Values-Based Management or The Performance-Values Matrix: Was Jack Welch Right?

Abstract

Two alternative models were identified in the existing literature on organization values and managerial performance. The Values-Based Management model suggests that organizational values influence managerial job performance through a process of enactment, am/ thus managerial performance is contingent upon the strength of the firm's values. The Performance-Values Matrix model suggests that organizational values and managerial job performance are independent constructs. We conducted an empirical study of these two models at a manufacturing facility. We measured organizational values enactment through a 360 degree feedback process using Behavioral Observation Scales, and obtained data on manager's annual job performance appraisal ratings. The results showed virtually no relationship between organization values and manager's job performance. We conclude from this study that the Performance-Values Matrix is a more accurate model. Implications for research and practitioners are discussed.