The personality of an organization can be changed through its pay system.

Each organization has its own unique personality and way of doing things. These shared norms are commonly known as the organization’s “culture.” Cultures tend to be remarkably enduring and serve to provide employees with guidance about what to expect when they come to work each day—for example, how communication flows through the organization or whether they should view their peers as collaborators or competitors. This guidance can also serve to promote the achievement of individual and organizational goals by identifying what types of behaviors are desired and how they will be rewarded.

In an ideal situation, employees join organizations with cultures well-suited to their values and needs. If their employer is not a perfect match, employees may be able to adapt to fit the culture. In contrast, changing organizational culture generally requires substantial time and effort due to the long-entrenched norms, behaviors, and traditions that must be changed to overcome organizational inertia.

Nevertheless, organizations can and do change their culture, particularly in response to external pressures from competitors or customers to improve efficiency or service quality. They may also need to drive cultural change following mergers or executive succession. Although these influences on culture have been studied primarily in the private sector, most of them are also relevant to the public sector. In particular, the Federal Government has faced increasing pressure in recent years to provide better services at lower costs, while experiencing unprecedented reorganizations and accompanying changes in leadership—all in the hopes of becoming more results-focused.

At the same time, agencies are increasingly being given the flexibilities to develop new employee compensation systems. These new systems can serve as powerful tools to align organizational culture with the focus on results. In particular, a pay for performance compensation strategy ties salary dollars directly to the achievement of organizational goals, rather than to the traditional basis of pay increases—years of satisfactory performance. As a result, pay for performance “raises the bar” by shifting the emphasis from “getting by” to distinguishing oneself as a top performer. Further, by aligning individual performance objectives with organizational goals, the agency coordinates the efforts of the workforce to accomplish mission-driven results.

However, these changes don’t occur overnight. Agencies must be prepared to invest substantial time, money, and effort into creating an organizational culture consistent with pay for performance. Agency leaders should demonstrate their commitment to a performance-based pay system and ensure that employees understand why it is necessary. Supervisors must be willing and able to distinguish between employees’ performance levels, reward them accordingly, and be held accountable if they don’t. Employees need to be involved in the development of the system to facilitate buy-in and after implementation as part of the on-going process of communicating with supervisors about performance goals and progress towards achieving them. In this manner, pay for performance can serve to align employee efforts with organizational goals, resulting in a culture that emphasizes performance. ¯

Reprinted from Issues of Merit, a publication of the Office of Policy and Evaluation, U.S. Merit Systems Protection Board.