Pages Navigation Menu

Building a High-Performance Organization

Business leaders are always asking, “What makes a high-performance organization?” Many companies claim to be high-performance organizations; however, the real thing is rare, and instantly recognizable.

Apple, Google, Berkshire Hathaway, Microsoft, Procter & Gamble, General Electric, Unilever, Coca-Cola, Southwest Airlines, and Johnson & Johnson are members of an elite circle, where exceptional performance is an everyday event. These groups operate on a different plane. We can name them, but can we explain them? When does high performance happen? What does it feel like? Can it be replicated?

High-performance organizations are the role models of the organizational world. They represent real-world versions of a modern managerial ideal: an organization that is so excellent in so many areas that it consistently outperforms most of its competitors for extended periods of time.

High-performance organizations are the role models of the organizational world.

Managers want to know more about high-performance organizations so they can apply the lessons learned to their own companies. Their goal is to ensure that their own organizations excel in the marketplace.

Seven areas of superiority

Recent research provides new insights about high-performance organizations and how these can be applied. The High-Performance Organization Survey commissioned by the American Management Association (AMA) and conducted by the Institute for Corporate Productivity asked 1,369 respondents about organizational characteristics associated with high performance. It found that, generally speaking, high-performance organizations are superior to their low-performance counterparts in these seven areas:

  1. Their strategies are more consistent, clear, and thought out. They are more likely than other companies to say that their philosophies are consistent with their strategies.
  2. They are more likely to go above and beyond for their customers. They strive to be world-class in providing customer value, think hard about customers’ future and long-term needs, and exceed customer expectations. And they are more likely to see customer information as the most important factor for developing new products and services.
  3. They are more likely to adhere to high ethical standards throughout the organization.
  4. Their leaders are relatively clear, fair, and talent oriented. They are more likely to promote the best people for a job, make sure performance expectations are clear, and convince employees that their behaviour affects the success of the organization.
  5. They are superior in clarifying performance measures, training people to do their jobs, and enabling employees to work well together. They also make customer needs a priority.
  6. Their employees are more likely to think the organization is a good place to work. They also emphasize a readiness to meet new challenges and are committed to innovation.
  7. Their employees use their skills, knowledge, and experience to create unique solutions for customers.

High-performance organizations are much more likely than others to report that their organization-wide performance measures match their organizations’ strategies — the single largest difference between the two groups. However, like great athletes, even high-performance organizations must continuously strive to improve and “work on their game”. Without the passion for improvement, they are unlikely to remain high performers for long. After all, there’s no shortage of business leaders who are working hard to ensure that their own companies reach the top echelons of organizational excellence.

Without the passion for improvement, high-performance organizations are unlikely to remain high performers for long.

Five factors of high performance

According to another study by the HPO Center in the Netherlands which reviewed 290 academic and management publications and gathered data from 2,500 organizations in 50 countries, high-performance organizations share 35 characteristics, falling into five groups: (1) management quality, (2) continuous improvement and renewal, (3) long-term orientation, (4) openness and action orientation, and (5) employee quality.

They found a clear correlation between how well an organization scores on these high-performance factors and its financial performance. Revenue growth increased by an average of 10%, profitability by 26%, and total shareholder return by 23% in high-performance organizations compared to others. Better non-financial performance included higher customer satisfaction, customer loyalty, employee loyalty, and quality of products and services. These positive correlations were found in every industry, sector, and country in the world. In short, it pays to be a high-performance organization.

  1. Management quality: The factor that most determines whether an organization becomes and stays a high-performance organization was identified as the quality of its leadership and management. A high-performance organization’s leadership maintains trust relationships with people on all organizational levels by valuing employees’ loyalty, showing people respect, creating and maintaining individual relationships with employees, encouraging belief and trust in others, and treating people fairly.

Pullout box

The factor that most determines whether an organization becomes and stays a high-performance organization was identified as the quality of its leadership and management.

Managers of a high-performance organization live with integrity and are role models: being honest and sincere; showing commitment, enthusiasm, and respect; having a strong set of ethics and standards; being credible and consistent; maintaining a sense of vulnerability; and not being complacent. They apply decisive, action-focused decision making by avoiding overanalysis but instead coming up with decisions and effective actions, while at the same time fostering action taking by others.

High-performance organization leadership coaches and facilitates employees to achieve better results by being supportive, helping them, protecting them from outside interference, and being available. Management holds people responsible for results and is decisive about non-performers by always focusing on the achievement of results, maintaining clear accountability for performance, and making tough decisions. They develop an effective, confident, and strong management style by communicating the values and making sure the strategy is known and embraced by all organizational members.

  1. Continuous improvement and renewal: The second factor concerns characteristics that not only create an open culture in the organization but also focuses on using the openness to take dedicated action to achieve results. Management values the opinion of employees, frequently engaging in a dialogue with them and involving them in all important business and organizational processes. High-performance organization leadership allows experiments and mistakes by permitting employees to take risks, being willing to take risks themselves, and seeing mistakes as an opportunity to learn. In this respect, management welcomes and stimulates change by continuously striving for renewal, developing dynamic managerial capabilities to enhance flexibility, and being personally involved in change activities. People in a high-performance organization spend much time on communication, knowledge exchange, and learning to obtain new ideas to do their work better and make the complete organization performance driven.
  2. Long-term orientation: The third factor indicates that long-term commitment is far more important than short-term gain. And this long-term commitment is extended to all stakeholders of the organization, not only shareholders but also employees, suppliers, clients, and the society at large.

