“A High-Performance Organization achieves financial and non-financial results that are exceedingly better than those of its peer group over a period of five years or more, by focusing in a disciplined way on that which really matters to the organization.”
According to a five-year study by the HPO Center in Netherlands that reviewed 290 academic and management publications and gathered data from 2,500 organizations in 50 countries, High-Performance Organizations share 35 characteristics which always appear in five groups.
They found a clear correlation between how well an organization scores on these high-performance factors and its financial performance, such as:
· Revenue growth increased by an average of 10%,
· Profitability increased by 26%, and
· Total Shareholder Return by 23%
Other non-financial performance was also better in the High-Performance Organizations including higher customer satisfaction, customer loyalty, employee loyalty, and quality of products and services than their less able counterparts.
Five Success Factors for High-Performance Organisations:
Management Quality - The first and foremost factor which determines whether an organization becomes and stays a High- Performance Organization was identified as the quality of leadership and management of the organization.
“In a High-Performance Organization, 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.”
Managers of a High-Performance Organisation live with integrity and are a role model by 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 by not being self-complacent.
They apply decisive, action-focused decision-making by avoiding over-analysis. At the same time they foster 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 by 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. Managers of a High-Performance Organization develop an effective, confident and strong management style by communicating the values and by making sure the strategy is known and embraced by all organizational members.
Openness and Action Orientation - The second factor concerns characteristics that not only create an open culture in the organization but also focuses on using this openness to take dedicated action to achieve results. Management values the opinion of employees by frequently engaging in a dialogue with them and by involving them in all important business and organizational processes.
High-Performance Organisation leadership allows experiments and mistakes by permitting employees to take risks by 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 Organisation spend much time on communication, knowledge exchange and learning in order to obtain new ideas to do their work better and make the complete organization performance-driven.
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, that is shareholders but also employees, suppliers, clients and the society at large.
A High-Performance Organisation continuously 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.
A High-Performance Organization maintains good and long-term relationships with all stakeholders by networking broadly, being generous to society, and creating mutual, beneficial opportunities and win-win relationships. A High-Performance Organization also grows through partnerships with suppliers and customers, thereby turning the organization into an international network corporation.
Leadership of a High-Performance Organization is committed to the organization for the long haul by balancing common purpose with self-interest, and teaching 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 safety (physical and mental) and job security and by not immediately laying off people until it cannot be avoided, as a last resort.
Continuous Improvement and Innovation - This fourth factor starts with a High-Performance Organizations adopting a strategy that will set the company apart by developing many new options and alternatives to compensate for dying strategies. After that, the organization will do everything in its power to fulfil this unique strategy.
It continuously simplifies, improves and aligns all of its processes to improve its ability to respond to events efficiently and effectively. It eliminates unnecessary procedures, work, and information overload.
The company also measures and reports everything that matters so it rigorously measures progress, consequently monitors goal fulfilment and confronts the breakdowns. It reports these facts not only to management but to everyone in the organization so that all organizational members 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.
The organization continuously innovates products, processes and services and thus constantly creates new sources of competitive advantage by rapidly developing new products and services to respond to market changes. It also masters its core competencies and is an innovator in them by deciding and sticking to what the company does best. It keeps core competencies inside the firm and outsources non-core competencies.
Employee Quality - The fifth factor addresses workforce quality. A High-Performance Organization makes sure it assembles a diverse and complementary management team and workforce. It recruits staff with maximum flexibility to help detect the challenges in operations and markets and take advantage of opportunities.
A High-Performance Organization continuously works on the development of its workforce by training them to be resilient, innovative and flexible, letting them learn from others by going into partnerships with suppliers and customers. It inspires them to work on their skills so that they can accomplish extraordinary results. It also holds them responsible for their performance so they will be creative in looking for new productive ways to achieve the desired results.
“The only thing of real importance that leaders do is to create and manage culture. If you do not manage culture it manages you and you may not even be aware of the extent to which this is happening.”
Summary
Recent research in the area of High-Performance Organizations underlines our experience that corporate success depends entirely upon how the leadership engages with its people. After all, your people are your single most important source of competitive advantage – as long as they understand your strategy and are aligned and engaged to deliver.
Low-Performance Organizations are looking for the next quick fix and are too short-term focused. They are spending too much time working ‘in’ and not ’on’ the business and cannot decide where to focus and sustain efforts.
Low-Performance Organizations tend to overlook the importance of their people and are more likely to treat employees as a consumable commodity.
Changing organizational culture involves changing the mindsets and behaviors of many individuals and takes significant effort, time and committed leadership. But this investment in achieving High Performance will deliver a substantial return.
These mindsets and behaviors need to become so deeply engrained in the organization’s culture and DNA that they literally become the organization’s new way of life. These new behaviors and mindsets will impact every facet of the organization, make it a better place to work, increase employee engagement and drive High-Performance.
Getting the corporate culture right can transform business performance and unleash explosive breakthrough innovation and growth.
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