Today’s businesses face unprecedented challenges. Leaders are opposed to increased competition, globalization, social responsibilities, technological changes, and strategic thinking. These challenges need to be managed for sustained high performance.
Developing better products or services or pricing them lower than competition must today be supplemented by organizational capability, through rational internal structures adaptive to the changing customer trends. Managers must compete not just for markets or technical expertise, but also for talents.
High-performance companies are the role models of the business world. They represent real-world versions of a modern managerial model: exceptional. It consistently outperforms most of its competitors.
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 of adapting to changing market dynamics than low-performing counterparts.
An illustration will do. 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.
For example, he acquired 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.
After significant success until in 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 due to customers assessing Marriot’s service primarily on the basis of the impression created by its staff. Hence, in order to sustain its position as 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 a feel of ownership over their work areas.
This enabled Marriot to redefine the nature of competition and maintain its standing 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, the most critical development tools are intensive individual feedback and coaching.
Customers are crucial to business. But what kind of customer approaches is most effective for high performance? 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. This was attributed to the organization understanding that different customers have different needs; some customers add more to the bottom-line than others. Such organizations create different types of processes to manage different categories of customers and adapt shifts in the market that require them to change their treatment of customers.
High performance is linked to “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. Hence, such businesses are more outwardly focused on customer needs and behavior than low-performance organizations.
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/her own domain.
After developing a competitive advantage in the areas of both employee satisfaction and customer service, Marriot 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.
Indian leaders are most sought after 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 –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.”
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.
The critical driver of organizational culture is the HR function which must undertake to help management develop a culture of “engaging, motivating and bonding” necessary to attract and keep talented employees. In such a culture, the potential incompetent individuals can be converted into better workers.
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 changing marketplace and shifting attitudes.
Organizational leaders will also need to adapt to new understanding of high performance. After all, today’s favored strategies and best practices can easily become tomorrow’s failures. These organizations will always be worth studying because they have much to teach us.
Nabeel Hassanali is a business builder possessing extensive experience in consulting and training start-ups. He was recently recognised amongst the leading ‘Under 30 Entrepreneurs’ in Tanzania. Twitter: @AfricanGenesis
By Nabeel Hassanali