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High Performance Organization Culture Overview

We believe every organizational culture either provides competitive advantage and superior business performance or competitive disadvantage and sustained sub-optimized performance.    Some people may argue that strategy, brand and/or some other variable is the most important factor in determining business performance.  Without an optimized organizational culture that is designed for high performance, the best strategy will not be optimized or consistently executed and the best brand will be diminished or ruined by poor quality, delivery or customer service issues.  In short, culture as we define it, influences and affects every part of your organization’s business operations and performance.

Consider the fact that every organization has the following two fixed competitive variables:

  1. They recruit from the same talent pool as their competitors
  2. They sell/service similar clients with largely identical products/services

The question is, given those fixed competitive variables, how does an organization predictably and consistently outperform its competitors in a broad spectrum of market and financial metrics? We believe the answer is culture.  Consider the following examples of automotive  industry cultures that consistently underperformed their peers for a extended and sustained period of time:  General Motors and Chrysler.  In addition, it is widely reported that a breakdown in Toyota’s culture in the past 10 years lead to the recent quality and recall issues.  Conversely, consider how Booz Allen and Hamilton and Goldman Sachs have outperformed their competitors over the past decade.

An organization with a performance culture is very deliberate and clear about what it wants to be, and has engineered and integrated its performance management systems, business model and core values to support its strategy and objectives.  Culture is embedded in what people and organizations produce and how they produce it.   Culture guides the way people think and act toward issues like: collaboration, teamwork, empowerment, accountability, risk taking, professional development, decision-making and results.

Organizational Culture and The Bottom Line

Until organizational culture can be linked to financial performance it seems an unlikely interest or leverage point for many business leaders.  Let’s compare and contrast the financial metrics between high performance and low performance cultures. In the book “Corporate Culture And Performance,” Harvard professors John P. Kotter and James L. Heskett established a direct link between culture and a broad range of financial metrics.  Specifically, they found that following cultural enhancements, companies did significantly better over a 10-year period than companies without performance enhancing cultures.  The results are depicted in the following table:

THE ECONOMICS AND SOCIAL COSTS OF LOW PERFORMANCE CULTURES

Financial Metrics Average for 12 Firms with Performance Enhancing Cultures (%) Average for 12 Firms without Performance Enhancing Cultures (%)
Revenue Growth 682 166
Employment Growth 282
36
Stock Price Growth 901 74
Tax Base (Net Income) Growth 756 1

As performance cultures mature, financial, employee and customer metrics improve and generally track together.   We believe these improvements build momentum, complement each other and are part of a self-reinforcing system.  The same can be said for low performance cultures going in the opposite direction.

Organizations with high performance cultures seek to continuously improve at every level.  They are able to demonstrate improvement because they have benchmark performance metrics for people, teams and services.

Those with the most potential, who contribute the most and live the core values are identified, developed and advanced to take on additional responsibilities and challenges.  Equally important, the people who repeatedly don’t contribute and/or live the core values need to be shown the door.  Most leaders get one but usually not both sides of this equation correct.

Performance cultures have a quality we describe as cultural integrity. The concept of cultural integrity combines openness, accountability, credibility, transparency, continuous learning and a humble willingness to deal with people, events and issues as they actually are – not as one might wish they would or could be. If the core values and the definition of performance mean anything, cultural integrity demands that they must be ubiquitously applied with discipline, accountability and transparency at all levels within the organization. Cultural integrity demonstrates to employees that the organizational values are not a charade and that their creativity, energy and commitment to excellence are valued and will be fairly measured, recognized and rewarded. Cultural integrity brings credibility to the appraisal process/results, promotion decisions and compensation actions. Is it likely that the most talented professionals are going to be attracted to, stay with and give 110% to an organization without cultural integrity?

A performance culture is not an accident, does not occur naturally and requires constant vigilance to maintain and build.  It is a deliberately designed living system of processes, incentives, behaviors, leadership and values that are applied with discipline and commitment.  Implementing a performance culture is not a short-term fix for poor performance and it can’t be done without the total commitment of the leader and the executive team.

Take our High Performance Culture Assessment and see what your current cultural score indicates about your organizations ability to optimize performance.

To talk with us about our process for creating a high performance organization, contact Tim Allard at 540-832-5751 or email

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