Today’s businesses face unprecedented challenges. Leaders are opposed with increased competition, globalization, demand for growing social responsibilities, technological changes, and strategic thinking. These challenges need to be managed to build and sustain a high-performance organization.
Developing better products or services or pricing them lower than competition must today be supplemented by organizational capability, by establishing rational internal structures to adapt to changing customer trends. Managers must compete not just for markets or technical expertise, but also for talented and capable people.
The Art of High Performance
Most organizations are managed for mediocrity. For example, in the United States, only a third of organizations that achieve excellence are able to maintain it over decades; even fewer manage to implement successful transformation programs. These statistics have devastating implications.
Organizations that learn are able to keep finding new sources of value and capturing them more quickly and effectively than their counterparts, creating a superior competitive advantage. This is achieved through overcoming employee resistance to change, management behavior towards adapting new customer trends, nurturing and building talent and strategic insight.
High-performance companies are the role models of the business world. They represent real-world versions of a modern managerial model: the organization that is exceptional in many areas that it consistently outperforms most of its competitors for extended periods of time.
Strategy as a medium
High performance organizations have strategies that are most consistent, clear and well communicated. Communication across various stakeholders is essential in demystifying the path sought. Such companies stand a better chance in adapting to changing market dynamics than low-performing counterparts.
An illustration is Indian leaders who see their role in strategy development as critical, whereas Western leaders often leave it to business unit heads. Indian leaders are likely to own the strategy function, setting the agenda and taking a visible role in shaping strategies. They tend to focus less on Western-style planning and analysis and more on creating incentives, organizational structures, and culture that will enable improvisation.
A good demonstration is Ratan Tata who set a new strategic course for the Tata Group when he took over, in 1991. At the time, it was doing virtually no business outside India. Against some internal opposition, he led the conglomerate’s 96 companies on a wave of acquisitions, using a case-by-case, trial-and-error approach to acquire, for example, the Tetley Group, Jaguar and the Daewoo Commercial Vehicle Company. Today, half of Tata Group’s revenue comes from other countries.
Essentially, leaders of high performance organizations promote the best people for the job, ensure performance expectations are clarified and understood, harness strict but judicious performance metrics, and convince employees that the success of the organization hinges on their attitude.
“As any good gardener knows, to promote healthy growth, in addition to fertilizing and watering you also must prune and weed. “ That is a metaphor Jack Welch used often in describing the performance-ranking process he introduced to cull chronic underperformers at General Electric.
To engage employees, competitive organizations create a sense of belonging where openness is encouraged to foster employee empowerment and pushing decision making down through the ranks whilst heavily investing in training. Granted that these individual practices aren’t new, but leaders combine them in a coherent package with consistent emphasis on the value of people not as a resource, but as a critical success factor.
After significant success until the mid 90s, Marriot Hotels – one of the most successful corporations in the world – shifted its focus to people as a high performance ingredient. This was resorted due to customers assessing Marriot’s service primarily on the basis of the impression created by its staff. Hence, in order to sustain it’s position as an employer / provider of choice, the group embarked on conducting surveys to learn what motivated and challenged employees. Other methods included training; industry internship programs and giving employees feel of ownership over their work areas. This enabled Marriot to redefine the nature of competition and maintain its grip in the hospitality industry.
Global management-consulting firm McKinsey & Co. is an example of a company that truly values its employees. Although formal training plays an important role, by far the most critical development tools are intensive individual feedback and coaching.
Customers are crucial to nearly any line of business, but what kinds of customer approaches are most effective to establishing high performance? The approach should not be imitated from best practices because such a directive could be more harmful than beneficial. High performance organizations tend to be more attuned to the current and future needs of their customers.
To compete successfully, Marriot management committed itself to ignite a burning sense of responsibility within each employee of delivering outstanding customer service. This was attributed to the organization understanding that different customers have different needs whereas some customers add more to the bottom-line than others. Such organizations create different types of processes to manage different categories of customers and they are adapted to shifts in the market that require them to change how they treat customers. High performance is linked with the use of “customer information as the most important factor related to understanding customers or developing new products and services.”
In order to meet guest demands, Marriot constantly utilized metrics from surveys and customer satisfaction cards to best deliver concierge service, room service and overall customer experience. Hence, such businesses are more outwardly focused on customer needs and behavior than low-performance organizations where a customer is able to say, “I could get this from different companies, but this one does this certain thing that I like best, so I’m giving them my money.”
Leadership: Performance, Belief and Talent
The leadership component requires creation of a vision, which the leader articulates, owns and promotes within and outside the organization. Leadership is not a realm or sacred entity for top managers but rather every individual in the company must be empowered to think and act as a leader in his own domain.
Earlier in the article, the example of Marriot was cited. After developing a competitive advantage in the areas of both employee satisfaction and customer service, leaders changed their attention to gearing a shift in mindset with managers coming to see themselves as owners rather than change agents. The mechanization included changes in training, reward and communication systems.
Unlike capital, scarce knowledge and expertise cannot be accumulated at the top of the company and distributed to those programs in which it will yield the greatest strategic advantage. The philosophical shift requires executives to expand beyond strategy, structure and systems to a multi-dimensional approach on the company’s purpose, process and people.
An impressive case in point are Indian leaders – who are most sought in both emerging and developed economies. Employee investment continues with leadership development; almost twice as many companies in India as in the U.S. formally track leadership training.
At Wipro – one of the most successful Indian company in the world – as per their sophisticated program, each of roughly 1,000 managers and executives is scored on 12 leadership measures, and individual scores are compared with company averages. Wipro’s chairman, Azim Premji, in a process that extends over five days, reviews the top 300 leaders. Following those reviews, the company draws up a development plan for each candidate that includes coaching, training, and rotational assignments.
As Unilever’s former CEO explains, “Indian leaders have been trained or groomed in extremely fluid, dynamic, uncertain environments. [Thus they have] a much greater ability to cope with uncertainty, they don’t get disturbed by uncertain events. They also tend to be more creative as a result, because they have to face these sorts of untoward situations almost on a daily basis.”
￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼The Winning Culture
Formalized and well-communicated management practices transform the behavior, attitudes and ethic of employees into organizational advantage leading to improved customer satisfaction and competitive advantage. Such practices are formal processes governing how employees think and react to different roles.
Imperative practices include financial and people policies, standard operating procedures, work ethic and practices. An accepted set of governance shall regulate the ‘organizational climate’ in ensuring employees spend their time efficiently, with whom and doing what.
The critical driver of organizational culture is the HR Function which must undertake to help management develop the engaging, motivating and bonding culture necessary to attract and keep talented employees. In such a culture, the potential in competent individuals can be converted into engaged, committed action. High performance companies accept the challenge of creating an environment that will attract and energize people so that they commit to the organization.
But the ‘bonding process’ involves more than creating a sense of identity and belonging. The secret sauce of high performance companies is to believe that it is less of an economic entity but more of a ‘people centric institution’ through which people acting together can achieve meaningful purpose.
Sustaining High Performance
These characteristics of high-performance organizations are likely to remain stable but the ways in which companies demonstrate those characteristics will evolve. For example, there will be changes in leadership competencies, talent, technology, customer service, performance metrics, and the like. Achieving and maintaining high performance will require companies to adapt to a changing marketplace and shifting attitudes.
Organizational leaders will also need to adapt to new understandings of high performance. After all, today’s favored strategies and best practices can easily become tomorrow’s failures of imagination. These organizations will always be worth studying because they have much to teach us.