared perceptions of the work climate led members to develop beliefs, defensive and/ or constructive, regarding how they are really expected to think and behave - regardless of the culture deemed ideal in the organization’s mission and value statements.

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At the outset, it is important to note that all systems having to do with performance management shape cultural norms in two important but different ways. This relationship is most clearly exemplified by reinforcement systems. Different culture scholars have highlighted the allocation of rewards as a mechanism for reinforcing desired behaviors and shaping culture. Marketing rewards contingent on the demonstration of desired behaviors (e.g., setting achieving goals or helping colleagues) can directly promote the specific behaviors being sanctioned. Similarly, making punishments contingent on specific behaviors (e.g., not showing up for work or working while intoxicated) can discourage those behaviors from occurring.

 

However, what is less widely recognized is the impact of the use of rewards and punishments beyond the specific behaviors they’re contingent upon. Several studies have proven that the extent to which rewards and punishments are used more generally can create culture that is safe and supportive, or indifferent and lackadaisical, or punitive and combative. In other words, the system of reward and punishment in an organization contributes to and reinforces norms for behaviors above and beyond those such a reinforcement system is intended to promote or discourage.

 

The use of rewards has potential to strengthen constructive norms. While leaders in some organizations might contend that they do not have the resources to positively reinforce desired behaviors, research and practice have proven that recognition and praise (which don’t cost any money) are as strongly and positively related to constructive norms and expectations as are monetary rewards. Furthermore, intangible rewards, such as praise, are less frequently used in organizations with strong defensive cultures (passive, aggressive, or both), likely reflecting as well as solidifying the prevailing norms.

 

Equally important is the type of feedback provided when things go wrong, when people make mistakes, or when employee performance falls short of expectations. In some organizations, the prototypical reaction or procedure is to problem solve and provide people with support and, within reasonable parameters, the opportunity to learn and improve. This developmental response not only reflects but also strengthens constructive behavioral norms - particularly achievement, self-actualizing, and humanistic-encouraging. In contrast, when the modus operandi is to criticize and punish people for mistakes, norms for defensive prevail. Members develop a fear of failure and come to believe they must hide their shortcomings and errors, shift blame to others, and avoid getting involved in anything that seems risky.

More specifically, passive/defensive norms emerge when feedback and reinforcement systems primarily or exclusively focus on punishments and don’t provide much in the way of recognition or rewards for effort, improvement, good performance, or going the extra mile. In contrast when reinforcement reflects more of a ‘carrots and sticks approach’ - where high performance is monetarily rewarded (with raises or bonuses) and low performance is met by criticism along with other forms of punishment - norms for aggressive/defensive behaviors tend to merge.

 

Norms and expectations for aggressive/defensive behaviors can become even stronger when raises and bonuses are designed specifically to reinforce the oppositional, competitive, power, and perfectionistic styles. The most frequently heard example of such reinforcement is from organizations that espouse internal teamwork yet sales or other ‘wins’ by members who compare with and outperform rather than cooperate with and work collaboratively with peers. Other examples come from organizations that disproportionately reward members who skillfully promote or ‘advertise’ their accomplishments and make sure they are noticed. Yet more serious issues arise when members receive rewards for performing well along certain dimensions even though they treat others in disrespectful or arrogant ways. There is no doubt that the use of rewards, tangible, and intangible, can lead to a negative, potentially toxic culture when (even inadvertently) sanction defensive styles.

 

Given these dangers, one might conclude that it is best not to use monetary rewards at all. However, as mentioned above, the use of rewards (tangible as well as intangible) is also positively associated with constructive norms, while a lack of rewards is associated with passive/defensive cultures. That’s why understanding the impact of your organization’s reinforcement systems and what you are reinforcing in terms of behavior is essential to effectively managing culture.

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Source: ‘Creating Constructive Cultures; Leading People and Organizations to Effectively Solve Problems and achieve Goals, by J. L. Szumal and

R.A. Cooke.