In cooking, whether you are a master chef or novice, the sequence is crucial. Performance improvement programs are much the same as recipes, but since companies must address a multitude of variables to boost productivity, success can be significantly more difficult to achieve.
Consider one global luxury car manufacturer that was mired in a cycle of poor performance. Sales and production standards had declined, and the brand had lost its distinction in the market. A new ownership team acquired the carmaker and set an ambitious goal: become the world’s most progressive luxury car brand.
The owners first conducted an Organizational Health Index survey to assess the carmaker’s starting point and challenges. When the survey placed the company in the third quartile, the new CEO remarked, “We’re not healthy—but at least we are not dead!”
Clearly, a standard performance improvement playbook wouldn’t be sufficient to achieve this lofty target. The assessment reinforced that the carmaker needed to address organizational health—its underlying culture, mindsets and behaviors—if it hoped to return to prominence.
Many struggling companies face the same challenge: how to combine performance and health while building momentum for a turnaround. In such instances, the order in which a company tackles its initiatives is crucial.
Prioritization: a three-step process
As leaders develop a portfolio of initiatives to improve performance and health, they can follow a process to prioritize opportunities and investments for maximum impact.
- Identify thematic areas
Management should begin by identifying the organization’s guiding principles for achieving its business goals. For example, the carmaker distilled performance and health efforts into four thematic areas: improving profitability and efficiency, revitalizing the brand, reinforcing product strengths, and promoting global growth and sourcing.
- Define supporting initiatives
The executive team should identify a concrete set of initiatives to sustain each thematic area. For example, to support “reinforcing product strengths,” the carmaker defined three areas—electric vehicle strategy, quality improvement and car architecture renewal—and engaged employees to develop initiatives that address each area. Our research found that initiatives in which employees contribute to development are 3.4 times more likely to be successful.
- Sequence the program to build momentum
To realize the program’s full set of initiatives, companies should select prioritization criteria that reflect their program’s business goals. Some questions to establish common criteria include the following: Are any initiatives interdependent? Which ones have the potential to build momentum through quick wins? What are the different employee segments, and how can the company create coherent change journeys for each one? Leadership should ensure each initiative has a clear owner, charged with developing the detailed implementation plan and ensuring execution.
Organizations that carefully sequence initiatives to maximize impact and enhance employee experience can capture additional benefits. “Beyond Performance 2.0” found change programs that emphasized effective prioritization and planning are 1.7 times more likely to achieve a positive change in performance and sustain those gains.
Health in every facet of performance improvement
Companies should hardwire health into the detailed implementation plans of performance initiatives. The full set of initiatives represents the bulk of change activity, so it’s critical for executives to embed the culture aspiration into each one—for example, through role modeling and storytelling, reinforcing mechanisms (such as changes to structure, process, systems and incentives) and skills building. When structured properly, the performance improvement program can also foster a sense of shared experience, one that strengthens connections across departments.
The benefits of a carefully curated set of performance and health initiatives can be considerable. Indeed, in 2018, the luxury carmaker achieved its highest quarterly operating profit to date—a testament to its ability to prioritize the right initiatives.
For more on leading successful large-scale change programs, see our book, “Beyond Performance 2.0.”