4 Key Ingredients of High Performance Companies
Written by Jim Stewart
High Performance Management which, like golf, looks easy and isnít and requires a number of things to work together simultaneously. Get one wrong or out of synch with the others and the result will not be what you intended Ė in fact it could be...
A few weeks ago I spoke, along with Tom Anselmi, the
I’ve worked with owner managed companies for the last 12 years and listening to
There are 4 ingredients – Performance, Planning, People and Process. We’ll kick off by talking about Performance this month and discuss one of the others in the next 3 issues of the newsletter.
But what is High Performance Management? My definition is “the ability to consistently generate industry beating profits”. Consistency implies that performance is not just a function of the economic climate. Someone I knew had a saying which sums it up nicely - “Never confuse success with a growth market”. Industry beating is the key. High Performance companies outperform their competitors, the other players in their industry, in every phase of the economic cycle, boom or bust. You can’t always beat last year’s profits – but you can beat everyone else this year.
The first thing owners of High Performance companies focus on is Performance, and they do 2 things. Firstly, they set and communicate clear Performance goals for the Company, making sure everyone understands them. Secondly, they measure actual Performance against those goals regularly, give feedback to everyone and make changes if necessary.
How do they set clear Performance goals? Most owners know what they want their company to become, call this their Vision for the company. To make that more tangible, they develop a picture of what they want the Company to look like at the end of the next 3 years. They don’t do it by themselves; they get input from and involve their management team members and outside advisors.
Key inputs for those goals are what customers will need from the company based on their plans for the next 3 years. High Performance owners have their salespeople and other customer facing team members ask customers what they expect to happen in their business and how the company can adapt its products, deliveries etc. to support them. In fact, the owners regularly get out into the market in order to discuss their customers’ needs face to face with them. And High Performance companies don’t just ask customers to rate their Performance on the issues they think are important; they ask customers to rate them on the things the customers think are important.
Having developed the goals, the owners communicate them and make sure everyone understands them. They hold meetings and tell everyone. They make sure every part of the business knows what their area has to do so that the company can beat its goals. They make sure that the personal goals of every single member of the team supports those of the company – this becomes the basis of each employee’s annual performance review. The owners never miss an opportunity for one on one talks with team members about how they – and the company – are doing. They invite questions and constantly ask for input. They encourage people to talk amongst themselves about the company’s goals.
Imagine if the coaches and managers of an NBA,
Businesses are no different. Owners of High Performance companies regularly measure actual performance and give feedback to absolutely everyone. They do this several ways. The owner and her/his management team (and sometimes his/her advisors) take a half day just after the results for each quarter become available to compare actual results to the quarter’s goals. Then they spread the news about the company’s performance to everyone. They post it for every team member to see, the talk about it at every opportunity and they celebrate success big-time.
And talking about success is the perfect segue to the second ingredient, Planning. I’ll give you an equally brief overview of that in the next newsletter.
I want to leave you with a great quote from a great book. In “CEO Tools – the nuts and bolts for every manager’s success” Kraig Kramers has this to say. “Nothing leads to success like having clear, written, repetitively communicated goals. Nothing!” Kramers has an impressive record of success as a CEO and he uses lots of examples from his career to support this statement – and all of the others he makes.
As usual, to take issue with anything I’ve said or to share your thoughts or experiences, send me an email at firstname.lastname@example.org or call me at 416-258-9610.
© Copyright ProfitPATH, a division of JDS & Associates Inc., 2009