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The Essentials of High Performance Organizations

Business leaders crave knowledge about the key elements of organizational performance. After all, in the corporate world, these are the elements that make or break companies every day.

These organizational characteristics don’t have to be earth shattering or revelatory. In fact, according to a global survey commissioned by American Management Association (AMA) and conducted by the Institute for Corporate Productivity (i4cp), they amount to basic blocking and tackling in the corporate world.

The AMA/i4cp High-Performance Organization Survey asked 1,369 respondents about an extensive series of characteristics associated with high performance. It identified higher performers by inquiring about revenue growth, market share, profitability, and customer satisfaction. The research team correlated responses about market performance with responses relating to strategy, leadership, customer orientation, and other factors, looking for the largest gaps between the highest- and lowest-performing groups.

The survey found that the single largest gap between these groups was due to whether organization-wide performance measures matched the organization’s strategy. In other words, the proper alignment between performance and strategy seems to make a big difference to organizational success. The second-largest gap between higher-performing and lower-performing organizations was due to whether organizations’ strategic plans were clear and well thought out. If we put these two major findings together, we see that higher-performing organizations are much more likely than their lower-performing counterparts to have clear, well-thought-out strategies that are matched up well with performance measures. This sounds a bit like Management 101, but it actually reveals two critical and related organizational characteristics that managers often lose sight of amid the hubbub of new business ideas: consistency and clarity.

And there’s something else here. Higher performers have well-conceived strategies. The great American poet Ralph Waldo Emerson wrote, “A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.” Higher-performing organizations make sure that their consistency isn’t “foolish,” which is why ensuring that a strategic plan is “well thought out” is so strongly associated with success. No company can perform well if poor leaders devise poorly conceived strategies, even when those strategies are consistently implemented.

The survey also found that—aside from the emphasis on measures and strategy—the best performers are much more likely to “use customer information as the most important factor for developing new products and services.” This item in the gap analysis not only emphasizes the importance of innovation, it highlights a larger trend made very clear by the survey: the tremendous emphasis that high performers place on their customers. Such organizations are considerably more likely than other companies 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 consistently exceed customer expectations.

Below are some other characteristics of higher-performing organizations:

  • Their leaders are clear, fair, and talent-oriented. They are more likely to promote the best people for the job, make sure performance expectations are clear, and convince employees that their behaviors affect the success of the organization.
  • 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.
  • They are superior in terms of clarifying performance measures, training people to do their jobs, and enabling employees to work well together.
  • They are more likely to adhere to high ethical standards throughout the organization.

Yet, the survey also indicates that even high-performing organizations could improve in various areas, and there’s probably a lesson to be learned here. Like great athletes, even high-performing 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 ambitious business leaders who are taking notes on their fellow high performers and working hard to ensure that their own companies eventually reach the top echelons of organizational excellence.

High performing organizations are led by great thinkers and innovators. Learn how to become a smarter leader with this free AMA webcast.