Over the past two editions of the DDI Global Leadership Forecast (2014/15 and 2017/18), the key emergent themes in terms of the capabilities that organisations need in order to be well-positioned for future growth in an unpredictable landscape are:
1) a data-driven customer focus – including investment in and consistent use of systems that allow actionable and timely insights into the changing customer needs and wants;
2) effective collaboration – characterised by consistent sharing of knowledge and information across the organisation, whereby information flows top-down, bottom-up, and across; and
3) adaptive agility – including openness to risk and the encouragement of innovative thinking.
McKinsey and Co mirrors such findings in its recent research. As operationalised by its Organisational Health Index, the estimated health of any given organisation is largely a matter of strategy and culture with emphasis on equal measures of top-down and bottom-up innovation and knowledge sharing, communication of meaningful values, a strong customer focus, and a strategic focus on talent acquisition and leadership development. Organisational health, as defined by such characteristics, was found to be a strategic source of competitive advantage associated with an average 24% sales growth as well as superior performance in terms of stakeholder returns. Specifically, these studies found that companies with the highest ratings of organisational health (in the top quartile) outperform those with the lowest scores (bottom quartile) in terms of stakeholder returns (three times greater) and their returns on invested capital (two times higher). These findings are a striking indication of the power of organisational culture as a predictor of organisational performance in very tangible terms.
Further highlighting the importance of culture – and corroborating the centrality of the characteristics identified in the above studies – comprehensive global investigations conducted by the Institute for Corporate Productivity identified cultural factors as the critical differentiators between high-performing organisations and low-performing organisations. For the purposes of the study, performance was indexed by the organisations’ reported yearly profitability, revenue, customer satisfaction and market share, thus presenting a tangible metric by which to gauge the effects of cultural differences. Their findings revealed that the high performing organisations tended to have a significantly greater customer focus, placing more emphasis on delivering value to external customers. These organisations were almost three times more likely to emphasise ways of bringing out the best in their talent and nurturing innovation, more likely to value collaboration as central to their strategy, and were twice as likely to focus on aligning values with clear behaviours and accountability.
It is clear from the above research that emphasis on key aspects of organisational culture is paramount for supporting and driving organisational performance in impactful ways. These characteristics – including emphasis on customer focus, a clear alignment between organisational values and expected behaviours, inclusive organisational communication that flows up, down and across the organisational structure, encouragement and consistent practice of teamwork and collaboration, and an emphasis on innovative thinking and a support for risk-taking – comprise the core of High-Performance Organisational Cultures. Organisations that embody these cultural characteristics consistently outperform the market and the competition, and appear to be optimally positioned for effective adaptability and exponential growth in the face of inevitable, unpredictable change in the landscape.
The Five Pillars of a High-Performance Organisational Culture
The above research indicates the presence of five key attributes of a high-performance organisational culture.
The organisations characterised by a high-performance organisational culture hold customer focus as central to their mission and their purpose. They exist to consistently provide value to their external customers. They invest heavily in systems for ‘keeping a finger on the pulse’ of changing customer needs and wants and are proactive and responsive in meeting them. This obsession is shared by everyone in the organisation.
Clearly expressed values are crucial to an organisation’s culture. However, the true delineation between cultures of high performance and cultures of low performance comes down to ‘walking the talk’. Without clear expected behaviours to operationalise the values in the day-to-day realities, their impact is limited at best (and likely to be confusing and even detrimental). Values and expected behaviours that embody them need to be clear and explicit, modelled by everyone in the organisation. Most importantly, everyone needs to be held accountable for these behaviours.
Empowerment and trust in organisations are predicated on a sense of inclusion or ‘being a part of’. A key component of this sense of inclusion is a shared understanding and ownership of the ‘why’ – why certain decisions are made or not made, why particular actions are taken or not taken. A high-performance organisational culture builds a shared sense of belonging, ownership and inclusivity for all members through reliable and frequent communications going both top-down and bottom-up. Regular, two-way communication builds trust in an organisational context where employees’ input is valued and appreciated, and everyone understands the importance of their position and role in the scope of the broader organisational purpose and mission.
Fostering Effective Collaboration
High-performing organisations are increasingly characterised not by siloed departments with distinct work orientations, organised into a formal or informal hierarchy. Rather, such organisations achieve their agility and adaptability through non-hierarchically based teams. Teamwork and knowledge sharing across not just established teams, but the entire organisational structure, are both encouraged in principle and enacted in practice. Within such an environment, different perspectives are regularly deployed in developing and executing new solutions, which is a central factor in an organisation’s capacity to adapt and adjust positively to change and disruption.
High-performance organisational cultures are creative and entrepreneurial in the face of a changing market landscape. These cultures encourage the best performance in their human talent and place an emphasis on nurturing innovative thinking and its application. People are empowered to take the initiative. High-performance organisational cultures foster a safe environment that encourages creativity and personal engagement, and rewards risk-taking (even if the risk is a failure) in pursuit of innovative and creative approaches.
Is your organisation poised for high performance? Our brief Cultural Health Check Diagnostic will allow you to gain critical insight into the key components of your organisation’s culture based on your own lived experience. Click the link below to see how your organisational culture rates. The insights you receive are intended to provide you with a guide as to the five areas of High-Performance Organisational Culture where your organisation may be excelling or, otherwise, underperforming.
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