Organizational culture has a significant impact on a company's success. Studies show that organizations that focus on cultivating a "growth mindset" tend to outperform those that are solely performance-driven. Whereas performance-obsessed cultures breed stress and cutthroat competition, growth cultures allow employees to take risks, learn from failures, and continuously develop.
Today we will explore the key ideas around shifting to a growth culture and provide specific examples of how leaders can make this change.
The Problems with a Performance-Obsessed Culture
Companies that base status, compensation, and advancement solely on outcomes like sales targets, productivity metrics, and quarterly profits often create unhealthy dynamics among employees. When success is narrowly defined, people feel intense pressure to deliver immediate results. This leads to various issues:
Short-term thinking - Employees focus on quick wins rather than long-term strategy. There is little incentive to invest time and resources into projects that may take years to generate returns.
Discouragement of failure - Fear of failure suppresses creativity and risk-taking. Employees avoid new initiatives with uncertain outcomes.
Lack of collaboration - Performance metrics pit employees against each other. Knowledge and resources aren't shared in order to get ahead of peers.
Unethical behavior - Some employees may fudge numbers or use questionable tactics to boost their performance on paper.
Higher turnover - Top performers get burnt out and leave. Average performers feel inadequate and also exit.
Promoting a Growth Culture Instead
Growth cultures take a more holistic view of success. Performance still matters, but it's balanced with investments into employee growth and development. Here are some ways leaders can shift to this mindset:
Evaluate employees based on learning, not just outcomes. Recognize efforts to gain new skills even if they don't immediately impact the bottom line.
Allow failures. As long as employees learn from mistakes, understand that failure is part of growth. Conduct non-judgmental debriefs of why initiatives fell short.
Expand training budgets. Invest in developing employees' capabilities through classes, workshops, and stretch assignments. Spending more on enrichment ultimately pays off.
Be patient with transformation. Recognize that meaningful growth takes time. Stick with programs like coaching, mentorship, and job rotations even if gains aren't immediate.
Publicly appreciate risk-taking. Praise employees who had the courage to pitch bold ideas and test innovative approaches. This signals that creativity is valued.
Collaborate across teams. Break down silos by having teams share expertise and ideas. Joint strategic projects breed camaraderie over competition.
Implementation Examples
Here are a few examples of how the above growth culture principles translate into concrete programs and policies:
Netflix instituted a policy called "Keeper Test" for managers. Instead of just looking at whether an employee met numeric targets, managers are trained to ask themselves "If one of my people told me they were leaving for a better opportunity, would I fight hard to keep them at Netflix?" This retains strong performers looking to develop, not just achieve short-term goals.
Adobe got rid of performance ratings and instead has frequent check-ins between managers and employees. These focus on ongoing growth and problem-solving rather than backward-looking assessments. Adobe also has peer bonus programs where employees can reward each other for embodying the company's values.
MasterClass created a program called "Take the A Train" awarding funding and space for employees to experiment with new educational content formats. Even if these never translate into actual products or courses, it’s a chance for people to flex their creative muscles without worrying about immediate monetization.
Amazon instituted the "Just Do It" award for employees who overcame bureaucracy or rigid rules to do something innovative. This kind of bottom-up risk-taking is exactly the norm a growth culture wants to reinforce.
Key Takeaways
Shifting to a growth mindset takes work, but pays off through increased innovation, engagement, and retention of top talent. The specific steps leaders can take include: focusing evaluations on learning rather than just performance, allowing failure, investing in capability building, having patience with development timelines, publicly praising risk-taking initiatives, fostering collaboration across teams, and instituting programs and policies that embody a growth mentality. With concerted effort over time, organizations can create cultures where employees are motivated by intrinsic growth and continuous improvement.
Conclusion
Performance metrics have an important place in tracking health and progress. But they should not be the sole determinant of value and rewards in an organization. Employees also need space to experiment, learn, and grow without the constant pressure of immediately proving results. Leaders who balance goals with a holistic focus on developing people and capabilities will create higher-performing cultures in the long run. The first step is acknowledging the downsides of pure performance obsession, and then steadily implementing policies that demonstrate an alternative set of growth-focused values.
Jonathan H. Westover, PhD is Chief Academic & Learning Officer (HCI Academy); Chair/Professor, Organizational Leadership (UVU); OD Consultant (Human Capital Innovations). Read Jonathan Westover's executive profile here.
