A business is nothing without its people. Leaders looking to achieve long-term organisational success should understand how to create a performance culture that allows employees to do their best work.
As much as 90% of a company’s value is now made up of intangible assets — the thoughts, experiences and expertise of people in the workforce, according to a study by Ocean Tomo®.
AICPA® & CIMA® partnered with the World Business Council for Sustainable Development (WBCSD) to create the Integrated Performance Management (IPM) framework, taking knowledge from extensive research and distilling it into actions that can be implemented by any organisation, irrespective of size, sector or geography.
‘It was staggering for us to discover that even in successful companies, many leaders are struggling to make the connection between individuals and the strategic objectives of the organisation’, said Andy Beanland, Consultant, Redefining Value, WBCSD.
The IPM framework highlights organisational aspects that are fundamental to driving a performance culture, including clear strategic goals, ample transparency and enabling (rather than coercive) controls.
The world needs businesses everywhere to improve performance and successfully implement their sustainability ambitions if we are to avoid global catastrophe.
Leaders who want to transition towards a performance culture can start by implementing these three aspects across their organisations.
Align team and individual goals with strategic objectives.
While researching the IPM framework, we identified that 70–80% of companies fail to fully execute their organisational strategies. One of the reasons for that, our research found, is that 95% of employees don't understand their organisation’s strategic goals and how the goals relate to their individual roles.
The research found that employees are more engaged in their work when they can make clear connections between what they are doing day-to-day and the organisation's strategic objectives.
For example, if an organisation has a strategic goal of being a sustainability leader by targeting its carbon emissions or other aspects of environmental impact, employees want to understand how their role contributes to achieving that goal.
Instill a culture of transparency and visibility.
A transparent culture presumes that making targets, data and progress visible at all levels of the organisation allows people to understand the value of their efforts, encourages collaboration and increases engagement with strategies.
To enhance transparency and visibility, the IPM framework proposes a three-step process: mapping, connectivity and impact.
Engagement with strategies fosters feedback loops so ideas from personnel at all levels can make it to decision-makers. For example, customer-facing people are often first to experience product or customer concerns.
Organisations should provide forums, and businesses should build a sense of empowerment and trust so people feel like they will be listened to.
Use enabling controls rather than coercive controls.
A performance culture is only possible when employees are empowered to take the initiative and adapt to problems as they arise.
Enabling controls allow for flexibility and contribute to a no-blame culture of innovation, whereas coercive controls are based on compliance-oriented systems and create a fear of failure that discourages people from taking on responsibility, according to the framework.
Enabling controls could involve clear boundaries within which employees have the freedom to innovate or stage gate reviews by management, meaning set intervals for evaluating whether a project should continue.
Businesses should make sure their purpose and values align with their controls. For example, one senior finance executive interviewed for the IPM framework realised that employees at their organisation were being asked to think like entrepreneurs while facing controls that restricted them from being entrepreneurial.
Adopting these three attributes is a good place to start, but a performance culture is not built overnight. Read the full Integrated Performance Management framework for more ways to maximise the positive impact of human capital and achieve long-term sustainable value creation.