The Secret to Creating a High Performance Culture

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Written by Lorna Donatone

What accounts for the difference between companies that can hit the ball out of the park and those that are merely staying in the game?  How can a handful of organizations deliver operating profit margins that are 50-150 percent above the industry average? Why is it that even fewer can increase market share and maximize profit simultaneously? According to Swiss research and consulting firm Egon Zehnder select companies enjoy superior growth, increase profitability, better utilize capital and, therefore, escalate market capitalization because they maintain a high performance culture that drives vision, purpose, action and finally, results.

Culture acts as the “central operating system” for an organization. It guides the business, holds leadership accountable and gives employees a roadmap for the attitudes and actions expected of them. One of most effective ways to ensure sustainable growth is to create a culture based on high performance. A well-defined – and frankly, incentivized – culture provides the collective architecture that guides organizational development and strategic planning. The key to creating a high performance culture seems almost self-evident – deliberately think through what you want to achieve and how you want to achieve it. In other words, what is your organizational ambition and what are the elements you simply must have in place to attain it? There are three key components to consider when creating a high performance culture.

PeopleWorkforce Development

Great performance is the result of talented people working in a culture that encourages and challenges them, and perhaps even demands that they excel. Every business leader can attest that higher performance and lower costs are driven by identifying, developing and retaining the best talent. A recent case study featured in the Ivey Business Journal, found that employees at a U.S.-based mortgage banking company who are actively engaged outperformed the competition by 20 percent, earn more than their peer firms and are 2.1 percent above financial industry benchmarks. Simply put, your people are the straightest line to creating a high performance culture and thus, growing your business.

Attracting and then selecting the right people are undeniably Step 1 and Step 2 toward high performance culture creation.  A Gallup report on the State of the Global Workplace shows that 63 percent of employees are not engaged at work and 24 percent are actively disengaged, leaving a mere 13 percent of workers who are engaged in the work that they do (for you, and your customers, every day). With the wrong people, great strategy, superior technique and maximum effort are reduced to academic exercises with little chance of making a real difference.  Skill-set is just part of selecting the right talent – attitude, personality, ambition and integrity are perhaps even more important assets because they cannot be taught.

Once you have the right people in place, you have to support their growth and development.   Workforce development can feel like a buzzword, but in short, is based on the simple premise that the better educated a workforce is, the more likely they will deliver increased organizational success. Workforce development initiatives build employee knowledge, expertise and confidence, which equates to more productivity and engagement at work.  Revenues increased by an average of 22.2 percent for the 2014 Fortune 100 Best Companies to Work For, which places a strong emphasis on workforce development.  And according to the Bureau of Labor Statistics, these same companies added new employees at a rate that was five times higher than the national average. More self-evident business logic; companies that invest in the skills and abilities of their workforce are investing in their future competitiveness. So, what’s at the core of the ‘people’ problem?

Identifying and developing the best people only works if you can retain them.  A Columbia University Study shows that the likelihood of job turnover at an organization with a high context culture is less than 14 percent, whereas the probability of job turnover in low context cultures is 48 percent. It is a truism that ‘people do what they are incentivized to do’ – and therefore, recognition is a key engagement driver for most people, particularly in cultures based on high performance. Employees need to feel their contributions are being acknowledged, appreciated and are adding to the company’s success. Getting the best performance out of your employees comes down to proper incentives and appropriate recognition – the combination of which keeps them engaged.

Progress – Innovation, Ideas & Opportunities

Progress is the means by which an organization moves toward its ambition. Worldwide, 2015 research and development spending by the Global Innovation 1000 companies — the 1,000 public corporations worldwide that spent the most on researching and developing products and services — rose more than  five percent to nearly $700 billion, the strongest increase in the last three years. But how do companies deliver tangible, viable progress? To create a high performance culture, progress must consist of innovation, ideas and opportunities.

  • Innovation: A characteristic of any high performance culture is the ability to regularly deliver incremental innovations that keep operations, products and services fresh. Innovation is much more a trial and error, small-steps process than a single ‘giant leap.’ Did you know that companies like 3M and Google consider innovation so important to their business that they require employees to dedicate 10 percent of their time to exploration and experimentation? The ability to look forward and the capacity to envision the future are powerful stimulus in a high performance culture. Whether it is losing ground to competitors, not being able to attract top talent, operating inefficiently or simply not reaching their full potential, companies that do not relentlessly focus on aspects of innovation become irrelevant over time.
  • Ideas: An Accenture study found nine in 10 respondents say an entrepreneurial attitude can lead to new ideas that promote growth in a tough economy and more than 60 percent believe collaborative thinking is the best source for new ideas. Idea-sharing is energizing and motivating – new ideas create vitality, focus momentum and define purpose – action on ideas help align and guide a company’s people and priorities. Ideas solve problems and lead to continuous improvements.  Whether it is the little ideas that pop up to address everyday challenges or the ‘next big idea’ that occasionally appears as an aha moment, high performance cultures share the characteristic of supporting idea generation at every level.
  • Opportunities: The best opportunities don’t always knock. Sometimes organizations have to seek out, be able to recognize or create a solid prospect in order to take advantage of it.   High performance culture businesses don’t wait for things to happen, they make things happen.  Is there risk involved in doing something new? Of course.  But the reward is there too – and the reward aligns to the goal of growth.

Partnerships – Creating Shared Value

Creating a high performance culture is about more than products and profits. Strategic business partnerships can give companies the edge in a competitive marketplace. A 2013 Cone Communication Study found that, given comparable price and quality, 89 percent of U.S. consumers are likely to switch brands to one associated with a cause.  And a 2014 Nielsen Study found that 42 percent of participants reported they would pay more for products and services from companies committed to positive social and environmental impact.

Very few opportunities in business today offer as much economic and social benefit as strategic partnerships between with the nonprofit, education or government sectors.  Savvy organizations engage in long-term, multi-faceted, value-driven partnerships that meet their objectives and deliver mutual value. Organizations that make giving back to the communities where they live, work and serve a priority reap many rewards including increased sales, enhanced employee engagement, brand loyalty, relationship development and meaningful team building.  High performance culture organizations generally practice good corporate citizenship, and understand that what is good for the local community is also good for business.

In summary, at the heart of any successful business you’ll find a positive cultural dynamic.  Organizational cultures based on high performance inspire employees to assume success – to look for and create opportunities, anticipate needs, be informed and get involved, identify solutions and strive for excellence, even when no one is looking. And, they continuously raise the bar by encouraging, incentivizing and recognizing higher individual and collective achievement. Creating and maintaining a high performance culture is certainly not easy and is definitely challenging – but can you really afford not to?

 

About the author: Lorna Donatone is the President of Sodexo North America and the CEO of Sodexo Schools Worldwide. Ms. Donatone was honored with the 2015 Trailblazer Award from the Women’s Foodservice Forum and is Vice Chair of the National Restaurant Association Education Foundation.  She is on the Board of Directors of Jamba Juice, is a trustee of the Culinary Institute of America, serves on the Tulane Business School Council and Chairs the TCU Business School Board.