In every sector, there are organizations that perform better in the long term than others. These are organizations that lead the sector and for which everyone would like to work. The essential question is: What makes these organizations perform better in the long term? Is the reason higher salaries, a new IT system, reorganization or its extra sales efforts…?
This question was the starting point for a large international scientific and practical research into the features that transform an organization into a High-Performance Organization (HPO).
Definition of a High Performance Organization:
“A High Performance Organization is an organization that achieves financial and non-financial results that are exceedingly better than those of its peer group over a period of time of five years or more, by focusing in a disciplined way on that which really matters to the organization.”
dr. André de Waal MBA – Academic Director HPO Center
Global HPO research
Over a period of five years 500+ academic and management publications in the area of high performance and excellence were studied in order to be able to build the HPO Framework. From these literature’s sources characteristics of high performance were distilled and put in an HPO Questionnaire which was distributed worldwide. Thousands of respondents from hundreds organizations in 50 countries filled in this questionnaire in which they indicated how their organization scored on these characteristics and performed against their peer groups. Subsequent statistical analysis of the collected data showed that there are 35 characteristics that have a direct positive relation with competitive performance. These characteristics always appear in five groups, the so-called HPO Factors. When an organization scores higher on these five HPO Factors than its peer group, than it performs financially and non-financially also better than the peer group.
“The HPO methodology provided a perfect means of bench-marking where we were, what we really needed to focus on, a target to aim for and the means to measure our progress.”
Huw T. Owen – CEO Ark Data Centres Ltd
Five factors of high performance
The HPO research shows that there is a direct and positive correlation between the 5 HPO Factors and organisational results, regardless of sector, industry or country. The higher the scores on the HPO factors (HPO scores), the better the results of the organization, and the
lower the HPO scores the lower the competitive performance. The research also showed that all HPO factors need to have equal scores. If for instance four HPO factors score an 8 (out of 10) and one factor a 5, the organization will not be able to function as an HPO because it is out of balance. An easy way to visualize this is to imagine a child’s propeller. When exposed to the wind, it spins around at a constant speed. However, if one of the strings breaks, the propeller will no longer turn around smoothly and will eventually break down. It illustrates that
an organization should distribute its attention evenly across the five HPO factors to make sure none of these will be ‘broken’ and hold back the organization. Working on just one HPO factor, or only a few characteristics, without paying attention to the other HPO factors or characteristics in due course, will not help the organization in the long run.
Below the 5 HPO factors (and 35 characteristics) which are included in the HPO Insight™ software and reports.
HPO factor 1: Management Quality
In an HPO, managers at all organizational levels maintain trust relationships with employees by valuing their loyalty, treating smart people with respect, creating and maintaining individual relationships with employees, encouraging belief and trust in others, and treating people fairly. Managers in an HPO work with integrity and are a role model to others, because they are honest and sincere, show commitment,
enthusiasm and respect, have a strong set of ethics and standards, are credible and consistent, maintain a sense of vulnerability and are not self-complacent. They are decisive, action-focused decision-makers, avoid over-analysis and propose decisions and effective actions, while fostering action-taking by others. HPO managers coach and facilitate employees to achieve better results by being supportive, helping
them, protecting them from outside interference, and by being available to them.
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 in an HPO develop an effective, confident and strong management style by communicating the values and by making sure the strategy is known to and embraced by all organizational members.
HPO factor 2: Openness & Action Orientation
In addition to having an open culture, an HPO uses the organization’s openness to achieve results. In an HPO, management values the opinion of employees by frequently having dialogues with them and involving them in all important business and organizational processes. HPO management allows experiments and mistakes by permitting employees to take risks, being prepared 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 an HPO spend a lot of time on dialogue, knowledge exchange and learning in order to obtain new ideas to improve their work and make
the complete organization performance-driven.
HPO factor 3: Long-Term Orientation
In an HPO, long-term gain is far more important than short-term profit. This long-term orientation is extended to all stakeholders of the organization, that is, shareholders as well as employees, suppliers, clients and society at large. An HPO continuously strives to enhance customer value creation by learning what customers want, understanding their values, building excellent relationships and having direct
contact with them, involving them in the organization’s affairs, being responsive to them, and focusing on continuously enhancing customer value. An HPO maintains good long-term relationships with all stakeholders by networking broadly, taking an interest in and giving back to society, and creating mutual, beneficial opportunities and win-win relationships. An HPO also grows through partnerships with suppliers
and customers, thereby turning the organization into an international network corporation. Management of an HPO 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 first. They grow new management from their own ranks by encouraging staff to become leaders, filling positions with internal talents, and promoting from within. An HPO creates a safe and secure workplace by giving people a sense of safety (physical and mental) and job security and by using dismissal as a last resort.
HPO factor 4: Continuous Improvement & Renewal
The process of continuous improvement starts with an HPO adopting a unique strategy that will set the company apart by developing many new alternatives to compensate for dying strategies. After that, an HPO will do everything in its power to fulfill this unique strategy. 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 organization also measures and reports everything that matters, so it measures progress, monitors goal fulfillment and confronts the brutal facts. It reports these facts not only to management but to everyone in the organization, allowing all organizational members to access financial and non-financial information needed to drive improvement. People in an HPO feel a moral obligation to continuously strive for the best results. The organization continuously innovates products, processes and services, constantly creating 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 these core competencies by deciding on and sticking to what the company does best, keeping core competencies inside the firm and outsourcing non-core competencies.
HPO factor 5: Employee Quality
An HPO makes sure it assembles a diverse and complementary workforce and recruits people with maximum flexibility to help detect problems in business processes and to incite creativity in solving them. An HPO continuously works on the development of its workforce by training staff to be both resilient and flexible, letting them learn from others by going into partnerships with suppliers and customers, inspiring them to improve their skills so they can accomplish extraordinary results, and holding them responsible for their performances and with that encouraging them to be creative in looking for new productive ways to achieve the desired results.