How do businesses survive in today’s increasingly disruptive, digital and agile world?
Fundamentally, it depends on a set of leadership and workplace practices that give high-performing companies the wherewithal to outperform the rest of the market. But what are the practices that distinguish these high-performing companies from the rest? And what does the employee experience look like in a successful organization?
To answer these questions, we regularly analyze employee survey data from our high-performing clients. This sheds light on their inner workings, and helps highlight the way in which various organizational practices help shape a high-performance culture and organization.
What defines high-performing companies?
Every year we survey 10 million employees across 500 global organisations. This gives us a unique data base on the world of work. Our definition of high performance is a tough one. To be defined as "high-performing", an organization needs not only strong and sustained financial performance, but also a strong employee culture. In other words, an organization that does well as a result of building a positive employee experience, not by exploiting employees for short-term gain.
Updated every year, our Global High-Performing (GHP) Companies Norm comprises organizations from a range of industries including financial services, consumer products, manufacturing, pharmaceuticals and health care, retail and telecommunications. These organizations outperform their peers in two key areas:
- Financial performance. Above average financial performance for their industry – on metrics reflecting both top-line performance (such as earnings and growth in revenue) and bottom-line performance (such as gross profit margin and growth in profitability), examined over one-year and three-year intervals.
- Employee culture. Above average employee opinion scores on questions about company culture and organizational policies.
Financial data shows that high-performance companies – indicated in purple below – really do outperform:
Stock performance of GHP companies vs. Dow Jones and S&P Indexes
Of the 500+ clients we survey every year, only a few make this norm. Achieving strong financials and a strong culture is not easy, but it can be done, and we take it as the ultimate sign of a successful organization.
The path to high performance: Excellence, emphasis and effectiveness
The chart below illustrates the differences we found in comparing the high-performing norm to our global average. Each bar on the chart represents a broad topic, or category, which is made up of the average scores of several specific survey questions all related to that topic. These differences fall into three broad areas, which we have labelled "Excellence", "Emphasis"; and "Effectiveness".
What differentiates high-performing organizations?
Survey scores of high-performing companies vs global average
Effectiveness. The effectiveness group includes the issues that all organizations need to get right, the basic foundations. It’s essential that organizations provide a Total Rewards program tailored to the needs and values of different employee segments. Companies need to ensure that base pay, the largest component of their Total Rewards program, is fair and competitive. In today’s workplace, there’s a growing expectation of openness and transparency regarding pay and pay equity issues. Other factors contributing to an organization’s basic effectiveness are supportive managers and a balanced workload and flexibility – all key drivers of sustainable engagement. Finally, it’s important that the work environment is efficient and provides the tools and resources that support productivity and performance.
Scores of high-performing companies on these topics are better than those of organizations generally, but only by a small amount – ranging from two points higher in pay and rewards and operating efficiency to four points higher when it comes to supervision as well as work tools and conditions. Poor performance in these areas can cause serious problems, so it's necessary for organizations to get these factors right. However, these elements alone are not likely to create a high-performing organization, so just getting these factors right isn't sufficient.
Emphasis. Topics in this group are where we see high-performance companies start to pull away from the rest of the pack. High-performance companies are better at setting clear goals and objectives, empowering employees and improving processes. They have a more effective performance evaluation process that is part an ongoing performance dialogue with managers as well as strong working relationships that promote collaboration and innovation. High-performing companies score five to seven points higher than organizations generally in these areas.
It’s important to note that the “emphasis” elements of most importance vary depending on a company’s business sector and are strongly aligned with how each industry needs to focus their culture to achieve their strategic objectives. Consider for example an online retailer whose key strategic priority is customer centricity. Such an organization will want to ensure employees have a strong sense of empowerment and flexibility to answer customers’ questions the first time, handle any challenges with online orders immediately, and stay involved in decisions about how to improve front-line service.
Excellence. This is where high-performing organizations excel, and foremost is leadership effectiveness — the #1 differentiator of high-performance companies, and the #1 global driver of sustainable engagement. Leaders in high-performing companies motivate and inspire employees with their vision of the future, act with integrity and display a genuine concern for employee wellbeing.
High-performing companies have a strong, positive company image and reputation, open and transparent communications in all matters from pay and rewards to performance management, and an unwavering focus on the customer as the key to business success.
Further, high-performance organizations prioritize career development — not only traditional career advancement opportunities (e.g., vertical moves/promotions, lateral moves) but also dual career paths, special assignments, secondments and other skill building experiences critical to success in the new world of work.
High-performing companies score nine to 13 points higher than average on these key strategic areas.
The ultimate differentiators of "excellence"
The data above points to the broad characteristics of “excellence” in high-performing companies. But of all those broad topics, what are the specific practices where high-performance organizations are most differentiated? In other words, when we rank each specific survey question included in the research, and consider only the top dozen, what does it tell us about the employee experience of these successful organizations?
- Purpose. First and foremost, it tells us that high-performing companies have a very strong sense of purpose — work has real meaning. Employees have a strong identification with the company’s mission, brand and buy-in to its strategy and increasingly they believe their employer has a strong sense of social and environmental responsibility.
- Drive. The best performing companies provide a thriving work environment based on agility and innovation. This is allied to a strong focus on the market, their clients and customers, and ensuring products and services are market-leading. These companies understand the need to constantly adapt and are masters of change management.
- Growth. High-performance organizations offer outstanding development and growth opportunities and long-term prospects to help employees maximize their career potential. Total Rewards programs reflect this.
- Trust. High-performance cultures are characterized by respect and fair treatment. Employees trust leadership, and leadership trusts employees. As a result, employees are highly inspired to give their best.
How does your culture stack up against the blueprint above? Are you on the path to high performance?
Setting up your employee insight strategy to provide you with these insights is a great way to get started in the right direction.