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Why Does Building a High-Performing Organization Matter?

I am writing this on Labor Day 2020, thinking about the work our firm does to build high-performing organizations. I want to address two questions:

Why does building a high-performing organization matter? And what’s the connection between that work and Labor Day?

Philosophers would argue I should start with the end itself – the intended result. I’ll offer three reasons why building a high-performing organization is an important end in itself:

  1. High-performing organizations (HPOs) create more value for their customers and users, which leads to a virtuous cycle of financial sustainability and predictable income for all employees and returns for shareholders (if you have shareholders).[1]
  2. A high-performing organization better meets our individual needs as employees: Study after study shows that, like Maslow’s pyramid, once the basic need of income is met, we work for higher-order reasons: Because we are committed to a cause, because it brings us recognition, and because it “actualizes” us in some meaningful ways. As you’ll see in a moment, you can’t have a high-performing organization unless these values are in place.
  3. Beyond meeting our individual needs, working at a high-performing organization is simply more fun. The organization’s success breeds a sense of personal success and accomplishment. People can be more innovative when they’re having fun. It’s also a formula for further wins.

That’s why on Labor Day I believe everyone should be thinking about how to build high-performing organizations. It’s something everyone has to do together – from frontline workers to senior managers and everyone in between. Everyone benefits in the three important ways I’ve just listed.

[1] One might argue that shareholders have overly benefitted over the past 30 years at the expense of employees – but I would argue that a true HPO recognizes the importance of compensating people well in order to retain talented employees.

Exactly how does one go about building a high-performing organization?

This goes to the very purpose of our firm, which is to develop leaders and leading organizations. It starts with understanding how to build a well-functioning society. If 250 years of economic history have taught us anything, it’s that a well-functioning society and healthy economy are built on a set of checks and balances. Among them are technological innovation, free movement of labor and capital, and regulations aimed at protecting individual rights, curbing bad actors, and protecting things that markets don’t protect, like the air we breathe and water we drink.

What are the equivalent checks and balances in a high-performing organization?

I think there are five forces that work in concert in to create balance:

  1. The organization must have a clear purpose and core values – along with clear goals, objectives and plans aimed at achieving that purpose and sustaining those values.
  2. It needs quantifiable metrics and targets that can be used to track progress objectively.
  3. It needs people – managers, supervisors, employees – who can communicate effectively, work in teams, and focus on the things that are most important to achieve.
  4. It needs continuous feedback loops, both quantitative and qualitative. This includes feedback from customers and users, as well as feedback from all employees – and it must assimilate that feedback seriously and use it for continuous improvement. How are we doing based on our metrics? How do our employees feel? At our firm, we call these “learning loops.”
  5. Lastly, it needs people who can effectively lead and manage: Part of this is knowing whom to hire, whom not to hire, and what to when people aren’t meshing together effectively. Effective managers aren’t born. They learn a set of skills that enable them to: 1) manage and organize the work; 2) orient people to be effective in their roles; and 3) develop people’s skills and competencies.

These may not immediately seem like checks and balances. But if you look at them closely, they are. For example:

  • Left unchecked, an organization can take on too many priorities or over-work its people. The countervailing force (the check) is asking for feedback and paying close attention to what you hear.
  • Left unchecked, employees can be lazy and unproductive. The countervailing force is getting feedback from employees as well as customers – and having leaders be unafraid to deal in a straightforward way with unproductive employees.
  • Left unchecked, business owners can make profits at the expense of workers. But the countervailing force in an HPO is the focus on long-term sustainability and the need to retain talented people.
  • Left unchecked, an organization can run roughshod over civil rights or environmental protections. The countervailing force in an HPO are its core values, along with customer and employee feedback (as well as regulators who are watching you).

It takes visionary leadership to see the crucial role that all five of these checks and balances play. It takes a lot of work to make sure they are in place – and to sustain them once you do. The reward? It’s an organization that everyone feels deeply committed to and feels proud of. Labor Day is a day to recognize the contributions of everyone, not only the people who work on the frontlines, but everyone. It’s a day to celebrate and reflect on the work we do – and why we do it. And it’s a day to appreciate how important it is to aim high and not settle for anything less than high-performing organizations.

Eric Douglas

Eric Douglas

Eric Douglas is the senior partner and founder of Leading Resources Inc., a consulting firm that focuses on developing high-performing organizations. For more than 20 years, Eric has successfully helped a wide array of government agencies, nonprofit organizations, and corporations achieve breakthroughs in performance. His new book The Leadership Equation helps leaders achieve strategic clarity, manage change effectively, and build a leadership culture.

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