A high-performance organization strives to enhance customer value creation by learning what customers want, understanding their values, building excellent relationships with them, having direct contact with them, engaging them, being responsive to them, and focusing on continuously enhancing customer value.

Leadership teaches organizational members to put the needs of the enterprise as a whole first. They grow management from their own ranks by encouraging people to become leaders, filling positions with internal talent, and promoting from within. A high-performance organization creates a safe and secure workplace by giving people a sense of physical and mental safety and job security and by not immediately laying off people until it cannot be avoided as a last resort.

  1. Openness and action orientation: This fourth factor is very much in line with a trend that has been keeping organizations busy for the past two decades — continuous improvement and innovation. This starts with adopting a strategy that will set the high-performance organization apart by developing many new options and alternatives to compensate for dying strategies. It continuously simplifies, improves, and aligns all its processes to improve its ability to respond to events efficiently and effectively and to eliminate unnecessary procedures, work, and information overload. The company also measures and reports everything that matters, so it rigorously measures progress, consequently monitors goal fulfillment, and confronts the brutal facts. It reports these facts to not only management but everyone in the organization, so that they all have the financial and non-financial information needed to drive improvement at their disposal. People in a high-performance organization feel a moral obligation to continuously strive for the best results. It also masters its core competencies and is an innovator by deciding and sticking to what the company does best, keeping core competencies inside the firm and outsourcing non-core competencies.
  2. Employee quality: The final factor addresses workforce quality. A high-performance organization makes sure it assembles a diverse and complementary management team and workforce, and recruits a workforce with maximum flexibility to help detect the complexities in operations and enable creativity in solving them. It continuously works on developing its workforce by training them to be both resilient and flexible, letting them learn from others by going into partnerships with suppliers and customers, inspiring them to work on their skills so they can accomplish extraordinary results, and holding them responsible for their performance so they will be creative in looking for new productive ways to achieve the desired results.

Culture and performance

Culture, like brand, is misunderstood and often discounted as a touchy-feely component of business that belongs to HR. It is one of the most important drivers that has to be set or adjusted to drive long-term sustainable success and performance. It is not good enough just to have an amazing product and a healthy bank balance. Long-term success depends on a culture that is nurtured and alive. Culture is the environment in which your strategy and your brand thrives or dies a slow death. It cannot be manufactured, but rather genuinely nurtured by everyone from the CEO down. That is why it is so important to focus and work on culture. But it is an area that is often neglected or poorly managed.

Bain & Company research found that the best companies succeed on two dimensions simultaneously. First, every high-performing organization has a unique identity, distinctive characteristics that set it apart from other organizations. Second, winning cultures usually embody six high-performance behaviours:

  1. High aspirations and a desire to win: For employees in high-performance cultures, good is never good enough. They are always pushing to go farther, better, faster. It’s not just about short-term financial performance. It’s about building something truly special and lasting.
  2. External focus: Companies with high-performance cultures focus their energies externally on delighting customers, beating competitors, and caring for communities. They don’t get caught up in internal politics or navel gazing.
  3. “Think like owners” attitude: A hallmark of a high-performance culture is that employees take personal responsibility for overall business performance. They strive to do the right thing for the business, putting aside issues of personality or territory.
  4. Bias to action: High-performance cultures are impatient to get things done. They are doers, not talkers, keeping an eye on where the value is to ensure their actions will enhance the business.
  5. Individuals who team: Winning cultures encourage people to be themselves and help individuals develop to their full potential. They also recognize the importance of teamwork, being open to other people’s ideas and debating issues collaboratively.
  6. Passion and energy: Everyone in a high-performance culture gives 100%, striving to go beyond adequate to exceptional in the areas that really matter and bringing an infectious enthusiasm to everything they do.

A true vision for a business rests on foundations of both purpose and values. The power of vision is at its best when it comes alive in the people of the organization and they live the vision. They become passionate about what they do and why they do it and perform at a higher level. The business goals must then align with this foundation. Without a clear foundation, a business will never be truly strategic. So it is better to stand for something beyond simply increasing profits.

It should come as no surprise that an organization that genuinely places its customers and its people at the heart of the business, whose people understand where it is headed and the role they play in delivering the future, and continually improves the way it works is one that will outperform its peers. The key to an organization’s success, as ever, lies in the commitment of its leaders and their willingness to implement. The good news is that, regardless of your current reality, you can always elevate your leadership game. High performance is within the reach of any organization.

Reprinted with the permission of the authors Dr. Bart Sayle, a thought leader in business transformation and culture, and author of Riding the Blue Train: A Leadership Plan for Explosive Growth, and Nick Hawker, transformation director of Breakthrough Global at the time of writing. For more information visit www.thebreakthroughgroup.com and www.bartsayle.com

From Drake P3’s behavioural, personality and skills assessments, employee engagement strategies, and leadership development to workforce planning, outsourcing, and workforce analytics, Drake has the experience and solutions to help you take your company to the next level and become a High Performance Organization. Visit www.drakeintl.com