How to Build a High-Performance Organization

By American Management Association

There is no one single formula that leads to corporate success, but there are several common characteristics found among many successful organizations. “How to Build a High-Performance Organization,” a global study commissioned by CMC and conducted by the Institute for Corporate Productivity, reveals those critical building blocks. The organizations that share these traits are not guaranteed to be high performers, but they stand a far better chance of performing well than if they fail to adopt them. 

High-performance companies are the role models of the organizational world. They represent real-world versions of a modern managerial ideal: the organization that is so excellent in so many areas that it consistently outperforms most of its competitors for extended periods of time.

Managers want to know more about high-performance organizations so they can apply the lessons learned to their own companies. Of course, the goal is to ensure that their own organizations excel in the marketplace.

The truth is, however, that it’s hard to discern exactly why some organizations perform better than others. First, there’s the problem of determining which organizations are high performers. Should analysts study only those that outperform others in their own industry? How long a time period should they conduct the assessment? And which measures, financial or otherwise, are the best ones to use?

Once analysts settle on answers to those questions, they must try to determine the reasons that a given organization performs so well. After all, organizations tend to be complex and unique entities. This makes it difficult to draw straightforward lessons from them.

Despite these difficulties, researchers have been trying to identify and study high-performance organizations for years. Much has been learned during this time. As Julia Kirby (2005) noted in the Harvard Business Review, management experts continue to build on one another’s work in order to formulate more sophisticated ideas about organizational performance.

This study continues in that tradition, building on the theoretical work of others even as it provides new insights about high-performance organizations. Toward this end, a team of researchers analyzed the business literature in this area and conducted a global survey looking at the characteristics associated with high performance. The High-Performance Organization Survey 2007—commissioned by American Management Association (AMA) and conducted by the Institute for Corporate Prod uctivity—asked 1,369 respondents about a series of organizational characteristics that the literature suggests are associated with high performance. It also inquired about revenue growth, market share, profitability, and customer satisfaction. The research team correlated responses about market performance with responses about strategy, leader ship, customer-orientation, and other factors. Based on those findings, the team divided respondents into high, middle and low performers.

Like all survey data, these results have their limitations. Correlation is not causation, and the data are based on self-reports rather than on external market information. Nonetheless, the results provide clues to what separates high-performance organizations from their low-performance counterparts. Generally speaking, high-performance organizations are superior to their low-performance counterparts in the following areas:

  • Their strategies are more consistent, are clearer, and are well thought out. They are more likely than other companies to say that their philosophies are consistent with their strategies.
  • They are more likely to go above and beyond for their customers. They strive to be world-class in providing customer value, think hard about customers’ future and long-term needs, and exceed customer expectations. And they are more likely to see customer information as the most important factor for developing new products and services.
  • They are more likely to adhere to high ethical standards throughout the organization. • Their leaders are relatively clear, fair, and talent-oriented. They are more likely to promote the best people for a job, make sure performance expectations are clear, and convince employees that their behaviors affect the success of the organization.
  • They are superior in terms of clarifying performance measures, training people to do their jobs, and enabling employees to work well together. They also make customer needs a high priority.
  • Their employees are more likely to think the organization is a good place to work. They also emphasize a readiness to meet new challenges and are committed to innovation.
  • Their employees use their skills, knowledge, and experience to create unique solutions for customers.

The study also indicates that even high-performance organizations could improve in various areas. It found, for example, that high performers are much more likely than low performers to report that their organization-wide performance measures match their organizations’ strategies. This was, in fact, the single largest difference between the two groups. Even so, the data show that higher performers, taken as a whole, could do considerably more to match their performance metrics with their strategies.

There’s likely a lesson to be learned here: like great athletes, even high-performance organizations must continuously strive to improve and “work on their games.” Without the passion for improvement, they are unlikely to remain high performers for long. After all, there’s no shortage of business leaders who are working hard to ensure that their own companies reach the top echelons of organizational excellence. 

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